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How To Compete When You Are Small?
Are you small but an ambitious company? Here is how Walmart Inc did it when it was small...
It's scary when you are a small company; everything seems like a threat. But, unfortunately, it is as accurate today as it was 100 years ago. In this article, I draw lessons for the small company owners with dreams from the early history of Walmart Inc about how to compete when you are small without getting eaten, burnt out, or run over.
A small business can compete with a large company and win over in special conditions. And Walmart Inc., under the leadership of Sam Walton, presents the best example for explaining how with elaborated details.
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Most small businesses do not stand a chance against big businesses because of some of the wrong assumptions they have about competing.
Wrong Assumptions About Competition
Everything is about resources (capital, talent, and infrastructure)
You are competing for the same customers
You can beat big businesses at their own game
Here is how to compete for the right way step by step:
Leverage#1: Create a snowball effect with one dominant trend
When discount retailing became a trend, Walmart Inc. was established in the retail industry. Cunningham KMART was present in 1962, and after spending two years, concluded that this was the future of retail.
Sam Walton took the same trend and accelerated his effort to create a snowball effect.
“This was a big break for us. Harry was the guy who, in just ten years, had legitimized the discount industry and made Kmart into the model for all of us - Sam Walton.
Leaverage#2: Purpose is more important than resources
The biggest lever a small business has against a big business is its purpose (the reason behind why you are in the business). Purpose drives commitment and ownership that big businesses can hardly experience.
Sam's purpose in starting Walmart Inc was:
We Save People Money So They Can Live Better
This purpose not only charged the employee but also guided the strategic choices, as we will explore. Moreover, it brought customers and drove customers to Walmart Inc. Purpose attracts the unique customer base you want to attract; in Walmart's case, it was the sub-urban customer segment.
Leverage#3: Add value in a unique way
You can never beat big businesses at their own game; instead, you can take up new ways of adding value to your business that makes it more attractive. While KMART was executing the same business model, here is what Sam Walton, as strategist did differently:
Identified the right economic loops that drove prices down
Built community perspective into his business (employment, localized culture, local purchase)
Made every decision to drive the price down (technology, real estate, distribution, infrastructure)
Drove commitment through purpose and partner program
So we drew lessons for small business owners from the early history of Walmart Inc. on how to compete with larger companies. The wrong assumptions about competition are that everything is about resources, you are competing for the same customers, and you can beat big businesses at their own game. The right way to compete is to leverage a dominant trend, have a strong purpose, and add value in a unique way.
Action points for small business owners include:
Identify a dominant trend and create a snowball effect by accelerating efforts.
Develop a strong purpose that drives commitment and ownership.
Add value in a unique way by identifying economic loops that drive prices down, building a community perspective into the business, making decisions to drive prices down, and driving commitment through purpose and partner programs.
By following these steps, small businesses can compete with larger companies and win.
Subscribe for free and Increase your Strategic IQ to make your next bold move.
Increase your Strategic IQ to make your next bold moves.