Remember the old game Monopoly? Where you had a little icon that you moved around the board slowly gathering money and property till you could charge everyone else out of the game? Where you traded four houses up for a hotel? You had to wait till you got around the board to collect $200 to use to buy more properties. Eventually you reached critical mass and could buy anything. If only your competition would give up their properties so you could capture the whole strip.
That was and is still today the goal of any business. Both for big businesses that compete globally and for small businesses that compete locally.
My focus for this article is the local small business. The one that must build a monopoly against both the multinational and the mom and pop.
What is the goal?
To capture a predefined share of the market in a specific area, and hold it by providing competitive prices and superior customer service.
Where many small businesses fail and most big business fails is in maintaining superior customer service while still maintaining growth. The very thing that made them great to begin with they lose along the way.
I am convinced that local business can ALWAYS provide better service and support than a national or international company. They are well poised to do it. Not only do they have access to modern efficiency methods and machinery, they also can react faster to an ever changing marketplace. More importantly, they can react faster to customer requests than any bigger company with more layers of management and red tape.
Yet, there is a psychology in America, and probably abroad as well, that bigger is better. A company that is well known and established will always be the safer bet. Yet, the true circumstances speak against that. Smaller local companies more often than not outperform their bigger rivals in terms of level of service and support.
Here are the advantages of each as I see them…
Advantages of big business:
- Access to capital and other resources is greater (i.e. partnerships with other companies and in house staff for professional services such as legal and accounting.)
- Huge marketing and advertising budgets (thereby making them well known and the first company a person thinks of when they need a certain product or service)
- Seen as established and most likely to be able to fulfill a consumer’s needs.
Advantages of small local business:
- Able to react faster to the marketplace and customer requests.
- Much higher ability to customize as needed.
- Can partner with a community more in terms of relationships, partnerships, and giving back.
- Taxes and resources stay in the community more (basic import/export still applies to states and cities)
Laid out this way there are only a few ways in which small businesses need to evolve to create a monopoly in their area.
First, we need an expansion of credit towards small businesses. Although banks still lend money to small businesses they often wait till after that business is established to do so.
Incubators and investment firms have done a great job helping bring new businesses to life. Yet, these are often focused on new technologies rather than what many would refer to as dull normal businesses.
What small businesses need to learn is how to operate on lines of credit much like big businesses do, at least to start and expand, without threatening the life of the business. Investment firms and incubators should be set up to help get “normal” businesses started.
The next issue a small business faces is getting the word out about their services and becoming known in the community. These go almost hand in hand.
Small businesses simply don’t have the same budget for marketing and advertising that their bigger cousins do. However, they do not need it. There are many ways to market a business outside normal expensive channels.
A wise PR person would help a small business grow by getting them involved in community events and other social gatherings. They would help them get free press. They would help them target their market as precisely as possible to get the most bang for the buck.
And lastly, a small local company becomes a monopoly simply by the passage of time. Which is no small feat in and of itself. With fiscal responsibility and a focus on being so good at what you do that the name of your company spreads by word of mouth, domination of your local marketplace can not be much further away.
These are the ways in which a small local service based business can grow to be the main company people think of when they desire a certain product or service in that area. This is one way in which great franchises get started. A small local business model is duplicated in other areas around the globe. Think McDonalds.
Sometimes it pays to think locally. I’m starting to think that the big fish in a small pond may be the place to be…