If you run a growing small business, there is a good chance you are facing one or all of these challenges. We picked the brains of some small business experts to help you find a way to overcome them.
- You are slow getting to market with your product or service.
One big mistake newer companies often make is that they think they have to perfect their product or service before launching with it. In many cases, that’s the wrong strategy. Often, it’s better to get your product out there in an initial state and use it to test the market before you put in too much time and expense into a single direction.
“Provide a prototype, or MVP (Minimal Viable Product), as soon as possible and get it out with customers, even though it doesn’t have all the bells and whistles. I think it is important to test whether the market accepts it — whether there are real customers for that,” said Ricardo Newark, a consultant with Florida SBDC at FIU, the small business development center within FIU’s College of Business, who advises a number of small businesses.
“You need to make sure it is viable and sellable before you spend too much money on what you believe the customer wants,” he said.
Ricardo Weisz agrees. As an SBDC at FIU consultant who also advises startup companies as well as companies further along, Weisz sees a lot of business plans that lack a sensible go-to-market strategy.
“The team spends a lot of time figuring out the product but they are unable to connect the dots between the product and market. It’s always a challenge and it takes a lot of time and effort to work with the teams to make that happen,” he said.
Weisz suggests the company makes sure that it has industry expertise on the team. If it doesn’t, Weisz advises the founders to seek out people who have that market experience that can help make that bridge between the product and the market. He is currently working with a few businesses that have industry expertise on their management teams and they are excelling because of it.
Although small companies struggle on how they will pay for that expertise, Weisz said, look at the alternative: “Time is money and if you don’t have that expertise in house your learning curve is just too long.”
A good go-to-market strategy includes understanding about how the product or service gets distributed in the marketplace, who the main competitors are and having a good pricing strategy. Weisz said a solid go-to-market plan should include understanding the decision-making process on the buyer side.
“A lot of these companies underestimate the importance of a go-to-market strategy. They are too focused on social media. Social media alone is not going to do it.”
The next two challenges are important to overcome before you can execute on your go-to-market strategy.
- You don’t understand your true competitive advantage. Hint: It’s not always what you think it is.
Fill in the blank: “Buy my product or service because ___” In reality, often competitors can solve that need that you filled in, Newark said. “And if the companies say they don’t have competition they have probably not done a deep dive.”
Everyone starts a business thinking they have something unique and that is not always the case. The way to define your company is by your competitive advantage, but that is often not a unique product or service, our experts said.
A company needs to know what their true competitive advantage is – and then be able to articulate the message “why me and not someone else” to the marketplace. Newark says he helps companies through this with a process, and it starts with being able to answer these questions.
Is the product quality the advantage or is it the price? Is the distribution the highlight or the availability? Maybe it’s the customer service? What is it that will attract people? More features? A lower price? More availability? Does it last longer or have a better warranty? Does it dovetail with other products? Do you provide service that is different from competitors?
Once you can answer these questions, you can articulate what your competitive advantage is.
This understanding of your true competitive advantage is most critical when your company is at the point of expansion.
Weisz adds this caution: “A lot of startups have only minor differences with other products in the marketplace. It’s just a different flavor or vanilla, so to speak. They will say ‘yes, but mine has this feature’ but it is not enough to differentiate themselves in the marketplace. That happens because they don’t spend the time researching.”
He’s seen it before, lots of times: Startup companies spend thousands of dollars building a platform without first doing the research on the marketplace. “They need to understand what they are bringing to the table. What will get you to the end game is not the technology development but your traction.”
Weisz suggests rather than spending precious time and money developing technology, it is better to go out there and test the market first with readily available technology. Find a low tech, low cost way of testing it with the market.
Weisz also said to remember that product differentiation comes in many flavors. Providing great customer service could be your differentiator. For example, think about how Chewy’s business model was not unique – selling products on the internet – but the intense focus on 24/7 customer was. Chewy took a page from the Zappos playbook.
Ryan Cohen, the former founder and CEO of Chewy.com who sold it to PetSmart in 2017, in an earlier interview that he started Chewy in 2011 to replicate the same great customer experience of a neighborhood store, but online, and confirmed he used Zappos as a model and inspiration.
Customer service was Chewy’s differentiator, Cohen said. The company famously sends out millions of hand-written holiday cards to customers and has a whole department dedicated to that. Before the sale, Cohen expressed the importance of his differentiator this way: “We are 100 percent customer obsessed. We want them to feel as though they would never dream of shopping anywhere else.”
Now that you understand your competitive advantage, where do you you’re your customers? That’s challenge No. 3.
- You don’t take enough time to analyze who your customers really are.
“Once you have the competitive advantage, the next question to ask is who are the customers who appreciate this competitive advantage? Who are they and how do I reach them?” Newark said.
In general, many companies don’t take the time to gather and analyze their customer data to really understand who their customers are. That’s the first step to figuring out how best to reach them.
“We [SBDC at FIU] can help them with their market research — we have a lot of resources and we have access to very rich databases,” Newark said. “With the databases, you can really pinpoint to a specific universe of people. But to do the search you have to define what you are looking for.”
Step one is to gather information about who’s buying. As you are transacting business, gather as much information as you can about those customers. That lets you figure out the profile of the people who like your product or service. Then market research will help you know where to find more people within that profile.
Do you have other strategies for meeting these challenges head on? Share them with us.
READ MORE ON GROWBIZ: If you really know your customer, your differentiation strategy comes into focus.