You may feel like David next to your Goliath competitors. Depending on your industry, you may constantly worry about the Starbucks, the Walmarts, and the Forever 21s.
You may even believe you’ll never outpace them, but remember: real David killed real Goliath, and you too can seriously compete financially with the big dogs. You just need to be strategic.
Here are the advantages small business has over big corporations—and how to make it work for your business.
1. Be Data-Driven
In October 2012, the Economist Intelligence Unit surveyed 530 senior executives across the globe and found that the most successful companies (no matter their size) have adopted a data-driven culture.
Those that are data-driven rated themselves three times more likely to be financially ahead of their peers when it comes to financial performance; the stats concurred. A data-driven culture requires daily operational and business decisions that are based upon data rather than hunches.
Train employees to collect and analyze relevant data (or make it available to them) often so that they can make the most cost-effective choices.
2. Be sustainable
Research shows that businesses with established sustainable operations are financially more successful than those who don’t aim to be environmentally friendly.
According to a recent report, corporations that are actively planning for climate change get an 18% higher return on investment (ROI) than companies that aren’t. Furthermore, companies investing in carbon reductions saw 21% stronger dividends those than didn’t.
Although this study primarily analyzed S&P 500 companies, the same idea rings true for you. If you build a sustainable business, you’ll cut down on waste (costs) and incur more environmentally minded customers (revenue).
3. Be safe
Injured employees can really drive up costs, and as a small business owner, you can’t afford losing tens of thousands to liability suits. If your employees work in a potentially harmful environment, make sure you get workers’ comp insurance. The average premium ranges from $0.40 per $100 dollars of payroll for an office worker to $40 per $100 dollars of payroll for someone like a roofer.
One advantage you have against big corps here is that you have fewer employees to cover, and also more direct control over safety programs.
4. Be effective
Studies show that small businesses spend less on marketing than larger institutions, whether by choice or budget constraints. BrightLocal recently found that businesses with 1-50 employees spent about $2000/month on marketing in contrast to companies with 50+ employees, who spend $3,261 - $$$$ a month.
To be more effective than your big-budget competitors, you need to optimize every marketing dollar. To evaluate your digital marketing ROI, take a look these two guides: Your Guide to Online Marketing and Measure Me: The 10 Must-Track Data Points for Digital Marketing ROI.
5. Spend less
Large corporations aren’t as free to cut spending as smaller, more flexible entities may be. Take for example, office space. Large businesses can’t skimp out on real estate, but you might be able to. Co-sharing spaces are affordable alternatives than owning or renting expensive cubicle space. Fewer costs and constant revenue equate to higher profits, right?
6. Upsell and retain
Obtaining new customers will cost you more money than retaining them. According to KISSmetrics, it’s 7x more expensive to acquire new customer than to do business with existing clientele. Utilize your customer base if you don’t have the cash flow to chase new ones. You can also sell your product more strategically by implementing tactics like selling insurance, service plans, tactical product placement, and incentives to purchase more.
Small businesses are fueling America; don’t let the big guys intimidate you. In reality, you might have the upper hand.