In my home town of Sarasota, all sorts of businesses come and go. In fact, a group of business colleagues have something they call the “Business Death Pool” in which they bet on which new business will close down next.

It is enormously challenging to have a “Main Street” business that has limited resources, huge competition, and few ways to set itself apart compared to national and international firms with much, much deeper pockets.

Michael Porter’s Competitive Forces model of strategic thinking suggests that the best businesses have power over suppliers and consumers, and operate in consolidated markets with few competitors. Unfortunately, this obvious framework (e.g., strive to have a monopoly!) is not instructive for tiny businesses.

But you can gain a leg up vs. the competition even if you aren’t Microsoft or Starbucks. Here are some ways to compete as a small business, even as a “me-too” business:

  1. Form alliances with other local business to beat the chains. In Sarasota, a group of locally owned restaurants created an association to publicize their restaurants as high quality establishments with the best produce and creativity. They also offer promotions, like special tasting menus and coupons, to encourage citizens to stay loyal. Alliances improve one’s power in the market vs. larger competitors.
  1. Develop strong customer relationships and loyalty. Larger and more impersonal companies can’t win on personal relationships. Small Main Street establishments can. Develop a set of tactics to continuously reach out to customers, thank them for their patronage, and offer them reasons to keep coming back. Make sure your employees learn your customers’ names.
  1. Get on the Internet. I was recently delighted to discover that one of our local printing shops in town has, through its Internet presence, doubled sales. Thanks to its website, even a major bottling company has become a customer, and helped the firm build a dedicated press just for them. With the Internet, every business that has a unique product and quality service can reach out into new markets – just as effectively as the big players.
  1. Have a unique and meaningful edge. Many of the businesses that go out of business or get on our Business Death Pool in Sarasota do so because there is nothing unique and better about them. The best businesses excel through any number of edges: unique marketing strategies that lock in a loyal customer base (think Tupperware and Mary Kay, or long term contracts with certain clients), a better and proprietary product, the ability to customize, unique sources of hard-to-find products, depth and breadth of experience, and local flavor that no outsider can match.
  1. Keep getting visible. Too many small businesses don’t invest enough in marketing, which starts a downward spiral of lower sales, less money to invest in marketing, lower sales, and then death. There are hundreds of low-cost ways to get visible, and every business needs to make marketing a priority.
  1. Remember the personal touches. You can do things that larger businesses can’t: handwritten notes to thank customers, special touches and enhancements for repeat customers, friendlier customer service, honoring special requests, and going the extra mile to solve a problem.
  2. Find a niche that larger chains won’t touch. Sometimes there is profit for small companies in niches that large chains won’t touch. For instance, book stores can still compete successfully vs. Borders by going deep in some area of literature or non-fiction that the big chains don’t serve. For instance, I order frequently from a book store in Texas focused exclusively on mysteries and horror. They have a much deeper selection than Borders or Amazon and provide in depth information and reviews about these genres.

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