Starting and running a small business is an incredible challenge in its own right. Entrepreneurs have a nearly laughably diverse range of responsibilities that they need to tend just to operate. However, entrepreneurs don’t go into business dreaming of mere survival. Success means growing, competing within their industry, and taking on much larger and better established competitors to become an industry leader.
Achieving that kind of success is predictably difficult. After all, the businesses you’re trying to compete with are those that have already successfully reached the goal that you’re aiming for. To succeed, you’ll need to ensure that both you and your new business are ready to face the challenge.
Smooth out cash flow
The stereotypical small business owner spends half their day chasing down late payments, and the other half holding creditors at bay. You’ll need to even out any cash flow issues first, so that you can focus your full attention on running your business and actively guiding its development instead of making unnecessary phone calls.
A simple way to do this is to use invoice financing or financed customer payment plans through your financial institution. Instead of chasing down clients, you can collect payments from your financial institution up front, sans a small fee, and leave the client to settle the account with them as per your agreement. This effectively eliminates the endless hassle of fighting to get paid for work your business has already done.
Stabilise your supply chain
There are a lot of factors that go into positioning a business for growth, but one factor that’s especially important when taking on a bigger competitor is consistency. That means developing reliable relationships with high quality suppliers. Not only do you need these to accommodate growth in the first place, you also need those relationships to effectively market your business as a reliable, high quality alternative to a more established competitor.
Support supplier cash flow
Just like you, your suppliers can’t afford to chase down payments and do great work at the same time. While you can’t fix everything for them, you can help to stabilise their cash flow using a product like Fifo Capital’s supply chain finance. This allows clients to request and receive early payment on specific invoices. The funds they receive are paid out of an investor-supported credit fund, without burdening you with actually providing the funds for that early payment until the bill comes due.
Don’t be over-reliant
It’s important to build healthy long-term relationships with suppliers, but it’s equally important to maintain some level of redundancy. Supplier issues happen even in the best of circumstances. To ensure that you can maintain your growth and your quality of service, it’s important to build relationships with a variety of suppliers.
Larger businesses have a lot of advantages that need to be overcome. They benefit from economies of scale, they have more funds to invest in research and development, and they have large, well-established networks. To compete effectively, it’s important not to focus too much on those issues. Trying to compete on price, for example, is playing into your own weaknesses.
Instead, smaller businesses compete by playing to their strengths. Startups are agile and can make far-reaching organisation-wide changes almost instantly. That means you can adopt and integrate new technologies and ideas far more quickly than larger competitors, who often set inward-facing long-term trajectories based on their own research. In this way, startups can often establish themselves by implementing a new idea or technology and establishing it as a new industry standard before large competitors can hope to adapt.
Talk to your competitors
For newer entrepreneurs it’s important to understand that competitors aren’t always the enemy. Many of your ideas, your clients, and some of your employees, might well be sourced from them. It makes sense to connect with, and build relationships with other businesses in your industry. While those relationships are naturally guarded, they can also be mutually beneficial.
No two businesses are entirely alike, and, while you might compete on one level, you might also find yourself referring clients who are looking for a type of service you can’t provide yet, or vice versa. In this way, you’re functionally a convenience to each other instead of bitter rivals. Additionally, the startup in any such relationship can use the competitor as a gateway to their professional network, and as a way to build brand recognition within the industry.
As a startup, it’s essential to seize every possible advantage and to apply it to achieving your ultimate success. By ensuring that you and your suppliers enjoy stable cash flow, that your growth strategy plays to your strengths, and that your own competitors are rooting for your success, you can establish yourself as a major player in your industry, even against overwhelming odds.