Small businesses have to face intense competition from two quarters – other small businesses and the big players in the niche. There are some 28 million small businesses in the US alone, which are vying for customer attention. This in itself is a huge challenge to overcome, but at the same time they also have to deal with numerous problems that crop up at different times in the business lifecycle; if left unsorted they have the potential to stall growth.
This is something small businesses, especially products based businesses, cannot afford; their success depends on growing sales figures. They might not have a buffer time that helps them cope with stagnating or decreasing sales. They must make it a point to deal with these problems in real time so that they don’t impact their sales figures in any way or form.
Some of these problems might not look very serious at first glance, but if allowed to fester, they can result in some serious complications. Let’s take a closer look at three of them:
1. Finding Qualified People
As a small business owner you will need to find people who are as passionate about your business and its products as you are. They need to feel invested in the whole process of product research, development and sales. Finding such people is a challenge because people with the right kind of experience, expertise and attitude don’t come cheap. Small businesses cannot get round the fact that they need to pay for talent. But the problem is their overheads. You need to control those too.
This presents a conundrum, which can only be solved through innovative thinking while hiring. For e.g. if you have zeroed in on a candidate who you believe perfectly fits a role in your organization, but is currently located in a different City and is demanding a pay hike to move to your city, why not offer this candidate the chance to work remotely? This way you can keep the salary in check and make it sound like you are giving the potential employee a huge benefit. A win-win situation for you!
This will also free up some much needed office space that can be used for other activities/employees.
Creative Recruiting: 7 Innovative Ways to Land your Dream Hire is a must read for small businesses who want to implement inventive hiring practices to get their hands on the right workforce.
2. Inability to Offer Competitive Prices
37% of small business owners believe offering competitive prices to target customers is one of the biggest challenges they face while competing with big businesses. For products-based businesses it is a mission critical task to price their products right. As a small business, there is absolutely no doubt you will find it difficult to compete with larger businesses on the price front, because they can afford to price their products cheap. You might not be able to do that?
So, look for the next best option.
- Go for Unique Product Positioning
Don’t position the product in the same bracket as your competition. Make it very clear that your product has certain differentiations that demand a higher price. If you offer such differentiators, there is a very good chance customers will ignore the fact that your product is priced a little higher than that of your competitors.
- Give Customers Something Extra
Customers won’t mind paying a little extra for a product, if they think they are getting something extra from your product. It could be an add-on feature, or a discount on another product, an extended maintenance contract or a free gift. Adding additional value to your product will help you price your product a little higher and get away with it.
- Testing Price
Everything said and done, the best way of knowing the best price for your product is conducting a split test. Ideally you must test these prices on real customers. If you own an online business why not create landing pages for different prices points and keep track of which landing pages experience better conversions. This means you don’t work out a product price out of thin air and you are also fairly sure that the pricing structure you’ve zeroed in on will work for you.
3. Lack of Sales
Even the most successful small businesses say, “Yes we are doing well, but we could do much better”. When they say this, they usually mean, yes our sales are good, but we want more of them. But the problem is that many small businesses do not have the ability to scale their inbuilt process to keep in-step with growing sales. For e.g. more sales means more orders, which means the department processing these orders needs to be scaled up, and this can increase the overheads.
What’s the solution?
The solution lies in technology. The implementation of the right technological solution will not only allow small products based businesses to explore new sales channels for boosting top line growth, but also align sales activities with the front and back-end process for streamlining business operations.
Facilitating Exponential Growth is a Continuous Process
While sorting out these three problems will definitely help you improve your growth figures in more ways than one, what needs to be understood is that trying to achieve this growth is a continuous process. A start-stop-start approach will deliver diminishing returns. At the same time, you need to keep putting a plan in place for addressing the vagaries of the market. You never know when your business will have to face an economic downturn. This is one challenge that you might find difficult to overcome, but if your business has been positioned to address the challenges stemming from such downturns, you will be able to ride out the storm.
What you need to do is keep adding sales channels to your business and subscribe to a scalable business model. At the same time, you need to keep improving the reputation and credibility of your business, so that it becomes the first choice of customers looking for the kind of products you are selling. This ensures your business can ride out any and every downturn.
There is no end to the number of challenges that a small business will have to face in order to remain competitive. The one extremely potent weapon it has in its armory is its flexibility. Its small size ensures it can quickly adapt to the changing needs of its target customers and the market in general. This advantage needs to be exploited to the hilt, if it needs to compete with the big boys of the niche.Tags: Product Business, Sales Channels, Sales Strategy