Small Business

Small Businesses: Differentiate Don’t Emulate

Accidental Advice – really great advice someone gives you without even realizing it. Usually in the form of an analogy.

I don’t know if you can tell but that definition is made up but I think you get the point. I received some really good accidental advice today. We were discussing a small business trying to emulate a larger one in order to be successful. The woman I was talking to simply said if the small business was just like the larger than she would just shop at the larger. That sounds really vague so let me give a better example. Say a small family owed restaurant decides they’re going to change to fast and cheap burgers. Well there you have McDonalds. This small restaurant may think its a good move because McDonalds is successful, but if they change to be like McDonalds then they are competing against McDonalds and will be crushed! This is because a large company can do it better, faster, and cheaper than a small one.

So how does a small business compete against these giants? Differentiate themselves! There is a reason family owned restaurants still exist, even in proximity to fast food like McDonalds or other chain restaurants. It is because these restaurants offer something the chains can’t. Quality cooked food with personality. Yes it costs more and takes longer, but consumers are willing to pay a premium, in both time and money, for this higher quality good. If the restaurant tries to copy a large chain like McDonalds then consumers have no reason to go there, they just go to McDonalds.

The key is to give consumers a need to come to your business, a need they can’t fulfill elsewhere. That need doesn’t need to be quality burgers. Quality anything gives consumers a need to get that quality from you because they can’t get that quality at larger stores. However, if you try to compete head to head with bigger companies you will fail. Lose a hand to save a finger, some would say.

So what advice did I actually get from this ramble? If you don’t have extensive capital you can’t be the fastest, cheapest, or most convenient, so don’t try. Instead create a product or experience that the large companies can’t provide and you can develop a need in consumers to purchase your goods, regardless of the premium.