I’m down at the beach house. It’s Sunday morning, about 7am. There’s a Sou’Easter blowing about 20 knots, whipping up a choppy surf. I can’t go for a paddle, I can’t fish. I’m stuck with the prospect of having to wake up the kids for my own amusement. I turn on the ABC radio 774. The last independent, objective station left. On comes Macca’s Australia All Over. This instantly paints me as a basic redneck Aussie to many readers. I struggle with whether I should write that in an article (do they want the smoothness , rounded vowles and balanced advice that come from a sophisticated marketer with an MBA and 10 years experience in London and New York, or do they want biased messy stuff from old researcher/ ad man with a bad attitude?) I decide in the interests of fair play and honesty I’ll leave it in.
Macca reads out a few letters. All of them about the need to buy Australian. The people calling in complain about Asparagus from Peru. About drinking Orange juice from California. What are the farmers to do? They plough in their orange groves themselves because they can’t get people to pick the fruit “Australian’s are above a bit of hard work nowadays, we all want to be dot.com billionaires” and the customers want those perfect bright, big oranges from the USA. The ones grown on irrigated country with more chemicals than Karg Island. One phone call suggests we ought to set up a web site that lists products needed – so people doing business plans can find out what to make. I vote for that, but I’m sitting in my torn shorts on my own, in a cold kitchen and no-one sees my hand go up.
A guy is interviewed who’s a printer, Richard someone. Started his own business in the early 90’s. He talks about industry change, about competing with the big companies. About trying to maintain the Australian culture, by printing books about Australia. The printer says the plight of Australian businesses is about at the bottom. He talks of a change in direction. The presenter, Macca, plays ‘Stand up and fight’ from Carmen, making a joke about the brawl in NSW parliament that happened that week. The point is palatable. I can hear fervent Aussies, from Marble Bar to Manly, fists clenched, crying into their sweet weak teas.
Small businesses employ more people than big businesses. They are the backbone of this country. They work harder, buy more. And they contribute everything they have back to the economy. Where else would they send their excess profits anyway? Bosnia?
If we’re going to have any industry in the country, we need to encourage smaller businesses. Businesses which are obviously based in Australia. And if I know anything about you marketers reading this, you probably harbor plans to run your own business one day. While your career choice often comes down to what sort of company you think would sit well next on your CV, I’d like to think you also decide according to where your heart wants to go, what you’d actually like to do with your four score years and ten. Even if you work in a big business now, you need to keep one eye on smaller business, and how it operates differently. So I’m going to wander in that recess of my mind that harbors my experiences with small business.
This is another of my gross generalization articles. Obviously not all small or big businesses behave the way I describe below. If you think I’m inaccurate, as the Yanks say, write me.
Small, nimble brands
Fast moving attack craft
Smaller businesses must move quicker. They need to make decisions in hours, not months. The best smaller business people I meet are ‘fast reads’ – they get the point in seconds, don’t quibble about the detail too much and then go golfing or whatever it is they actually want to do that day.
Their businesses react faster too. They must be prepared to change in direction in relation to a wide range of issues, but most importantly in product range, distribution and advertising. This is not something you do in a few hours on a Friday morning, but being prepared to be flexible and explore other tactics is a fundamental of good small business.
To survive they often have to accept lower margins sometimes, more focused target appeals. A small business can often survive, even here in Australia, on a very tiny market segment. Like a local area, or particular kind of car enthusiast. But where they do focus in on a small segment, they doom themselves to remaining small. So you must choose carefully who you wish to appeal to. If it’s a psychological head-set which is likely to grow amongst the population, like say environmental sustainability, then work it.
If it’s a demographical sub segment that’s likely to shrink, it’s less attractive. It could well be a rich seam for a while, like say Elvis impersonators outfits, there’s still thousands of them around, but eventually they and the people who know his songs will die off, and you’ll be left with a business that’s only catering for people with sequins set in their grave stone.
Closer to market
Smaller businesses are by definition closer to their market, more aware of what’s happening. If you chat with your customers regularly you have much more opportunity to ask their opinions, predict their needs.
Fight for flexibility
As I said above, to keep alive, smaller businesses need to be more open to change than large businesses. This however fights with one of the most ingrained of the general characteristics of small businesses, conservatism. Which in Australia means doing what you’ve done before, that’s worked. You can’t blame people in a vulnerable business to want to follow the proven. They have to. But there are many instances, particularly in marketing aspects, where copying another business or asking another small business person, or doing what you have done before, is not the best approach.
Keen staff
Staff in smaller companies are often keener to compete. There is a different kind of person who applies for a job at a small company. They are less scared of failure, less scared of being out of a job. But it goes both ways too, often people who try working for a small company find their lives are more roller-coaster like. Many more highs and lows. If you suffer from bi-polar syndrome, this is where you’ll feel most at home.
Satisfaction
Small business people talk about the great sense of satisfaction they get running their own show. They like being at the tiller, with the wind in their faces. Interestingly, that analogy is very accurate. If you look at the owners of yachts in Australia, small business owners dominate their ranks.
Sentimental favorite of public
The public love the underdog. The angst that erupts when a big player moves into a market that has been dominated by a small, independent business is often powerful. When the bigger business does the job better, the punters move over slowly. When they stuff it up, as often happens, the public grunts with satisfaction to itself about that big group needing to stick with what they do instead. Quite a lot of people today hold a serious grudge against big businesses, regardless of the reality of better service, lower prices or more sophisticated technology etc. They get a real kick out of a big business failure, I think because they only ever see themselves as the little guy, battling the big corporation, not the other way around; a cog in the wheel of the giant machine.
They have a point. It’s hardly romantic to think you are account manager number 46 in a company. Much more exciting to think of yourself as a lone cowboy, out on the plains of life, sleeping under the stars and shooting varmints for dinner…there I go, redneck again.
Realities of with working in or owning a small business?
Less budget
If there’s one thing that kills your dreams of power and growth in most smaller businesses it’s the harsh reality that you just can’t afford all the things you want, to play against the big guys. The harder thing is not the lack of budget, it’s the decisions you have to make about what to spend whatever you have on. What will be the better investment? Why can’t I do both? What’s a minimal spend and what’s far too little and a waste of money? Can I crib that out of next month’s budget?
Poorly trained
Because small businesses need to hire multi-skilled people, it means they are often less trained in certain core tasks than the team would like. And they often can’t get specific training for say IT management, when it’s only 5% of their day. Which means smaller companies often need to bring in consultants for all sorts of aspects of the business, IT to accounting to sales agents etc. which again affects profits. Consultants are more expensive than internal staff. But who’s going to learn to fix that machine? You’d have to be a PHD before you can get near it.
Dependant upon few individuals – vulnerable
A small business which depends upon a few key people is as vulnerable as a big fat worm on hot bitumen in the morning sun.
Low awareness
The key complaint and major hurdle to get over ,mentioned by all small business people, is awareness. “I’d like to go to bar-be-ques and tell them my company name and have them nod, not say ‘what do they do? all the time.”.
But what really matters is not necessarily public awareness, it’s awareness amongst your target market, I hear you say. Bullshit. That’s nice on paper in a Marketing 101 exam, but that’s it. What public awareness does for small business is boost their credibility so much that people just trust them. Financiers, lawyers, distributors, even customers. Which means they get better treatment and their own self confidence goes up, which makes a great difference to the work place atmosphere and everyone’s enjoyment of the average day. And if you were looking to sell your brand to retire on, which most small business owners intend to do, wouldn’t you prefer to sell one with a house hold name? But how to get there…
Unestablished relationships
When companies have been dealing with each other for many years, there is a kind of invisible bond between them. With smaller companies these bonds often don’t exist. This isn’t helped by short-term thinking owners who swap and change suppliers on the basis of minor differences in cost. It is folly to ditch suppliers. Reliable suppliers are harder to find than customers and the work it takes to train yourself, your staff or the next supplier, just to save a few dollars, is almost never worth it. Better to just ask the current people for a discount, or to improve their service/quality in the aspect you are concerned about. If there’s a genuine reason for prices to rise, all suppliers will most probably have the same problem.
Heavily sales oriented
Because cash-flow is key, most smaller businesses focus more heavily on sales and put less weight into brand building than do bigger groups who can afford to build a market more carefully, and can afford to go into a new market with bigger budgets and longer time lines.
Role of owners/mgt
As owners and managers are closer to the business, and they are multi-skilling, their role must be much more hands on, much more efficient. I have a policy that if I find myself doing something for more than a few hours a week, I hire someone to do it instead. Owners must be like barmen, part psychologist, part sale person, part general, part cleaner.
Thinking big, spending small
With smaller turnovers, come less resources. Small businesses need to decide that they will grow and how. This often only takes a few hours of debate with some legally available stimulants, like alcohol and coffee. Add to that a white-board, and imagination and a smattering of basic market theory and off you go, conquering the universe. If they do commit to growth, the next steps are simple. They need to budget in the same proportions as do bigger companies, I mean 10% of anticipated turnover of new products or services on promotion, not 2%. They need to buy media and creative more efficiently. (That sounds easy, doesn’t it? I just thought I’d throw it in to give every decent marketer the shits) And they need to be twice as aggressive in their market as their bigger cousins. It ain’t the size of the dog in the fight, it’s the size of the fight in the dog.
Tactics you can use
Be small and humble
Smaller companies do very well using the underdog appeal. Lots of apparently little companies in far off places like Queensland (Herron) do well against their bigger adversaries claiming Australian made, little company etc.
Most smaller businesses try to look impressive. They do it by calling themselves ‘Incorporated’ or listing offices that don’t exist, using ‘corporate’ typefaces etc. This is because they want to be taken seriously. They miss the point. ‘Serious’ and ‘credible’ don’t get you sales or loyalty. To grow big you’re better off to look small.
There are some huge American companies who do this really well, with dumb little ads in magazines etc. who often turn out to have turnovers bigger than the State of Tasmania. Mind you, there are milk-bars in Moe who have the turnover of Tasmania.
Poke Fun
They can make jokes about the bigger groups, like Grill’d, who’ be lost for marketing tactics if they couldn’t poke fun at Maccas.
Dare to have personality and an opinion
One of the most fundamental truths of life on this planet is you can’t please everyone. If you polarize by siding with one group or just doing the different, while you won’t appeal to as many people, those who do think like you, will love you.
Become the expert
Nothing better than taking the expert role if it presents itself. You could be the expert company on several aspects of your business. If you’re strong on accounting in small business, be the small business operator on the radio accounting show. If you’re strong on weather and tides, be the small business that sponsors the report on surf conditions.
Get decent branding – hire the best designers you can find
But be consistent. Whatever you do, be sure to build your brand with the same colours, logo etc. Do not bounce around. This doesn’t mean you shouldn’t experiment within that. One smaller client of mine found they got many more sales calls when we lightened off the blue in their logo on press ads. They seemed more approachable, less expensive.
Systemize
Track how you handle phone calls, quotes, accounting issues. Find out what works and make them formal systems. Boring but true. Try getting someone in your business you don’t like much to do it.
Plan, but not to excess
Yes you need business plans. Yes, it’s the grown up thing to do. Yes, many people from big businesses move to small ones, write a business plan and think that’s it. They go broke thinking someone else will implement it. Short, basic, easily followed, easily changed business plans are fine. Best kept to about 10 pages max.
Achieve something every day
No matter what industry, the people who succeed are the ones who get something actually completed every day.
Learn from other people’s efforts
It’s often best to copy bigger businesses when you are small. I don’t mean their branding or their business model. Although it wouldn’t do any harm to work out what you think they are doing. I mean the percentages they put aside for one issue or another. If they spend 1% on legals, put that to one side. Same with advertising and bank costs for that matter.