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Startups / SaaS

How Entrepreneurs Win

By October 7, 2013 No Comments

Being an entrepreneur is a mixed bag. You are small. No wait, you’re nimble. You have no sweeping national market. No wait, you have a network filled with quality people you know and trust. The point here is that at the lip of every cliff lies a challenge and advantage. The trick to succeeding is recognizing the differences, and understanding how use your (small) size to win.

Being the numbers based folks we are, we thought we’d quantify the advantages for the you and your goliath competitors.

Goliath – The Big Guy’s Advantage

DISTRIBUTION  Distribution is at the heart of success for most businesses. If you can’t get it in the store, it can’t sell. They have salespeople, advertising, a retail network and co-op money to secure national retail…that means market share. This is a big advantage, but there are more retail channels than ever before, so it’s not an insurmountable one.

ACCESS TO CAPITAL  The big guys can borrow (or raise) lots of money…cheaply (whether they should or not.)

CUSTOMER RELATIONSHIPS  Let’s face it, sweeping, open door access to customers is a tremendous advantage.

BRAND EQUITY  The big guys invest billions of dollars in building a brand name, and we learn to trust that name. That trust can be built by repetitive encounters with the brand – that’s the kicker in this part of the equation; the quality of the produce actually can be less important than quantity when it comes to building brand equity.As the startup, you have to start from scratch, and you may be making less noise with much smaller instruments.

GREAT EMPLOYEES  Great, incredibly talented people are drawn to companies with a great reputation, great stability and great pay. Smart companies leverage this advantage. You don’t have to be big to offer solid employee benefits; yours just might look more like flexibility, creative culture and a say.

You know that competing head-to-head with Goliath isn’t an option, so you have to go where the big guy can go no longer. Know what you have and how to use it. But be careful to remember your differentiators. Lots of entrepreneurs have great ideas and lots of energy. Know and pursue your niche (even if it’s boring).

Remember. Skim milk is boring. But it’s in more American home kitchens than the much hipper nut/soy/coconut milk cousins. Cotton swabs are boring, but you’ll find them in most home bathrooms. The point is, boring can be profitable.

Given the choice between building a thriving, profitable business with a niche and a really boring product and putting your life savings into an intensely competitive business where youʼre likely to fail but the product is cool, the experienced bootstrapper will pick the former every time. (Seth Godin, The Bootstrapper’s Bible)

David – The Little Guy’s Advantage

The startup entrepreneur has as many advantages as the big guys. They might just be a little harder to see standing in Goliath’s shadow (hint number one, get out of the shadows).

Entrepreneur as Mighty MouseYOU HAVE NOTHING TO LOSE  This may be your biggest advantage. Agility, a lack of red tape and an absence of slews of demanding shareholders give you huge amounts of freedom to create and grab (or create!) a niche.

REVEL IN LESS (OR…VESPA VS THE DODGE RAM)  The small business that can own a niche has plenty of trajectory, and needs a lot less fuel to travel down the same highway as the big competitor.

I KNOW (OR AM) THE PRESIDENT  In most big companies, the president is nowhere near the heart of the action. As an entrepreneur, you might be president, CMO and chief toilet cleaner, but you’re sitting in the center of the action, making decisions and making sure things get done. One caveat to that rule, is that at a certain point, you may need to know when to delegate – but even then, you have a say in who will take over the task in question.

RAPID R&D  Small, focused teams are always faster than big, bureaucratic ones. Period; end of story. Creativity comes at a higher risk and much slower in big companies.

BE A FRIENDLY (UNDER)DOG  Your company is smaller, more nimble, less bureaucracy-ridden and staffed by friendly people who are hungry to succeed and quite likely doing interesting and good things. People respond in kind. The relationship element is powerful and can’t be underestimated. And the lack of required red tape may enable you to undercut your big competitors – nice people plus cost savings are powerful advantages.

LOW OVERHEAD  This may be what people mostly think of with the term “bootstrap” – a home office, small team and only the necessary resources will keep more money in the business.

STEALTH  Big companies have little or no flexibility with their schedule. You do. You’re flying under the radar, getting things done as they make sense.

If you’re keeping score, that’s seven advantages for the entrepreneur, and only five for the machine. Chances are, you’ve worked for the man at some point. Remember what worked and what didn’t. Use your advantages to your advantage. And have fun with it – people sign on for fun.