David vs Goliath? How to compete with big businesses
A massive battle many SMEs face is competing with large businesses. These companies have bigger budgets to invest in everything from equipment to marketing and can sell vast amounts on credit without running into cashflow problems. While these advantages can seem insurmountable, SMEs who work smarter can not only rise to the challenge, but also leverage the surprising strengths of their scale to gain a competitive advantage.
Set frequent targets
Both SME owners and employees are frequently juggling numerous tasks at once. While this might seem necessary to keep up with large competitors, it often ends up being counterproductive. There is little point setting vast targets if only half can be reached. Moreover, having too many tasks going at once reduces focus, often seeing targets continually delayed – including the most important ones – without a concrete completion schedule. Setting out a realistic, clearly defined timeline and meeting it consistently will increase productivity where it counts, enabling competitive output of value.
Find a healthy balance
Related to the above, don’t try to work more than is humanly possible – you’ll end up burning out. Taking a quick break provides a boost to concentration, while slotting in some exercise reduces stress and improves mood. So, counterintuitively, taking some time off will actually improve your productivity, and ensure that quality – core to the value that makes you competitive – doesn’t slip.
Provide excellent customer service
Leaders in customer service are four times more likely to have growth over 10%, and three times more likely to have higher acquisition rates. If doing business with you is more pleasant and convenient, you gain an and advantage over competitors offering similar products or services. The personal interaction that SMEs can offer gives them an advantage here.
Use your flexibility to your advantage
Larger businesses are often slow to adapt due to “legacy systems” – rigid processes for completing tasks within complex bureaucratic hierarchies. SMEs, on the other hand, can quickly adapt to improve their organisational structure and respond to market changes.
- Continuous improvement:
This involves constantly iterating changes within your business – either in your product or service, or the processes involved in operating. You can do this either based on internal ideas (such as suggestions from employees) or research into what competitors or businesses in other industries are doing. Thereafter, you implement a change, test whether it has a positive result, and proceed with the changes in place if so. Doing this on a continuous basis allows you to improve your existing operations, and over time to innovate products or services that give you a competitive edge.
- Use disruption as an opportunity:
The rapid evolution of the economy means there are constantly new threats to existing providers of products or services – but also new opportunities. Keep your eye on market trends and keep up a constant dialogue with clients. If you provide an item of clothing that goes out of fashion, this threatens your business – but if you provide something that comes into fashion before competitors can catch up, you have a huge opportunity to get ahead – which can in turn make you a preferred supplier in future. Use your flexibility to get a head-start on big businesses.
Utilise supply chain finance
SMEs often cannot keep up with their larger competitors because they cannot provide a competitive scale of production on extended credit terms, let alone manage the risk associated with late payments. Managing cashflow and inventory in this context becomes a nightmare. Supply chain finance seeks to bridge this gap by extending the credit rating of the SME’s clients to them – that is, providing SMEs with finance based on the clients they can acquire. This allows SMEs to expand their production without credit terms being prohibitive.
Promoting flexibility with finance
Factoring is one variant of supply chain finance. Your company sells its accounts receivable to a third-party organisation, who collects these on your behalf – giving you working capital up front, rather than requiring you to wait up to 120 days for payment.
In addition, Merchant Factors provides extensive support – getting to know your business goals and your clients, and tailoring your factoring facility to suit your unique, ever-changing requirements. With a financing model that evolves as you do, you have the flexibility to adapt and expand your business to its full potential – and even take on industry giants.For fast, flexible financing – contact Merchant Factors today.
Finance beyond the Numbers.