Smart business owners know that the customer is always right, but the bigger problem is figuring out, “Who is the right customer?” If you’re a profit-driven entrepreneur, you might say that targeting the big guy, or larger corporation, is the key to profitability. However, that may be a narrow view. In fact, many businesses are thriving from the loyalty of the little guy. Here are some reasons why small business is more powerful than you think.
Smaller Business Means Lower Risk
It might be fine for a larger company to go full-force into larger markets without thinking about potential losses. However, the same behavior from a startup could spell disaster. This is especially true if you’re experimenting with a new product or service (or tinkering with your existing offerings) but you only have a few large customers under your belt. If one walks away, your business will suffer the consequences. On the other hand, catering to smaller businesses or even single clients creates a natural safety net. You can fine-tune your product to meet their needs but you’re not “betting the farm” if something goes wrong.
Smaller Business Creates Room for Scalability
Once you’ve fine-tuned your process, you can always expand to larger markets, and hopefully you’ll have built yourself up a solid reputation and strong brand along the way. Small businesses have similar needs to large businesses. So, whatever systems and processes you use to please your smaller clients will no doubt work for larger ones as well. Starting small also allows you to create the ideal unit economies. If you have to change your fees or prices with a larger company, the damage to your reputation would be much greater. Starting small also gives you time to generalize your product or service in preparation for growth. The most successful businesses are the ones that offer the simplest solutions to meet the simplest needs. However, that simply doesn’t happen overnight. This is another reason why small businesses are the ideal playing ground. There’s room for trial and error.
Starting Small Creates a Sense of Loyalty
Lead Bank of Garden City, Missouri is capitalizing on the benefits of small-business loyalty. After the big crash of 2008, bank executives knew they had to pull out all the stops to stay afloat. So, they decided to reach out to the little guy. Despite the slow profitability, the bank has started a number of advisory programs that offer loans and incentives to small and mid-size local businesses. What they’ve found is that smaller companies are happy to pay bank fees for services that save them time and the burden of managing their own finances. As fees rise, the relationship and trust they’ve built will small business owners are sure to make their profits soar. Online companies like Stamps.com and Vistaprint have reached great success with the same mentality: give the small business owner a reason to keep coming back.
Offering a simple, yet effective service no one else can provide is key. After that, it’s all about customer service. A cornerstone of customer service is making sure every customer feels welcome. As these examples suggest, snubbing your nose at a small business owner might be tempting, but it could also be a huge mistake when it comes to your bottom line.