Competing as a small or medium sized business is a tough job. Bigger businesses have access to more financial and intellectual resources, and often boast more experience in the industry. Surviving and growing in this type of environment is a constant battle. Success requires careful planning and an innovative culture that promotes versatility and constant improvement. Let’s take a look at a few important ways that small businesses can develop and maintain an edge over bigger competitors.
Use size to your advantage
Small businesses don’t have access to the kinds of resources that their larger competitors do, however they do have one critical advantage. Smaller businesses aren’t bogged down with rigid bureaucracy and expansive hierarchies, which makes them much more agile than big businesses. To take advantage of this, smaller business have to work hard to find ways to develop and implement new cutting edge technologies, techniques, and resources.
Build an innovative company culture
As a business owner, your schedule is likely to be packed with a huge variety of tasks that make it extremely difficult to spend the time to find and implement every relevant innovation in your industry. You’re going to need support. That means ensuring that your business builds an inclusive company culture that welcomes innovation and change, and that recognises employees who find, develop, and share new ideas.
Additionally, it’ll be helpful to encourage constructive criticism, and a variety of diverse viewpoints among your staff. Unfortunately, developing this kind of culture isn’t as simple as telling your employees to be innovative and collaborative. You’ll need to come up with strategies and incentives that reward and encourage workers to take innovative risks, and to share their ideas with managers and other team members.
Hire diverse talent
Small businesses can’t afford to fund market analysis studies to help them tailor their products and services to different markets. That’s one reason that it’s especially critical for small businesses to hire from a diverse talent pool. Depending on your industry, putting together a heterogenous group of workers might require some effort, so you may need to develop specific strategies to make it happen. The more varied your business’ staff is, the easier it will be to ensure that your products and services appeal to a broad market.
Always be financially prepared
Unlike larger competitors, small businesses don’t have enormous budgets to draw upon at a moment’s notice. Being able to pursue important opportunities can be a critical factor in promoting your business’ growth, though, so you’ll need to find other ways to access the finances you need. A few great options include…
Invoice financing is a way to give yourself an advance on your own revenue. You can issue an invoice, and then sell it to your financial institution for most of its value. At Fifo Capital, we’ll pay you most of the invoice’s value right up front, and then collect the payment from your client in due course. This way you can access future funds immediately instead of being forced to wait weeks or months.
If you need funds to acquire new stock on short notice, you can take out a stock loan. Stock loans are designed to pay for the purchase and shipping of additional stock, and to give businesses enough time to sell that stock off before repaying the loan a few months later. Unlike a traditional loan, they’re secured against the stock itself, so you aren’t forced to tie down other assets.
Standby finance facilities
A standby finance facility is a type of loan that you negotiate in advance without actually drawing on any funds. The loan is on standby, and is ready to be used at a moment’s notice. This kind of loan is perfect for ensuring that you can negotiate for the cash you need from a position of strength on your own time, rather than being forced to negotiate for fast access to funds when you’re under pressure.
These types of loans are particularly useful because they can give you access to a more significant amount of money than invoice financing might, and they don’t restrict your use of the loan the way a stock loan does. Standby facilities can be used for anything you can think of from paying wages, to acquiring new equipment, to renting out a larger space.
There are many aspects of business that you can work on to help you build the competitive edge you need, but these are a few critical tools that can make all the difference when you’re trying to compete with a bigger business in your industry. At Fifo Capital, we pride ourselves on working with our clients to help provide them with the financial tools they need to succeed in their respective industries. Give us a call today to learn more!