The Competitive Edge of Entrepreneurs
to maintain their position as a robust part of the total economy, small entrepreneurial companies must compete effectively with firms of all sizes, including large publicly owned companies.
How is it that small and entrepreneurial firms can hold their own and often gain an edge over successful, more powerful businesses? The answer lies in the ability of new and smaller firms to exploit opportunities. If a business can make its product or service “cheaper, faster, and better,” then it can be competitive. Small companies—if well managed—are just as able as larger firms to develop strategies that offer a competitive advantage.
In this section, we will take a look at some ways in which new firms can gain a competitive advantage. In Chapter 3, we’ll elaborate on strategies for exploiting these potential advantages and capturing the business opportunities they make possible.
CUSTOMER FOCUS
Business opportunities exist for those who can produce products and services desired by customers. Small companies are particularly adept at competing when they commit to a strong customer focus. Good customer service can be provided by a business of any size; however, in many instances, small businesses have a greater potential than larger firms to achieve this goal. If properly managed, small entrepreneurial companies have the advantage of being able to serve customers directly and effectively, without struggling through layers of bureaucracy or breaking corporate policies that tend to stifle employee initiative. In many cases, customers are personally acquainted with the entrepreneur and other key people in the small business.
Not all small enterprises manage to excel in customer service, but many realize their potential for doing so. Having a smaller number of customers and a close relationship with them makes customer service a powerful tool for entrepreneurial businesses. For further discussion of this subject, see Chapter 14.
QUALITY PERFORMANCE
There is no reason that a small business needs to take a back seat to larger firms when it comes to achieving quality in operations. We frequently talk to owners of small businesses whose operations not only equal the quality performance of larger firms, but in fact surpass the performance of the giants.
No finer examples of quality performance can be found than MFI International in El Paso, Texas, owned by Cecilia Levine, and J&S Construction in Cookeville, Tennessee, owned by Jack and Johnny Stites. A visitor to these companies—a manufacturer and a general contractor, respectively—can feel their commitment to quality. It is a part of their DNA. In fact, these small business owners can insist on high levels of quality without experiencing the frustration of a large-company CEO who may have to push a quality philosophy through many layers of bureaucracy.
In short, quality is mostly independent of firm size, but if there is an advantage, it most often goes to the smaller business—which is a surprise to most people. As a small business owner, you do not and should not have to accept anything less than the highest-quality performance. An uncompromising commitment to quality will move you a long way down the road to having a competitive advantage relative to other firms in your industry.
INTEGRITY AND RESPONSIBILITY
In order to maintain a strong competitive advantage, it is essential that you add to good customer service and excellent product quality a solid reputation for honesty and dependability. In fact, the quickest way to lose a competitive advantage is to act without regard for others, or worse, to act dishonestly. We all respond positively to evidence of integrity because we all have, at times, been taken advantage of when buying a product or service.