There’s a wide gulf between how a small retail business and national chain thinks, plans, and operates. While many tactics and strategies either work for a national chain or small retail business – but not both, here are 5 lessons we can learn from the “big-guys.”
For many local retailers, enjoying the lifestyle of running a small retail business, having a good income, and just keeping things simple is for them. They’ve made it. They’ve achieved their goals. But for others, those of us who have bigger plans, we aim to turn small enterprises into household names.
If you’re looking to grow, these 5 these retail lessons can help you grow your small retail business into a major force in your market.
1. Add Revenue Channels.
Simply put, you need to diversify. Focusing entirely on a single product is a great way to manage a streamlined startup operation and keep a strong grip on production, delivery, and service. On the other hand, the potential for business growth is limited to the market for that vertical line. Adding a new revenue stream opens a whole new avenue for growth. Once your primary product line is selling well and your critical margins make sense, you can allow yourself to increase your range of focus, without spreading your time, energy, and financial resources too thin.
Launching a new product or service line can broaden your customer base and increase your repeat business. Think about how you’ll scale your systems to accommodate the added operations and what resources you’ll need in order to scale to a level that will deliver a return on the investment that makes the addition worth the effort.
Think about how well the new channel fits your team’s core competencies, mission, and growth goals. Consider industry-wide and larger economic factors of adding such a channel as well, to see whether the add makes sense in the broader scheme of your decision-making environment.
2. Partner your Small Retail Business with a Larger Business
Grow by partnering. Hop aboard an already fast-moving train. Take advantage of the opportunities for rapid growth by partnering with a bigger, more established, better-positioned company. A bigger company has the resources necessary for your growth, like production facilities, a functioning supply chain, hard-won distribution channels, a wealth of expertise, and so on.
Sure, it can be challenging to negotiate with prospective partners. But, many can see the enormous potential benefits to their own profit margins and goals for growth by partnering with another business that comes with an established customer base and its own infrastructure.
So, weigh the pros and cons of working with each prospective partner business. Choosing a partner company with products or services similar to yours generates synergies in knowledge, creative collaboration, and productive force. It also establishes an effectively merged customer base.
Some associates of your business might present organic partnering opportunities. You might be able to subsume a partner’s business under your own company’s name and use existing assets to provide lease space for the qualified prospective partner(s). For example, you may be able to parlay some business relationships into partnerships by bringing supply chain vendors, delivery services, or product insurance services in-house.
3. Commit to a Niche.
While this goes against lesson #1 to diversify, if you run a broad or generic retail business you could serve a narrow market. Choose a niche market with a need you can serve, and make it your mission to fill that void. Let larger competitors spread their efforts across the broader range of market demographics. Your enterprise has the greater appeal of being a small business, enabling you to focus on more specific markets, offering them a more effective solution and a richer customer experience.
While your competitor is planning and investing based on trends across wide-range sales data, you can precisely see what niche customers really want most. By dismissing the notion of trying to have it all, and committing your business to serving a smaller target market whose interests typically get too little attention from big companies, you’re in a better position to meet their needs.
A niche market, by definition, has very specific needs, which makes it much simpler to more sharply define and optimize your offering. That’s much more difficult to do when striving to meet the more generalized needs of a much broader market. The latter spreads your resources thinner and keeps you struggling head-to-head with the biggest companies in your industry before you’re ready.
After your niche customers grow to trust in your consistency, they’ll help you in your marketing to related consumer groups. As you build trust in additional niches, eventually you can rival your largest competitors, and you’ll have established your niches as your collective loyal customer base.
4. Offer a New Idea.
Innovate. Of course, we all set out to innovate, but how often are innovative approaches actually taken to market? So be the one to take on the risk of introducing a new way or a new thing. One great thing about being a small retail business owner is that you have natural agility that big organizational systems simply cannot allow. For all their surface-level commitments to agile, protocols in large companies more typically require mountains of red tape to put the financial and formal supports in place for pursuit of an innovative process. With a relatively small team and far fewer obstacles, a small business can create, plan, iterate, and ultimately roll out market-disrupting changes much faster — a winning competitive advantage.
A small retail business doesn’t usually have the wherewithal to launch large, complex, expensive innovations, but you don’t really need to do so. You don’t have to announce some revolutionary technology to disrupt the market. Your growth through innovation can simply be from offering a new and better way of producing something, that your market will appreciate. It could be a new way of doing marketing, sales, customer service, fulfillment, packaging, shipping, or any other process.
5. Merge or Acquire.
As your business grows, you will likely discover that it is becoming increasingly attractive to other companies seeking growth by merger with, or acquisition by another business. When the timing is right, shifting into this position can represent an exciting opportunity for your company to grow very rapidly.
Merging with, or acquiring a competitor or a related business means that your new sister or child entity, including its products, locations, and workers all become part of your company. Financing may become necessary to achieve growth by acquisition, however taking on some debt can be well worth the gains in acquiring an additional revenue and profit generator.
As You Grow Your Small Retail Business
Big businesses have big resources. To small local retailers, it can seem impossible to compete in your market. But, as we’ve discussed, there are important advantages that a small retail business has over larger competitors. To expand your company, you’ll need to capitalize on those. You’ll also need to do a few other things to support your growth plan:
Maintain Cash Flow. — Growth can drain cash flow, a problem that causes many businesses to fail while trying to grow. Make sure you have a healthy cash flow, going into your expansion effort. Monitor cash flow carefully during execution of your growth plans. Consider a small business loan, if needed.
Prioritize the Team. — Accepting that you can’t do it all is fundamental to growing your business. Lots of great employees enjoy working for smaller organizations. So, you can hire just as well as your bigger competitors can. Employees make or break a business, so of course, the caliber of workers you bring in is the measure of your own potential to become a big success.
Build in Scalability. — Understanding your small niche very well allows you to start thinking about other niches you can start serving. So, plan for growth by making your small business scalable as you go along. Invest in good tools and equipment, instead of in machinery that will have to be replaced frequently.
Reinvest in the Business. — It might be tempting to reward yourself big for your hard work. But, ask yourself if the money would be better spent on building inventory, hiring talent, improving your website, training, etc., for potentially much greater rewards in the future.
Make the Most of Social Media. — Social media is the game-changer. Make it work for your business. Be inspired by your competitors’ examples. Get help to make it look professional, if needed. Build a following. Connect with your audience. It’s most meaningful when the owner of the company is the one engaging with customers on social media. Your appreciative audience will sell and influence for you.
Harness the Power of Video. — Vision is the sense we most depend on, so it’s no mystery that video is the most used content on social sites. Publish some sleek video with emotional appeal. Find some video tools that are easy to use, and let consumer video marketing social media engage your audience.
Be Obsessed with Customer Service. — Exceptional service is the most important thing any business can offer in contrast with competitors. Being a small retail business means you have a big opportunity to build a more personal, stronger rapport with your customers. People want more than results. They want a great customer experience. It’s the primary way great companies distinguish themselves and build their brands.
Let’s bring this home.
There’s more than one way to grow your small business into a big one. Get some advice from knowledgeable people around you, like your local SBA advisor, business lenders, family members and friends. Whichever route you choose toward growth, of course, ultimately you’ll need to trust your own judgment. And, you’ll have to accept calculated risk with the same kind of courage you proved to have when you started your business in the first place. Doing those two latter things seems obvious, but they can be the biggest challenges when you’re putting a lot on the line.
Going even further back to basics, it bears repeating that however big you get, the priority must be to guard against losing sight of what made you great when you were still small. Remember when you took the time to deal directly with your customers, to really let them know that you heard and understood their needs, desires and concerns.
Helping people and letting them know their business is appreciated will always be the most sustainable business growth methodology. It’s the passive marketing engine that generates word-of-mouth marketing, the most powerful of all forces for sustained business growth. The decisive effects of customer support on business growth pervade all five methods of scaling suggested above as well as any other efforts toward success in business.