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> April 16, 2012

Battle With the Big Guy

I was coaching last week and had a run of clients who had some interesting business ideas…except for the fact that they were running right into the lion’s den.

The den of BIG companies.

I realized that most of the companies we deal with every day, read about in the media, or learn about in school are companies with hundreds or thousands of employees. They have an ongoing cash flow and a proven business model.

Because this is the way we’ve always seen business done—so few entrepreneurs truly get the public spotlight–it’s easy to imagine that the only way to run a business is to imitate the big guys. Of course, this isn’t true.

Just as playing a table tennis match is very different from playing Wimbledon tennis, bootstrapping your business is a world apart from running IBM. You need to understand the differences, and you need to understand how you can use your size to your advantage.

Big guys succeed because they capitalize on:

1. Distribution
2. Access to capital
3. Brand equity
4. Customer relationships
5. Great employees

Do you have a chance to succeed playing by any of these rules?

Nope.

Not if you try to compete head to head in these five areas. Not if you try to be just like a big company, but smaller. If you try to steal the giant’s lunch, you’ll be the giant’s lunch.

You have to go where the other guys can’t. Take advantage of what you have that they don’t.

Many bootstrappers miss this lesson.

Why? Because they fall in love with an idea, not a business.

Yet there are exciting things you can do. If you insist that those fabulous five will make your business, follow these rules:

1. Distribution—never start by selling your products in major stores. Start with the small guys, prove your value, reduce your risk and then think about the big ones.
2. Access to capital—don’t pick a business in which access to money is an important element. Even your Mom will grow tired of you asking. Start within your budget.
3. Brand equity—position yourself against the brand leader. They don’t do everything well. They often don’t do anything well…they’re just BIG.
4. Customer relationships—get a little piece of business as a test. Then sell to someone else and someone else and someone else who you love and will love you back.
5. Great employees—lots of people who would prefer a great adventure, flextime, a caring boss, convenient location or a chance to grown without bureaucracy. And they don’t have to be employees. Focus on what you offer that the big guys don’t. They’re not that fun to work for anyhow, remember?

You have plenty of things that the big guys don’t, things that can give you tremendous advantages in launching a new business or growing this one. Put those assets forward to your best advantage.

Go forth and do great things,

Martha Hanlon and Chris Williams