how does the "little guy" compete

[James Burke]

The reason ppl go out of bizz is they do not have the skills it takes to stay in bizz or they do not have the capital. It has nothing to do with someone around them running rock bottom prices.

Ka-Ching! Anybody who goes to Google and types in "business failure" should know this by now. It would do a person well to do their own case studies on why businesses go broke...especially the businesses of those who are doing the same type of work. Continuing education should be top priority on every business owner's list.

 

[Mosh]

You know this last year was the first time I didn't have a yellowpages ad. We didn't notice any loss of local customers at all. Saved $120 per month to boot.

 

[WildWestDesigns]

No one goes out of business because they got run out by another using low prices. Anyone who believes that is living in disney's fantasy land.

Yes and no.

You might have actually had a good business model and lasted a long time, but if Wal-Mart comes in and you are in competition with them(say as a little local grocery store or hardware store etc) you might get creamed due to the low pricing of Wal-Mart.

Now you have to do something that sets you apart from wal-mart. The hard or not run of the mill products that you can charge what you need to charge for them. However, in order to survive, that will depend on how quickly you can adapt. Now depending on what it is exactly you are doing that can either be hard or easy regardless of how quick or slow you are able to actually switch over(if you need to do so).

Some industries are just by their very nature harder to change gears midstream then others. Doesn't mean that the individual shop's business plan is flawed, it's just the nature of the beast of that particular type of business. Farming is the prime example of something that is hard to switch over. Anything that has a long "gestation" time. Vehicle production etc are a lot harder to re-tool and re-gear then a sign shop.

There are instances where you can get creamed on pricing and pricing alone. It's not that common, but it is possible. A person can be as efficient as they can be in their situation, but still get creamed by something like Wal-Mart if it's in direct competition. That's the key thing, if it's direct competition.

Now continued education is the best way to keep from getting stagnent. That also sets you up as slightly different and into more of a niche market. It just depends on how direct the competition is and you also have to remember that you also have to go by what the consumer's perception is of the arrangment as well. Notice I said perception, not truth. Those might actually be mutually exclusive in some instances in truth, but not in the customer's eyes.

 

[James Burke]

You know this last year was the first time I didn't have a yellowpages ad. We didn't notice any loss of local customers at all. Saved $120 per month to boot

.

Although it takes a while to establish, word of mouth advertising has always been my best source of getting the word out. I market my business like a wild man by focusing my attention on making connections with people, not just throwing out the word and waiting.

Marketing is not like fishing where you dangle a line and keep quiet. It's more like hunting...with just a knife in hand. However, you really don't need to kill the customer, in this case....perhaps a bad analogy, but you get the point. You have to be constantly tracking down opportunities and then be ready to serve those customers when the opportunity presents itself.

 

[Embosstek]

More ego driven statements.

No one goes out of business because they got run out by another using low prices. Anyone who believes that is living in disney's fantasy land.

The reason ppl go out of bizz is they do not have the skills it takes to stay in bizz or they do not have the capital. It has nothing to do with someone around them running rock bottom prices.

Guess I am headed to Disney...Yippeee!! BUT, I do not agree...case in point Wal-Mart. They have been running local stores out of business for years now with the "low price wins" philosophy. And I know for a fact that, as a vendor, if you can't get the price where they want it and yet they want your product, they threaten to go to China and sometimes do. The difference between Mosh and Wal-Mart thinking is he just doesn't go to China!

Something else Mosh isn't considering, is the fact that his equipment cost him something at the outset and that is overhead regardless of a monthly payment and he should be pretending there is a payment there because what happens his equipment does wear out?? More $$ to spend, but hey, he doesn't have any debt or payments right??!! LOL

Any good business person will tell you selling on price only lasts so long until the next corn-picker from Nebraska is cheaper and then you are in a Nebraska corn-picker face off!!!!!!!! Wow, I smell a pay-per-view special.

Have a great weekend.

 

[Techman]

im sorry,, but give me a break. Lets get real..
Sure,, Walmart a multi billion world wide company has the power to do that.

In the real world
Very few small businesses have the power to put any other small bizz out. No way now how. Other small bizz's leave or "go out" because they do not have the skills or capitol to stay. It is an internal problem. Not an external problem. That is a factual law of business that no one can overcome. The SBA has all kinds of stats as to why a bizz fails. The single biggest failure is a lack of capital. The next is a lack of expertise. Competition is almost never a factor in a failure. Competition is a factor in a successful change in business plans.

Every one who knows anything about genuine basic business marketing knows that building a market niche is a key. That means avoid any semblance of operating in the commodity market. Competing on price alone is not a business model.

In summary. A small biz cannot put out another genuine small business by price undercuts.

 

[Techman]

As for yellow pages ads. I am finishing an experiment with pay per call yp ads.

My opinion on yellow page pay per call system is..

It's a complete waste of time. It is an utter failure. It does absolutely nothing to bring in "paying" clients.

They "YP" are making too many changes that do nothing to help their clients. They put up too many obstacles to do follow up calls. They do nothing to make the lead a genuine call lead.

I will not be renewing the experiment when it expires.

Stats may follow in another post.

 

[Billct2]

[

Very few small businesses have the power to put any other small bizz out. No way now how. Other small bizz's leave or "go out" because they do not have the skills or capitol to stay

You are assuming that the competition is other small (Sign) businesses. That isn't always true, and is definately changing in this era. You aren't just competing with the other (small) sign shops for business, you're competing with every other sign shop in you area, large and small, franchises, online suppliers, print shops, Kinkos, party stores, photo stores and a bunch of other sources, including the ability of some to print their own stuff in house, with more to come.
Lots of folks say "Fine let the bottom feeders knock each other out and let the tire kicker shoppers go elsewhere", but it eventually begins to erode the customer base. There are only so many niche markets to fill.
Our main advantage besides experience and service is installing what we sell. But like I said more and more shops are chasing the same business.
And look at a lot of other small busineses that were driven out of existance by large competition, just remember what used to be on Main St., grocery stores, drugstores, photo stores, 5&10, shoe stores, bookstores, men's clothing store, womens clothing store, hardware store, lunch counter, gift shop, newstand, sports shop etc etc. Can it be that every one of those was poorly run? No, the business changed and they disappeared. I wouldn't be surprised to see the same thing happen to this business.

 

[Billct2]

Oh, the yellow pages is a good example of a "large" business that couldn't survive the new era. The new economy doesn't just kill small businesses.

 

[Techman]

A guy down the street just left the arena. He called me asking to team up.
His bizz failed not because I came here. He failed because he didn't have the skills it takes to stay. Simple.

Of course I like to say I ran him out. But the truth is.. He didn't have it in the first place.

 

[WildWestDesigns]

im sorry,, but give me a break. Lets get real..
Sure,, Walmart a multi billion world wide company has the power to do that.

In the real world
Very few small businesses have the power to put any other small bizz out. No way now how. Other small bizz's leave or "go out" because they do not have the skills or capitol to stay. It is an internal problem. Not an external problem. That is a factual law of business that no one can overcome. The SBA has all kinds of stats as to why a bizz fails. The single biggest failure is a lack of capital. The next is a lack of expertise. Competition is almost never a factor in a failure. Competition is a factor in a successful change in business plans.

Every one who knows anything about genuine basic business marketing knows that building a market niche is a key. That means avoid any semblance of operating in the commodity market. Competing on price alone is not a business model.

In summary. A small biz cannot put out another genuine small business by price undercuts.

Competition is very much a factor in failure. How big of a factor depends on the individual circumstance.

How many people complaing about X amount of sign shops in the area. If you have more sign shops then what the population of the area can support, you are going to have competition for that market share. Those that can't get it, fade away. I'm not trying to mitigate the other factors that you mention, but I don't think you are giving competition it's just place in the grand scheme of things. Knowing your competition also helps determine what niche to go for, how to differentiate in order to not lose market share. What skills as a designer you need to harness to have that stand out for your customers to see.

 

[WildWestDesigns]

A guy down the street just left the arena. He called me asking to team up.
His bizz failed not because I came here. He failed because he didn't have the skills it takes to stay. Simple.

Of course I like to say I ran him out. But the truth is.. He didn't have it in the first place.

He didn't have skills that his competition had. If he was the only game in town and people wanted what he was selling, then there is a good chance he would still be around.

There is one company in about 50 miles that services well pumps. I have no choice but to go to them even though I hate their customer service and the fact that it takes me a month and a half of calling 5 times a day to get someone out there and that's after waiting a week to hear back from them after I called them just once to set something up. The quickest turnaround they had at returning my call was a little over 2 wks. Considering I also have to deal with them every few months, their skills at fixing my pump aren't topnotch either.

 

[Colin]

You know this last year was the first time I didn't have a yellowpages ad. We didn't notice any loss of local customers at all. Saved $120 per month to boot.

Yes, but you gained your momentum with the assistance of a yellow page ad. Claiming that they are worthless because of your first year without one, I suggest is misleading and probably incorrect.

Could you have done equally as well without a YP ad if this was your first year in business?

It is like accelerating in your car up to 100 mph, suddenly shutting the engine off, coasting, and claiming that everyone else is foolish by running their engines. You got up to speed by using the same fuel, but depending on the terrain, you will eventually slow down.

 

[wetgravy]

[you're competing with every other sign shop in you area, large and small, franchises, online suppliers, print shops, Kinkos, party stores, photo stores and a bunch of other sources, including the ability of some to print their own stuff in house, with more to come.

kinkos want's about $230 for a 2x6 digitally printed banner (single sided) they can have their niche. and i'll leave the home brewers with their cricuts ... they are competition as much as an average homeowner is in repaving their own driveway with just a wheel barrel and a sledge hammer. also, unless you are an online supplier yourself ... you can't compete with online shops ... to assume so only proves that folly since successful online suppliers make their money on volume and have little customer service involved ... the more customer service you offer ... the less of an online supplier you are and the more you have to charge for that personal experience since it eats into man hours.

 

[CentralSigns]

A guy down the street just left the arena. He called me asking to team up.
His bizz failed not because I came here. He failed because he didn't have the skills it takes to stay. Simple.

Of course I like to say I ran him out. But the truth is.. He didn't have it in the first place.

Same happened to me started the business 3 years ago. Other business started to fail 1 yr later. Tried to sell out to me 3 times, always wanted way too much money. Just last week heard he quit, he is done, gave up all his big contracts. Got a call from big national sign group to take over the stuff in town they were doing. He had the clients and had been here 15 years, he failed because he didn't provide a high level of service to his clients, something that they were looking for.

He put all his apples on the yellow page ads and the paper and other obsolete forms of advertising rather than spending the money on service. We provided the services the customer wanted and didn't actually advertise anywhere, till last year. That may have been his undoing, as we will likely gross 4 times the last years gross. We had some Avery failures, and we stood behind our products and took a loss to redo some stuff, something he didn't do.

 

[wetgravy]

Same happened to me started the business 3 years ago. Other business started to fail 1 yr later. Tried to sell out to me 3 times, always wanted way too much money. Just last week heard he quit, he is done, gave up all his big contracts. Got a call from big national sign group to take over the stuff in town they were doing. He had the clients and had been here 15 years, he failed because he didn't provide a high level of service to his clients, something that they were looking for.

He put all his apples on the yellow page ads and the paper and other obsolete forms of advertising rather than spending the money on service. We provided the services the customer wanted and didn't actually advertise anywhere, till last year. That may have been his undoing, as we will likely gross 4 times the last years gross. We had some Avery failures, and we stood behind our products and took a loss to redo some stuff, something he didn't do.

You would not believe how often I hear that ... doesn't matter about the industry. Superior customer service skills and a willingness to please the customer with a good product and end result always wins. kudos bro.

 

[Billct2]

You're right an individual shop can survive a given set of circumstances, but as a whole this industry is going to look a lot different in 20 years.
There are plenty of small businesses that thought

][/I]Superior customer service skills and a willingness to please the customer with a good product and end result always wins

, I'm making some going out of businesses for one of them right now. One of my local customers had a great 85 year old business that operated on exactly those principles, but the big stores won out in the end.

 

[CentralSigns]

You're right an individual shop can survive a given set of circumstances, but as a whole this industry is going to look a lot different in 20 years.
There are plenty of small businesses that thought , I'm making some going out of businesses for one of them right now. One of my local customers had a great 85 year old business that operated on exactly those principles, but the big stores won out in the end.

Just got contacted by a big national based business to do work for them. We were talking that for me it's good to have links to them and going in their database is good for us. They claimed that it is critical for them to have the links to small business as well. I beg to differ on your big vs small ideas. I think there is a place for both, they need each other especially with small being in a small town location. They even agreed to pay small town rate for the sign work, no haggling. Sure they secured the work from the big national corporation but they also see that they can not do it for a reasonable price and need the small guy to be able to compete with the other big ones.

 

[Techman]

Competition is very much a factor in failure. How big of a factor depends on the individual circumstance.

With all respect.
No it does not. There is no need to be in competition with any one. In fact. My personal bizz is a perfect example of this. I have no competition here. None nadda nothing. I am the only one doing what I am doing here. Yes, there are dozens of shops around. But once I had an epiphany a while back .. of which I posted,, of which that post had a large following.. I developed a few items that no one will do or can do any time soon. The economies of scale will prevent them in the short run.

That's a fact jack..

How successful? Last month was a record income since moving here. Next week I am paying off my house mortgage. That's another fact. Not fiction.

I came here just a newly wed.. That is with nothing. No assets. No income. No job. The area has lots of competition. So, in my experience.. No one has to worry about the competition ever again if they would get some good marketing advice.

 

[WildWestDesigns]

With all respect.
No it does not. There is no need to be in competition with any one. In fact. My personal bizz is a perfect example of this. I have no competition here. None nadda nothing. I am the only one doing what I am doing here. Yes, there are dozens of shops around. But once I had an epiphany a while back .. of which I posted,, of which that post had a large following.. I developed a few items that no one will do or can do any time soon. The economies of scale will prevent them in the short run.

That's a fact jack..

How successful? Last month was a record income since moving here. Next week I am paying off my house mortgage. That's another fact. Not fiction.

I came here just a newly wed.. That is with nothing. No assets. No income. No job. The area has lots of competition. So, in my experience.. No one has to worry about the competition ever again if they would get some good marketing advice.

Do you realize that competition is still a factor in your scenerio? It is because you have a niche that no one is doing right now, so you have zero competition for market share, at this time. That is very much a factor in your success. What happens when you have people that do what you do? Are you going to be as successful as you once were? No you won't unless you find a way to set yourself apart from competition again, but you have to set yourself apart for competition. Thus competition is a factor. Be it client loyalty, or quality of design etc, but it has to be something to continue to set yourself apart from the competition.

You are going to have a hard time selling that competition is not a factor for success to someone that has a MA in Economics and who has spent a good bit of time doing impact analysis for businesses in the private sector.

Don't mistake zero competition for what you do for competition doesn't matter. I have had 3 businesses of which I still continue with 2.

1. Impact analysis for business when I was with the Extension agency

2. Breeding, selling, boarding, training horses,

and

3. The business that y'all currently know on this group.

Some more lucrative then others, there was always competition of some form keeping me improving and setting myself apart from the rest. That's the nature of surviving at a business. Competition is what got you to do something that no one is doing now. You are successful because there is zero competition, that may or may not change when more people do what you are doing now. It all depends on how seriously you take that competition.