Many would-be entrepreneurs are scared stiff of the thought of facing the big names in the industry they plan to enter. This fear is understandable. There are so many things going for the big established firms. They have market power, which we can describe very simply as the capacity to significantly influence what happens to price and quantity in the market. They have a variety of products that appeal to and attract a wide range of customers. Established firms have enormous goodwill.
Over time, they have built an extensive network of partners, friends, admirers and loyalists, which often manifests in their ability to get away with things that would end the life of any small business.
Anyone contemplating a start up in the cement industry, for instance, who does not reckon with Dangote Cement and BUA is suffering from baseless arrogance. This kind of arrogance is suicide dressed up as Santa Claus. It is a disease that kills its sufferers, and even when they are stone dead, they continue ignorantly to plead the innocence of the disease that killed them – arrogance fueled by ignorance. Big companies are powerful and constitute an entry barrier into the industry they bestride. This fact raises questions regarding size and its importance in the competition matrix.
Almost all the big businesses we hear of in today’s international economy have one story or the other that indicates they either started in a garage or someone’s car park. They often start small. The entire Silicon Valley success story has links to starting small and capturing world attention and hence consumers’ disposable income. Hewlett and Packard, Page and Brin (the Google duo), Wozniak and Jobs (the Apple pair), all started small before expanding into big businesses. The world’s largest online retailer, Amazon, has grown from a mere online bookstore to its present status of number one global online store – far from a bookstore.
When budding entrepreneurs begin it is easy to get scared when they look at the likes of Dangote and Amazon. These entities create the impression that the virtues of starting small, have waned overtime. As we read this story, Amazon is racing ahead of its competitors, especially Apple and Google, to become the world’s first one trillion dollar market capitalized company. Surely, the incentive to think and start big is quite alluring.
Over a decade ago, the concept of Barbell Industrial Structures was developed by McKinsey. This industrial structure is one in which there exists a few gigantic global players and an increasingly large number of small players, with a rapidly shrinking population of medium-sized companies. This appears to have become a global trend, which is likely to accelerate with attendant increase in competition among the micro, small and medium enterprises. The need has therefore become more urgent for small companies to prove their worth and survive, even in the face of the big players. How would they do this?
First, our small businesses need to have a better customer service culture; of welcoming and retaining customers. Just get into any small shop, no matter how well laid out the display of items are, and focus on the mannerism of those attending to you. There is nothing that says we want you to return the next time you need what we are offering you today. That is why you could be standing there and the attendant initiates a long telephone conversation with a friend, and intermittently talks to you.
I recall visiting Frankfurt in Germany in the 90s, when we tried all kinds of entrepreneurial activity. I used to own a company that was into import and export, including automobiles. I was in Frankfurt to close deals on cars for shipment to Nigeria. I visited this company with which we had never had any dealings. The way they treated me led me to wonder if they knew me beforehand. In their narrow 6×6 office space I was offered coffee the moment I walked. Somebody said “its winter sir and am sure it’s different in your country, so coffee for you”. It was like they were trying to lure me way from a nearby competitor. To date, I still wish I could visit that shop in Misales Strasse, Frankfurt, once again.
But here, the butcher is ready to knife his customer just for offering a low price. The pastries and food joints will not let you have a taste before you buy – like they are not sure of their product. Others are lack the kind words that draw customers close and keep them coming. Everything is devoid of the humanity that makes life worth living.
Perhaps, our small businesses have been fooled by our excessive and largely illiterate population, massing around the markets with little or no disposable income. This, and the perennial and endemic shortage of everything, has helped to strip the customer of his kingship. We do not care if the customer comes back or not. There should be a change of attitude towards repeat business. Nigerian businesses, hardly understand the value of customer service, and that a satisfied customer is the best advertisement a business can place. They therefore do not know what customer loyalty means to a business. And so they do not care if the customer comes back or not. There is research evidence pointing to poor customer service, not poor product quality, as the reason why companies lose customers.
To compete with the big players and find your little space in the sun is possible, but the small business must be different from the big ones, to successfully compete with them. There must be points of differentiation both in products carried, office design and service delivery. A company called Kazoo Toys competed successfully with Walmart, Toys “R” Us and other large firms by being different in many ways. Not only did it have a unique design for its shops, it welcomes professionals, such as speech therapists, to bring their patients into the store to play with them and choose the kind of toys that will help the patients. In this way Kazoo staff learnt new things about the needs of its customers and got ahead of competition in providing them.
In simple terms, what Kazoo Toys has done is to get intimate with its customers. Intimacy is when you step out of the profit motive to get into the service motive with an eye on the customer and not the profit. By this strategy, the company is fully familiar with its customers and their present needs. It is also able to glean into their future needs and thereby gets a head-start in providing them. Intimacy may entail giving before receiving benefits. Opening your facilities for customers´ purposes that are not directly sales related but which eventually rub off positively on the bottom-line.
Emeka Osuji
