The following article was written by Tuck Aikin several decades ago about how large and small businesses play different games on the same field of play and how playing by your rules and not the others is how you survive. Some of the facts contained in the original article have become stale with time, but the message remains as true today as it was when Tuck penned them. To ensure the message continues to resonate with readers today, I took the liberty to update some of his original examples but kept the intended message intact. I hope you enjoy it.
“We’re tired. After all the years of running our business and then having these big chains come into town, it’s just too much work. We can’t compete against those guys – they’ve got unlimited money and resources, so we’re quitting. Sure hope we can find a buyer.”
These comments were reported in a recent news story announcing the sale of a decades-old Colorado Springs family business. Not a pretty picture, is it? The big corporate giant unmercifully squashing under its heal the helpless little guy, the local merchant, the one who epitomizes our American ideals of individual initiative, creativity, hard work, and a willingness to gamble everything on the ultimate prize – owning your own business, being your own boss.
Yet another victim of the big economic machine, the ‘system’ that rewards the powerful and crowds out the small and weak, right? Hold on. Let’s think this through.
If the inevitable consequence of our market-driven system is for small companies to grow into big corporations, which then crush any competitive startups, why are hundreds of thousands of new businesses begun each year? Are Americans that stupid, idealistic, or both?
Why do some of the big guys fall, like Montgomery Ward, and why do so many local businesses, such as the Mill Outlet Fabric Shop, and Spencer’s Market, continue to prosper in the face of big corporate competitors? Even Current Inc. was once a local, operate-out-of-your-garage pip-squeak competitor to corporate giant Hallmark Cards. How can this be if the big guys always win? The obvious answer is that they don’t, that the small entrepreneur can be a very wily competitor indeed. So how does he do it?
First of all, and most importantly, the small operator realizes that the marketplace changes constantly. What once satisfied a customer wants or needs no longer does. Customer tastes shift, innovation in manufacturing, service delivery, distribution, and cost/price all contribute to the constant displacement of the old for the new.
The successful small businessperson watches like a hawk the market he serves as well as those that influence his market. When a competitor or an innovation gets the attention of his customers, the entrepreneur “tweaks” his business formula, sometimes exposing himself to much greater risk than he’d like, but he does it anyway, and he does it constantly. He knows that complacency threatens survival.
Secondly, the small business owner focuses almost obsessively on individual customer service and on extensive knowledge of his product or service, something he knows the big boys can’t or won’t provide.
Large corporations invariably build bureaucracies comprised of narrow specialists with the objective of improving competency, but in the process, they sacrifice responsiveness to customer needs and promptness in delivery. Even standard customer requests have to be referred “up the line” for an answer or approval. Time is money, and most buyers are willing to pay more for good service and prompt, knowledgeable, reliable assistance.
Years in advance of an expected corporate assault into our local marketplace, which we dominated, our company chose not to attempt to compete on price (which we couldn’t do) but instead developed a highly knowledgeable and responsive sales force and the data products and services to support it. After about a year and a half, our $5 billion competitor withdrew. Yes, you can compete with the elephants!
Another strategy successful small business owners utilize is to be fast afoot, to serve market niches the big companies neglect or disregard, or just don’t see because the decision makers are too far removed from “the field” where all the market signals are located. Corporate politics are well known, and ladder climbers are always looking to make a big impression and a big “score.” Corporate executives are not interested in the small stuff – stuff, by the way, that often becomes very big.
Who thought hamburger stands or specialty bagel shops or coffee shops or trash removal services would be listed on the New York Stock exchange? The key here is to be where the large businesses aren’t.
Entrepreneurs only try to compete head-on, product for product, service for service, price for price, if they have no other choice. With imagination and determination, however, that’s almost never the case.
So, what do you think? Is our local “forced out of business” really the victim of an overpowering corporate force, or is their plight the consequence of their own failure to maintain the entrepreneurial spirit? No one with experience ever said operating your own business is easy!
Tuck Aikin was a former SCORE colleague of mine for many years until his retirement. Tuck is a prolific writer and wrote small business-themed articles for the Colorado Springs Gazette for many years. As a co-mentor, Tuck was my inspiration for me starting this blog. The preceding post is reproduced with permission from the author.
