Why
Size
Doesn't Count ...
How to make
your small business seem bigger
Perception
is not everything, but in the world of business, it is certainly
vitally important. You are competing in a marketplace where
the big are most likely to grow bigger and thrive while
the smaller enterprises too often struggle to survive. The
high casualty rate for start-up businesses says it all.
Your
business may offer goods or services superior to the big players,
but who's to know if you can't afford to advertise or compete
by providing the optimum customer service and minimising costs.
You may enjoy being the owner of a small and potentially perfectly
formed business, but you have to admit the big guys have advantages.
The trick is to behave like a big guy while retaining the
benefits of staying in your niche.
The
most empowering tactic for very small businesses is the strategic
alliance. Getting together with a number of like or complimentary
businesses can enhance your performance.
When
facing a sudden rush of orders a small business may be strapped
to deliver on volumes and deadlines that they cannot handle
themselves. Their options then are to outsource or contract
the assistance to ensure that they can perform at that level.
If a strategic alliance is operating they can call on another
member of the group to help out.
They
can also use the alliance to add critical mass to their buying
power, and to share the cost of advertising. Four upscale
bathroom products retailers and designers from four capital
cities have recently done just that, with promising results.
The retailers - Christiaan's of Brisbane, Candana Designs
of Sydney, M Design of Canberra and The Bathroom Gallery of
Perth - formed The Clear Solutions Group early this year to
serve their common interests.
"The
four of us had been meeting over a number of years at suppliers
and industry events," says Chris Stevens of Christiaan's.
"We're all at the top end of the market, offering services
and products to architects and interior designers. As small
businesses, I felt we were getting increasingly isolated.
We realised a lot of our interests were the same and we'd
benefit from sharing knowledge and arrangements, instead of
regarding each other as competitors."
A legal
agreement to incorporate the group, while leaving the businesses
separate, was drawn up. This specifies the terms of the alliance,
including what would happen in the case of a business being
sold. A logo was also created.
As
a group, the businesses have gained status with suppliers
who now are more willing to offer them exclusivity on some
products. "Often we were the ones who gave credibility to
a new design In fact, we were the trendsetters," insists Chris,
"but then due to the large volume orders suppliers would switch
to the chain stores. This way we have more political power."
In some instances, due to the distibution across several states,
now manufacturers will make products to The Clear Solutions
Group's specifications. The group has just launched at exclusive
range of tapware.
"One
of the problems for us was the cost of national advertising
in glossy interiors and design magazines. While we were paying
national rates, individually we only needed to advertise in
our home states. This way we split the costs." Mimmi Croser
of M Design in the ACT says this aspect proved particularly
attractive to her when discussions of forming the group began.
She had previously been forced to discount advertising in
the leading interiors magazine at a cost of $8-9000 a time
as too higher cost for her smaller market.
Group
members meet quarterly to exchange ideas and solutions. Whoever
hosts the meeting is responsible for the agenda which includes
presenting new products. So now all four do not necessarily
have to meet with suppliers, although each business still
retains unique or specialist products and services that may
not be offered by the others.
As
each outlet has been established for its high level of expertise
and quality goods and services, Chris says they are mindful
of the danger in commonality with a strategic alliance. "You
have to be careful you don't become average. We want to be
industry leaders, not just retailers," he says. "The other
danger in being a group is in being considered an information
centre when you are first and foremost a sales organisation
that has to make profits." See below ...
Chris
Steven's tips
| Thinking
of getting together with a group of businesses to form
a strategic alliance? Then, consider:
1.
Are you compatible?. You're looking for like businesses,
and it helps if you're like minded too. That goes
not only for issues of personal taste and business
styles, but in ethics as well.
2.
Suppliers/customers in common. You need to source
your products from the same places or be targeting
the same market. Your alliance may be with others
in the supply chain. You must be prepared to abide
by the group decision. Sounds easy, but remember small
business owners tend to be rugged individuals.
3.
Be prepared to budget ahead for marketing and advertising.
You'll need to plan.
4.
Be sure to have a contract drawn up that specifies
responsibilities and procedures - and a carefully
worded get-out clause.
|
This is an edited
excerpt from August My Business Success
