Small business owner looking to grow her small business.(AP Photo/David J. Phillip)
It used to be that big business had its marketplace and small business had their marketplace and rarely did the two cross over. Now with technology, online ecommerce and direct to consumer, everyone is potentially competing with everyone. Casper is displacing small business mattress firms, Warby Parker is hitting the local optometrist hard and Intuit TurboTax is disrupting small tax service and accountancy firms. It looks tough out there for the small business environment.
The good news? Small businesses are an important and growing driver of U.S. economic growth and dynamism. They employ over half of America’s private sector workers, produce over half of America’s non-farm private GDP, and create roughly 75% of new private sector jobs. The next decade will see the growth of small business continue, and the social and economic impacts of small business will increase. The bad news?
According to statistics published in 2019 by the Small Business Administration (SBA), about twenty percent of business startups fail in the first year. About half succumb to business failure within five years. By year 10, only about 33% survive. So, you need to hedge your bests and be in the latter group and not only survive, but thrive. If you have a legacy business like a local paint, hardware or bookstore, you need to completely rethink your strategy for survival and growth.
It’s not enough to just deliver what you delivered last year. You need to constantly be progressing your business and looking at everything you are doing through your customer and prospect eyes. All while keeping your eye on competitors. One thing you just have to accept. There is no normal anymore. You can be just as easily be disrupted by a large corporation as you can by two people and dog working out of a converted garage who land VC funding.
In order for you to understand what to focus on and perhaps where to start, review the following below for takeaways so that you can evolve and grow.
Disruption is the new normal. No mater your business, you have to assume that at some point, it will be disrupted by a trend, technology, consumer or a competitor. So, before that happens, pay attention to what your current or future customer will need and begin to test or offer that service or product now. In other words, disrupt yourself before someone else does.
Niche expertise becomes more important. As ecommerce and services become more competitive, you will need your product or service to have specific capabilities or expertise. Perhaps it caters to a narrower but growing customer base or perhaps it’s drill bits coated with a certain coating that makes them so much better than the competition. Instead of regular tax or accountancy advice, perhaps it’s services related to the coming transfer of wealth from baby boomers to their Gen X or Millennial children.
Remote work. With competition comes higher costs. Rather than expanding your company’s physical footprint, and costs, consider remote workers. You can acquire a talented employee without the resulting overhead expenses. You might also have a better chance at recruiting a person with a special expertise than you might find in your local city.
Data analytics are becoming critical. In the 1800’s, early prospectors might have said “there is gold in them thar hills.” Today, the gold is in the data your company generates or the data you can acquire to better understand your customer. How do you know what to offer your customers next if you don’t really know what problems the customer is really trying to solve? It costs five times as much to conquest a new customer as opposed to an existing one and if you can attain 60% customer loyalty rates, that is more than 50% of your revenue year over year with no additional marketing expense. Track and actually analyze your data in order to make better decision on current and future products and services.
Automation/outsourcing of redundant tasks. Review your current business and assess exactly what every employee is working on. How much of your employee’s time is spent on redundancy or repeating their tasks each week? Outsource or automate those tasks and have the employees focus on increasing your current customer service levels or generating new sales.
Population is aging. Okay, this is a wildcard but it is also a large population group. The reason aging population is on this list is that our aging population represents a very large opportunity over the next 15 years as the 70 million baby boomers currently hold tremendous financial and real estate wealth. And baby boomers will spend their wealth trying to live an amazing life as they try and avoid death. Analyze the research data on this group and determine if you could offer them a product or service they would be willing to pay for in hopes of achieving their goals.