By Bridget McCrea
In business, being able to think big is an attribute that every company aspires to, but that not all firms can necessarily put into action. One of the easiest ways to adopt a bigger-picture mindset is by looking at what your larger counterparts are doing. Are they setting up elaborate websites and sitting back as their online sales numbers grow? Are they battling the current labor shortage by offering their recruits great incentive packages and other perks? Or, are they making other moves that make you scratch your head and say, “Boy, I really wish we could do that.”
If any of the above statements resonate, then it’s time to start thinking out of the box and taking a good look around at what your larger competitors are up to. In One Underdog’s Secret To Adopting Big-Company Best Practices, for instance, Forbes contributor Mary Josephs details the struggle that small to midsized firms face on the path to growth. Namely, it’s how to use large-company strategies, technology, and management tools without negatively impacting the “lean and mean” culture that made your company successful in the first place.
In the article, Josephs tells the story of Hisco, Inc., a former mom-and-pop distributor in Houston that now employs more than 450 workers across dozens of branches. As part of its growth strategy, the company borrowed a page from its larger counterparts and set up an employee stock ownership plan (ESOP). An equity-based deferred compensation plan, an ESOP is a defined contribution plan that allows employees to become owners of stock in the company that they work for.
“Hisco workers benefit from the value they create,” Josephs writes. “And, as has been widely documented at employee stock ownership plans (or ESOPs), such companies enjoy higher productivity, less workplace friction, and the bubbling up of useful ideas.” The distributor has also adopted leading-edge supply chain, sales and marketing, and financial practices, and taken other steps to go up against the likes of larger competitors like Grainger and Fastenal.
“There is a collective determination that Hisco will be a survivor in the consolidating industry, where billions of dollars in annual sales are up for grabs,” the author states. “And Hisco, as an employee-owned, privately held company, possesses a nimbleness and willingness to change that giant, publicly-traded companies typically lack.”
If your distributorship is ready for its own dose of “collective determination,” Brian Alquist has one recommendation: start thinking big now. “If you don’t have a vision, and if you never aspire to meet goals that are bigger than what you’re currently doing, then you’ll never get there,” says Alquist, a business coach with Cleveland-based ActionCOACH, a provider of professional business coaching services catering to clients with revenues of less than $100 million.
Alquist says even the smallest distributorship can effectively steal big-company secrets and put them to use in their own operations. After all, smaller firms have to evolve, anticipate trends, and adapt over time or resign to “eventual failure,” says Alquist, who sees business planning a key success ingredient that many small to midsized firms overlook. Busy putting out daily fires and tending to what’s right in front of them, managers and leaders at these companies often don’t see the “big picture” until it’s literally staring them in the face. By then, it’s too late to take a proactive stance and, predictably, that issue or aspiration becomes nothing more than another “fire” to put out.
The “scarcity mindset” is another roadblock that holds companies back. Excuses like, “We don’t have enough employees to set up an ESOP,” or, “We can’t possibly invest $50,000 in a state-of-the-art technology upgrade this year,” for example, tend to make companies risk-averse and keep them from jumping into the pool with their larger counterparts. “Roughly 80% of small firms fail within five years because of the scarcity mindset,” says Alquist, “and because smaller entities don’t ever aspire to become something bigger.”
Breaking Through the Barriers
To break through these barriers, San Francisco-based venture capitalist and best-selling author SC Moatti says one of the first things electrical distributors need to realize is that while they may not be able to compete directly with e-tailing behemoths like Amazon, they can borrow multiple pages from their larger competitors’ playbooks. “You can’t just lower your prices and expect to be able to compete with Amazon,” says Moatti. “It just doesn’t work that way.”
Trying to outdo larger firms on the customer acquisition/marketing front probably won’t work either, unless your company has very deep pockets. A better alternative is to focus on things like customer loyalty, high-quality service, and the ability to shift gears and remain agile in even the toughest business environments. Moatti also suggests hiring one or more managers or supervisors who have worked for larger firms and that understand those companies’ challenges, goals, and strategies.
“Look for someone who wants a part-time gig or who is in-between jobs,” Moatti suggests. “This is a cost-effective way to glean some expertise from larger companies.” Finally, Moatti tells distributors to get out and attend industry conferences, sign up for webinars, and otherwise “do your homework” to find out what other, larger companies both within and outside of the electrical distribution field are up to. Then, use the knowledge learned from those experiences to start developing your own future success strategies.
4 Big Business Growth Strategies Worth Trying
In American Express’ 5 Big-Business Growth Strategies Small Business Can Use, the author outlines how small firms can leverage the power and innovation of their larger counterparts. Here are some of his tips, and you can read the full article online here.
1) Utilize market segmentation. Pick a subset of the entire marketplace that you can organize your sales efforts around. Most big businesses are good at carving out their corner of the market. Then they do whatever they can to own that space.
2) Leverage partnerships. You may not be able to “pay to play” like the Fortune 500s, but you can leverage partnerships in a savvy way.
3) Consider mergers and acquisitions. Acquisitions can be a massive source of profit and a means of growth if you make a few key moves.
4) Become a leader in your industry. Big businesses often make their name by leading an industry. Then, they make moves when other businesses sit by the wayside.
McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at firstname.lastname@example.org or visit her website at www.expertghostwriter.net.
Tagged with business, competition, ESOP, small business, tED