The series: We look at decision makers and issues important to Canada’s mid-sized companies.
How do small and medium businesses (SMBs) make it when the competition is gigantic and worldwide? Here are some challenges they face – and ideas for meeting them:
Go where the others are not
If everyone is focused on a huge market, for example the United States, look to other markets that might seem harder to penetrate but may long for your product or service. China, India and even seemingly saturated markets such as Europe can offer opportunities competitors might miss. Kobo, with a staff of approximately 350, tilted deliberately away from the U.S. to sell its e-books and now has customers in 22 countries.
Provide a product that is wanted or needed
Thomas Edison invented a lot of useful products, but, as the story goes, one of his biggest flops was an electric voting register that he hoped to sell to the U.S. Congress. Turns out, back in the late 1800s, no one in Congress wanted their votes recorded automatically – they wanted to keep it vague so they could trade favours before voting one way or another. Any SMB with a new product or service should ask: Do people need this? Do they want it?
Crack the cash-flow curse
In 2014, the U.S. research firm CB Insights found that 29 per cent of startups failed because they ran out of cash. One certain way to run out is to not get paid on time. There are ways for SMBs to avoid this. Choose a business with low overhead. Line up your credit before you need it. And organize a payment system that will help ensure that customers pay you on time, not months after your company has become desperate.
Do your tech homework
It does not help if your product or service is in beta or your technology is wonky and does not mesh with your customers' needs. SMBs need to get this right from the get-go – if they don't, a competitor surely will.
Pay attention to cybersecurity
Chances are really good that you will be hacked. SMBs are sitting ducks for phishers, spearphishers and, as the recent worldwide WannaCry cyberattack demonstrated, ransomers who can hold your prized data hostage. According to the security firm Symantec, in 2014, attackers targeted small businesses 34 per cent of the time – triple the percentage just three years earlier. Many SMBs are now adding cybersecurity insurance to their business policies.
Source: CB Insights, Symantec Corp., Rutgers University, Rohit Sethi of cybersecurity firm Security Compass