How to compete with business much larger than your small business?

by Ashvini on March 11, 2011 · 2 comments

in Entrepreneurship

Every small enterprise is scared of one thing the most. “Competing against a larger competitor and surviving”. Large corporation have huge amount of marketing and execution machinery which can be effectively deployed to destroy a smaller business. Most of the small enterprises simply submit in the face of the onslaught from much larger competitors.

Competing with larger business

There are hundreds of stories that you can find where big large organizations have successfully closed down their much smaller rivals, competing for the same business. The size and power of large organization make sure that make small business unsustainable.

As an entrepreneur, it is always a case that someone start small with minimal resources at hand and in absolutely in no position to take on a large competitor. An entrepreneur starts with an idea and starts competing with the other businesses. Soon she realizes that it is impossible to win against them.

So is there a way for small businesses to survive. From the history, you can learn that they have not only survived but sometimes caused extinction of giants and their businesses.

If you are in the process of starting business, you have to be extremely aware of the fact whether you are competing with a larger business. Once you know that use following strategies to compete with them.

  1. A larger business will compete fiercely if its business is directly affected

  2. In case you are directly competing with a business, expect a fierce response. No one likes anyone else to take their business. A large business will do everything that is possible to destroy your business away. They will cut down the prices, upgrade the features or simply bully the retailers not to stock your items. It is not a good idea to take large customer head on unless you have enough muscle power yourself.

  3. Your product should remain under the radar of the large businesses

  4. Most of the times, large businesses are too busy managing their own operations to notice a small change in business conditions. Large businesses will laugh at small competitors and their products and are not too much worried about them. If you can put your products at those segments or areas where large competitor is absent or does not care about, you have much better chance of success.

    For e.g. if your product is a ketchup that competes directly with ketchup producing giants, you are in trouble. They will make sure that you are wiped off from the market. To avoid such a situation, create a new category for e.g. ketchup with a special flavour. Since you are not competing with them now, they do not notice you. If possible give your ketchup a different, unique name(that is not ketchup). This will make sure that you are outside their sales radar.

    In the ancient story of David Vs Goliath, David always remained far away from the weapon of Goliath, till he got the shot and killed Goliath.

  5. Consolidate and avoid temptation of expansion

  6. It is terribly exciting to win larger areas than to make win smaller ones. If by stroke of luck or effort, your product is successful against a larger competitor in certain places, you are tempted to try your luck again at its strongholds. So instead of consolidating and dominating your area, now you start spreading out making yourself vulnerable. This is a mistake and might give your larger competitor enough time to strike right at your dominating position. If you have won a fight, make it your stronghold first.

  7. Compete in a smaller area, product line or region

  8. This is natural as it is better to concentrate your resources on a much much narrower front than the larger one. If you can find smaller areas to win, conquer them first. Till you achieve the scale to take over the giants, the best bet is to compete in as smaller segment as possible. It is best however, in earlier stages not to compete at all.

  9. Strike at the weakness of competition

  10. If you have decided to take competition head on eventually, it is a good idea to do an analysis first. Try to find out where the strengths and weakness of a competitor are . For e.g. if your competitor delivers highly complex software which cause enormous headache to customers, you can start by providing them easier to user, less complex software. Note that it is does not mean you take on competitor feature by feature. You might not win in that case. Try to find out the weakness and exploit them for your advantage.

  11. Create partnership and alliances

  12. Nobody has won against competition alone. Alliances and partnerships are essential to winning the market. Involve all your partners in your success. One of the company in India, TALLY has succeeded in Indian market leveraging its huge channel of partners who share a good amount of revenue that the company makes. It has been able to fend off competition from giants just because of partnership and alliances with its dealers.

  13. Create a great user experience and show the value

  14. Big companies rarely give much heed to customer needs. Most of the time , it is like “I have got this and you will have to use this”. In my experience a hapless customer is often forced to choose a complex, difficult product. Many time customer is looking for an escape route. If you can remove complexity , provide a much user friendly product and show the value, it could turn things in your way.

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Veronica Cervera December 18, 2011 at 1:52 pm

Seems very difficult, but possible. For small business and new entrepreneurs, it may be important to focus on making the product or service as good as possible while continuing to dream about defeating the big players. In my view, competing should be set as a long term goal.

Aswani March 14, 2011 at 3:28 pm

Ashvini, brilliant points shared. Talking in terms of our business, we do have a strong niche here and it is paying us well. It was much better few years back but now, we have more players competing with us in the same niche. Many new small players have entered but anyways, we have been able to keep our market strong and profiting mainly by following your 6th point. We do have a strong alliance and partnerships and we have making it better and better in recent times.

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