It's right there in the Bible. Goliath, the giant champion of the Philistines, taunts the Israelites arrayed on the field of battle.
Goliath's idea is that instead of having the armies go at each other, he will just take on whatever champion the Israelites send out; and that will decide the day. If Goliath wins, the Israelites are conquered and go off to slavery. If Goliath loses, well, he really doesn't think Goliath's going to lose.
There's a lot of reason for that confidence. This guy is big. He's ten feet tall, he's got monster armor and weapons, and he's got a bad attitude.
If you're a small business, you may recognize this profile. This is what happens when monster competitors take on the small fry. But it's a good idea to remember what happens to Goliath in the Bible.
In the Bible, Goliath lost. And he didn't even lose to some professional warrior champion of the Israelites. Instead, he lost to a kid with a sling. That kid was David, and he went on to be the king of the whole shebang. But ever since his meeting with Goliath, he has been inspiration for small players on the field against big ones.
In today's business world, there are lots of giant players. Sometimes they are the giant chains called the "big box" stores. Those are folks like Wal-Mart that come into town; and, according to some folks, drive the locally-owned businesses right into bankruptcy.
Sometimes Goliath is a specialty chain, like a Starbucks. When Starbucks comes to town, it's bound to be trouble for small coffee stores. The same thing is true for hardware stores when Home Depot shows up or office supply stores when the monster stores like Staples show up.
That's the bad news. The good news is that there are lots of small companies out there, not only holding their own against Goliath competition, but actually increasing profitability. How do they do it? There are three key strategies that can help you build profit against Goliath competition. Here they are.
Position strength against weakness. Narrow your niche. Band together. Of these three, the first, position strength against weakness is the most important.
Remember, David? He didn't go out to meet Goliath in the standard warrior's outfit. That's what Goliath wanted. That was Goliath's strength. Instead, David took his strength and matched it up against Goliath's weakness.
To make this work, you have to know the strengths and the weaknesses of the Goliaths of the world. Let's start with the strengths.
Goliath has a lot of money and marketing muscle. Many times the ad budgets allocated to an individual Wal-Mart store are larger than the entire revenue of some of the small locally-owned stores pitted against it.
That money buys lots of high-quality professional help and media placement. But it's not the only strength that Goliath has got. Goliath is very good at logistics and purchasing. That means that Goliath gets to offer lots of goods at really low prices.
If you want to beat Goliath, you're not likely to do it on price or on the basis of slick or saturation advertising. That would be like David dressing up in heavy armor and trying to fight Goliath with a sword. It's a recipe for disaster. You're going to have to find something else.
Start by analyzing your own strengths. What sets you apart from other businesses? Take a look at your entire business history. Listen to what your customers tell you, then figure out where your strengths lie. Talk to your best customers and find out what you do for them that's special.
Avoid the "I'm smaller so I'm faster" trap. Just because you are smaller doesn't necessarily mean that you are quicker or that you give better service.
Goliath has been able to roll easily over competition in lots of markets because the competition got complacent. In one small city that I know of, the office supply places had things to themselves for decades. There were several small office supply stores in town. Every one of them had limited inventory and high prices. None of them had really great customer service. They didn't have to. They owned the market.
When two big office supply chains came to town, that changed quickly. The office supply chains weren't any better at customer service than their small counterparts. But it's significant that the small stores weren't any better than the chains. That meant that the chains could compete on price and selection, often offering products for sale to customers below what the small stationery stores could buy them for.
Could this have been different? Could the small stores have beaten Goliath? Probably, but in order to do so, they would have to have clear strengths that they could pit against Goliath's weakness.
Speed is often a strength of small businesses. Just remember that it's not automatically a strength. Here are some of the other strengths that we see around the country in lots of smaller stores
Many small stores are great at relationships. They have been in town for ages, and have got roots that go deep into the community. If that's you, build on that.
Don't be bashful about playing up the local connection. Mention it in your advertising. Talk it up to your customers. Hang "locally-owned" signs in your window.
Get those relationships cooking, too. Most small stores can do, easily and naturally, through their salespeople what big stores have to use technology and procedure manuals to accomplish. Make that work for you.
Here's a caution, though. If you do this, you've got to pay attention to the people on your sales floor. Those folks are likely to be the "rock in your sling" when you go up against Goliath.
The reason for this is actually pretty simple. People don't have relationships with businesses. They have relationships with other people. If folks are coming back to your store over and over again, one reason is likely to be that they've got a good relationship with somebody who works there.
The biggest advantages you'll get from a competitive standpoint are the ones that come from relationships and culture, because those are the strengths that can't be copied. Your competition, large and small, can copy your inventory, beat your prices and mimic your ad campaigns. They can find a location that's as good or better than yours. But relationships and culture can set you apart. They're the best kinds of strength to position against Goliath's weaknesses.
Okay, that's Goliath's strengths. What are those weaknesses we've been talking about?
A lot of Goliath's weaknesses are actually the flip side of Goliath's strengths. Goliath's strengths come from being really big. So do Goliath's weaknesses.
Think about it. Big chains put lots of money into developing ad campaigns and placing ads in local media. Those ad campaigns are developed for the entire chain, and usually planned months ahead. They can't really have different campaigns for each location and they can't change the campaign easily.
Does that give you any ideas? Smaller organizations can almost always be more flexible and quicker off the mark than bigger ones. Plan your ad campaigns with shorter lead times than Goliath. Counter Goliath advertising with specific advertising of your own.
We can apply the same principle to inventory. Sure, Goliath can stock lots and lots of stuff across all categories of merchandise. What Goliath usually can't do is stock a couple special, non-standard items for a particularly valuable customer.
Remember what we said about people earlier. Small businesses do things with people that big businesses usually do with procedure manuals and technology. Goliath often has the computer and inventory system ruling the people. You don't have to.
Take the case of bookstores. In lots of the large chain bookstores, the manager doesn't have discretion to add items to the regular inventory. The only way that they get there is that if there is a customer request or if, somehow, the item gets sold through the store.
Well, how could it get sold through the store if it's not there in the first place? The answer is a tactic called reverse shoplifting. One of my author friends uses it to get his book into key markets. He simply takes his book into the store, walks up to the counter, and buys it.
What happens next is interesting. Since it's not shown in inventory, the clerk keys in the book's ISBN number. That tells the chain's computer that the book's been sold, and, therefore, needs to be replaced. This is a lot better than a special order, which is tagged as a special one-time occurrence.
Advertising and inventory flexibility is good and can give you an advantage, but you still want to build on the people stuff.
Concentrate on your best customers. You want to treat them like they're your key to profit, because they are. On average, repeat customers cost five times less to retain than new customers cost to acquire. Not only that, your best repeat customers are worth thousands more than your "average" customer over their lifetime.
Can you serve them in a special way, a way that no computer program could possibly match? That's just one way to position your strength in relationships and people against Goliath's technology. Can you talk to your customers about their needs and then really listen to the answers? Goliath can spend millions on market research and not get the quality you'll find with a few conversations with good customers.
The key to victory is to be like David in the Bible. Take your strength and position it against Goliath's weakness. Then compete hard and smart. Remember how that Bible story came out.
This feature appeared on 10 December 2001
