Q: Hi Steve: I have read some of your answers about how a small business can compete with big box Retailers like Wal-Mart. My situation is different. I don’t compete against huge retailers, but I do have some competitors that are national businesses with resources I don’t have. I run a small shop. How do I compete with such large competitors?

Shelly

A: No, the situation you describe is not the same, but it does seem similar to me. Generally speaking, the strategy you should employ is the same as a small business would employ when competing with the Home Depots of the world, but the actual execution will be different.

Let me explain what I mean: Al Levi owns a small medical supply company with his wife Rosanne. Consolidated Medical Supply is one of the best companies of its kind in the Pacific Northwest -- it has an excellent, loyal clientele, great products, and a 20-year record of success and growth. It has that first-rate record despite the fact that it competes with some huge national outfits even while remaining a small, 2-person business.

So how do Al and Rosanne do it?

I sat down with Al recently and asked him whether he could share some strategies for remaining competitive when faced with competitors with far greater resources and capital.

First, he sympathized. The threat posed but such competitors is real indeed. He explained that in his industry, the “big boys” have sales forces, fulfillment capabilities, and a catalogue of products that his small firm cannot match. But the secret, he explained, and the moral to the story, is that Consolidated too offers something unique; something that the big boys can’t match.

That is what you have to focus on.

Specifically, Levi shared 4 strategies that any small business can use to compete and beat a large competitor:

1. Offer exceptional service: Consolidated takes this tried-and-true idea and really runs with it. For Al and Rosanne, offering great customer service is not something that they simply pay lip-service to, it is something they live and breathe every day.

For instance, their bread-and-butter product are medical gloves like the ones your dentist or physician wears. Whereas a national medical supply company might try and sell a customer their own brand because the markup is better, Consolidated offers not only a wide variety, but Al personally goes to the different offices, letting the doctors and assistants try on the various gloves he offers.

Because each glove has a different fit, feel, and texture, different offices like different gloves, and it is Consolidated’s personal service that allows them to make an informed decision. It also creates a loyal customer base.

2. Offer something unique: While a national business may offer different products, by and large, they tend to push a few products. To counter this, Consolidated offers some exclusive lines that the big boys cannot offer.

Similarly, Levi has a deal with Kimberly Clarke, the maker of those purple gloves you see in doctor offices. This allows him to offer his customers a necessary product which he has the rights to sell.

Offering products the national chains can’t or don’t, therefore, also works.

3. Offer a lot: An adjunct to the previous strategy is that by offering various products, in a wider variety than what a national competitor offers, you give your customers something the national sales rep cannot: Choice.

4. Create multiple profit centers: Relying on one big customer is a recipe for disaster. If something happens to that customer’s business, or your contact person leaves, or a competitor steals them away, you will be in big trouble. That is why Levi suggests that you cultivate as many different, varied customers as you can. He not only sells to doctors and dentists, but also to police, fire departments, and schools.

A stock trader would never own just one stock and you should never have just one big client. Too many eggs in one basket is risky.

Competing with the big boys is not hard if you follow the Consolidated model for success: Offer a variety of quality at fair prices, treat your customers well, do something the national competitors are unable to do, and you too should be around for 20 years.

Today’s tip: One of the easiest ways to have great customer service is to hire people who genuinely seem to love people, and teach them to “answer the phone with smiles on their faces. Phone experts say that customers will hear the smile in the employees’ voices.”