viernes, 9 de marzo de 2007

Revenge of the little guy

For a while it seemed that the small mom and pop businesses were doomed and that there was no way for them to survive the Wal-Marts coming into the neighborhood, with their economies of scale and rock bottom prices. But now it seems that there is still a chance for these smaller places to survive. Small won't replace big, of course, but small will add up to considerable new competition. And that is because small can now succeed. The little guy now has in his quiver customer service and loyalty, niches, the drive to succeed, and flexibility to fight back.
The increase in big conglomerates like Wal-Mart increases people’s desire for more personal service. And with the increase of available technology and the decrease in cost of running business; the revenue you need to be successful thus declines, so more people are willing to fit the roll of the small personal business. This is a new definition of value built on trust. In the person-to-person marketplace the internet enables, you do business and converse with those you trust. Small businesses value that trust and earn it. They greet you by name, tell the truth in their blog and answer your emails personally. The small guys will win because everyone is getting sick of not being treated like a human. The small guys are banking on customer service and loyalty.
The increase in niche markets due to the internet also causes the tastes of consumers to be more wide spread. When you buy something off of or rent a movie from Netflix you get recommendations of other products that might interest you, pushing you further down the sub-genre pipe and off the beaten path. As Chris Anderson puts is, “The compromises necessary to make something appeal to everyone mean that it will almost certainly appeal perfectly to anyone. It is the paradox of plenty; walk into Wal-Mart and it looks like there is so much choice, but look a little closer and the thinness is revealed. They carry a little something for everyone and therefore don’t have anything particularly perfect for anyone.” People’s tastes are now out growing what they can find at Wal-Mart. The small guys will win because they supply the more niched-based variety that is in demand.
There is no loyalty from employer to employee and there is also no loyalty from employee to employer. In the business world today you can anticipate changing jobs at least 5 times in your professional life time. We'll see more and more people trying to make it on their own now that more and more can. The small guys will win because they have the drive to win and innovate, because they realize that they can’t rely on their day jobs to support them anymore.
The smaller companies create a way for the founder to make a far greater percentage of the interactions with the customer; meaning that he is closer to the decisions that matter and can make them quickly. When a big conglomerate wants to change something they have to invest in new products and new staff. The executives don’t want to spend time raising projects; things need to be big to compete for attention and pay for the big infrastructure and new equals risk. So new things don’t start. Being small is very important as the ability to change with the fast paced world of today means having the flexibility to change the business model when your competition changes theirs.
Even with all these advantages I’m still a little skeptical that the small company can endure against the big guys. Any more ideas about how the little guy can survive that I have left out?

1 comentario:

Marc Jorgensen dijo...

Zach- you are the champion of this whole small business stick it to the man type thinking. The best way to beat the big man-Four Words- Customer Loyalty and Competitive Prices.

Hey I got an idea you could change the voice into a conglomerate of blogs. You could manage a host of blogs and people pay you $3 a month to have it on there, and you could charge $19 a week for a business to advertise on there with links and directions to there store!! The Voice blog- you would have to achieve high traffic-