Small and medium-sized businesses (SMBs) employ nearly 60% of workers and account for almost 40% of national value annually, according to data from McKinsey, making them the “bedrock” of the U.S. economy. The catch? These SMBs are only 50% as productive as their enterprise-level counterparts.
But it’s not all big business crushing the little guys under their boot heels. Let’s explore four proven strategies that small companies can use to help outmaneuver industry giants:
- Mastering niche specialization
- Leveraging superior agility and speed
- Building unmatched customer relationships
- Optimizing digital presence and technology
Understanding the Competitive Landscape
The most important thing for SMBs to understand about successfully competing with large companies is that it’s not about matching them dollar for dollar. No matter the number and type of deals they make or how many customers they serve, they’ll never compete with the big guys on revenue alone.
Instead, successful competition is about picking your battles and winning where you can. For example, while enterprise deal values could be five to ten times larger than those of small businesses, their sales cycle is also much longer. A large company might take three to six months to close deals and get paid, while smaller businesses may only require two weeks to a month.
SMBs generally are also better equipped to meet customers where they are. For example, high call and email volumes can lead enterprises to leverage stock responses and formulaic answers, while small businesses excel at treating clients like individuals.
The bottom line? Success is about playing to your strengths.
Strategy 1: Master Niche Specialization
Focusing on specific markets or services helps create competitive moats — obstructions that enterprises are hard-pressed to overcome. In practice, this means finding a space where no one else is currently competing or finding a way to improve on existing products so they’re clearly superior to enterprise alternatives.
Consider Canadian cleaning company GoCleanCo. What began as a local cleaning business that took cleaning a step further than its competitors is now an online juggernaut with YouTube and Instagram pages, curated product lists on Amazon, and bespoke cleaning guides. In this case, the company stayed in the same lane but pivoted from in-home service to online advice and recommendations.
On the other end of the spectrum is Play-Doh. The classic children’s toy was originally sold as a cleaner designed to remove coal residue from wallpaper. As coal gave way to gas and oil, Play-Doh rebranded as a children’s toy, taking the market by storm because there was nothing similar available. Today, more than 3 billion cans of the brightly colored clay have been sold worldwide.
Not sure how to find and leverage your niche? Start here.
Pick a signature product or service.
First, select a signature product or service. Think specifically. For example, if your company makes shoes, start with a single model that comes in multiple colors rather than trying to sell five or six styles simultaneously.
Evaluate similar options on the market and identify differentiators.
Next, see what else is out there. Is someone selling similar shoes? If so, how do you set yourself apart? For example, you might use higher-quality materials or incorporate additional features, such as waterproofing or slip resistance.
Carry out search and keyword analysis.
With your niche in mind, see how you stack up against the competition. Search your product — for example, “waterproof shoes” — and see which companies come up first. Review their product lines and see what they’re doing that makes them similar and different from your brand.
Then, carry out keyword analysis. Use tools, such as Google’s Keyword Planner, to find keywords that describe your product but aren’t overused in your market.
Craft marketing campaigns.
Finally, build a marketing campaign around your signature product or service. Identify your target audience, including age, income, and price threshold, then sell to customers where they are. This may include social media sites, search engines, or mixed-media ads.
Strategy 2: Leverage Superior Agility and Speed
Two common SMB advantages are agility and speed. While enterprises have the edge when it comes to resources and budgets, small businesses are typically built for rapid response.
Common applications of agility and speed include:
- Market responsiveness:
Because small businesses produce fewer items, they’re usually better positioned to respond when a customer demands change. Without a warehouse full of unsellable overstock, they can focus on producing items that buyers actually want. - Product selection speed:
SMBs also have the advantage in selection speed. Enterprise purchases must go through layers of committees and approvals that take weeks or months. Meanwhile, small businesses can usually act within days to partner with new suppliers, purchase new software tools, or pinpoint new product specs. - Customer service agility:
Finally, small businesses can often respond more quickly to customer concerns or complaints and take meaningful action to resolve any issues. Instead of a generic discount offer, SMBs can work directly with customers to find satisfactory outcomes.
Strategy 3: Build Better Customer Relationships
Personalization is a priority for consumers. As noted by the Boston Consulting Group, 80% of customers want personalization.
From rapid responses and direct messages or emails to community engagement on forums and other information sites, SMBs can set themselves apart from faceless, corporate enterprise customer service lines that always seem to experience “higher than normal call volumes.”
Along with building loyalty, better connections also create switching costs for consumers. While they could move to a larger competitor and get a lower price on similar products, they’d be giving up the experience. This helps reduce the impact of price competition.
Strategy 4: Optimize Digital Presence and Technology
Digital presence can make or break your reputation. Smaller companies that have limited social media presence, a bare-bones website, and rely exclusively on word-of-mouth marketing may find themselves struggling to attract and retain customers.
Four strategies can help you improve your digital presence and make the best use of emerging technology:
1. Optimize your website.
Use free website builder tools to optimize your website for ease of navigation or ecommerce sales. For-pay tools can help expand your impact, but free tools can point you in the right direction.
2. Create a responsive social media strategy.
Whether it’s direct messages on Instagram or TikTok, posts on Facebook, or answers to form emails, speed is the key to social success. Whenever possible, ensure customers wait no longer than 24 hours for an initial response and no more than two days for a follow-up.
3. Implement cost-effective digital marketing.
Not all digital marketing is created equal. If you advertise on sites that aren’t frequented by your customer base, you’re losing money. Instead, research where your customers are most likely to be. For example, if you sell highly technical products, consider placing ads on tech forums or sites like GitHub.
4. Leverage AI tools.
Finally, make use of AI tools. According to Salesforce, 75% of SMBs are experimenting with AI to help improve customer experiences. The advent of cost-effective chatbots now makes it possible for SMBs to provide on-demand answers to user questions. As long as customers can still access real people at any time in the process, AI typically offers a net benefit.
The SMB Success Implementation Roadmap
While standing toe-to-toe with enterprises isn’t possible, smaller businesses can carve out market niches, build loyal customer bases, and stand out from the crowd by playing to their strengths.
But this doesn’t happen by accident. Instead, companies need an implementation roadmap that helps keep them on track and on budget. For example:
Step 1: Find your niche.
Timeline: Three to six months.
Resources required: Product development, market research, and keyword analysis.
Step 2: Use your agility and speed.
Timeline: Ongoing.
Resources required: Market analytics tools and customer relationship management (CRM) solutions.
Step 3: Build better relationships.
Timeline: Initially, 2-4 months, then ongoing.
Resources required: CRM tools, customer data analytics solutions, and robust data privacy policies.
Step 4: Optimize your digital presence.
Timeline: Initially, one to two months, then ongoing.
Resources required: Website builder tools, advertisement engagement and conversion trackers, and AI frameworks.
Getting the Win
They’re big — you’re fast. They’re steady — you’re clever. By relying on what sets your small business apart from enterprise operations, you’re better prepared to outmaneuver the competition.
The caveat? Small or large, you’re still a business. Make sure you have the insurance coverage you need to protect intellectual property, current inventory, and customer data. Get a quote here.