For a startup or a medium business company, it is always an uphill task to beat big companies. There are many big companies who have learned to adapt and survive in difficult business environments. This has made them almost immune to any form of competition. The big competitors have achieved a sustainable competitive advantage over its competitors and this is what makes small and medium businesses difficult to compete with big competitors. Here are some challenges that you may face to beat big companies.
The first and the most obvious reason it is difficult to beat big companies are because they have the vast resources. Resources can be in the form of financial resources, physical resources or human resources. The financial resources include surplus profits, huge investments in the form of share capital. The physical resources include land, infrastructure, technology and others. The human resource would include the manpower available. In the case of small companies, they have a limited amount of resources. Therefore, they need to spend wisely and cannot afford to waste such resources. Moreover, they find it difficult to attract the skilled talent due to a number of factors. Some of the factors include less salary package, lack of growth opportunity and lack of job security.
At Acuity, the employee work culture is amazing. “Have fun” is a core aspect of their work culture. They have ping-pong tables, popcorn machine outside the cafeteria, summer family picnics, an adult casino and many other employee engagement activities. The employee’s salaries stand at an average of $16K above the industry standards. Onsite fitness center and discounted gym membership are some of the perquisites provided to employees. All of these factors ensure that the right employees are retained and more employees are attracted to the company. Small businesses lack all the resources to provide such benefits to the employees and retain them.
2. Brand Image
The brand image plays an important role to beat the competition. When a company, with a good brand, comes up with a new product in the market, it is easily accepted by the market. This is because the consumers perceive the product to be as good as the company. In the case of a lesser known company, it will require effective marketing activities and large investments to persuade consumers to buy the product. Therefore, it becomes difficult for lesser known or small companies to compete with big competitors. Moreover, due to the brand image, it is easier for big companies to receive economies of scale. The creditors provide raw materials at discounted rate due to the huge volume of order or because of the brand image. The creditors are assured that there won’t be any problem of default on part of the big companies. They may also extend the credit period for the big companies. These factors give an added advantage to big companies over others.
3. Consumer Base
The most important asset for any company is the consumer base. Big companies have a strong and loyal consumer base. Just as they try to retain and maintain their existing employees, similarly, they look after their consumer needs. New product development, modification of existing products, or customization of products are some ways to continuously keep their consumers from switching to competitors. Small companies find it difficult to come up with a newer version of their product on a regular basis to beat big companies. Furthermore, companies like Apple, have achieved brand resonance which is the highest level of brand development. As a result, they have a dominant consumer base in the market.
4. Multiple Products
Big companies have their businesses diversified into various industries. As a result, they have multiple products to increase their bottom line. When it comes to small companies, they deal in few products. In case the market condition is not favorable for the product’s growth, the small companies suffer losses. Moreover, if it is their core product from where maximum revenue was generated for the company, then it may also result in winding off the company operations. Thus, they may find it difficult to survive and beat the competition. Big companies have the cushion of relying on other products if one product fails in the market. Additionally, if the entire industry is facing instability, still the big companies are able to manage because of diversification into other industries.
3M was a small mining venture that began in 1902. Currently, it has grown into a global powerhouse. Minnesota Mining and Manufacturing Company as the company that would grow into 3M had five founders. Their goal was to harvest a mineral known as corundum from a mine called Crystal Bay. Eventually, the mine didn’t produce much corundum, and they shifted their focus on innovation and collaboration that forms the basis of 3M’s strategy today. The company diversified into other materials and other products and grew up gradually. Over time, innovations began to produce success upon success. At present, 3M is responsible for 60,000 products used in homes, businesses, schools, hospitals and more. Also, one-third of 3M’s sales come from products that were developed within the last five years. Today, 3M sells its product all over the globe. Therefore, working on multiple products brings in valuable returns over a period of time.
5. Operating in Multiple Markets
Another big challenge to compete with big competitors is that they operate in multiple markets. As in the case of multiple products, big companies have their presence all over the globe or in more than one market alone. This is beneficial for big companies because if a particular market becomes saturated or is facing turbulent times, then companies are able to leverage their losses. Moreover, operating in multiple markets gives them the immense scope and opportunity to grow. Small companies may face entry barriers from big companies when they try to penetrate into new markets. One of the barriers can be in the form of reducing their price so that the small companies find it difficult to fight in terms of price.
Thus, the above-mentioned challenges make life difficult for small companies to compete with big competitors. Therefore, it should be noted that the small companies formulate plans and strategies that going to help beat the competition that is at par with them. In addition, working on innovation and collaborating with other companies to tackle competition should be undertaken by small companies. Furthermore, to beat the competition, small companies must keep on trying and not give in after a failure.
Don’t be surprised if big company brands are your competitors, they’re everywhere. It is critical that you know what’s difficult in beating big companies, so that you can create ready solutions. For each advantage that a big company has, you can find a way around it and not let it stop the growth of your business.