Battle tactics for niche firms
The toppling of some of the nation’s largest corporations could clear the way for new and small businesses to carve out a profitable market niche or expand their existing business.
That is, if they can survive the recession themselves.
“There isn’t a small-business owner in America who hasn’t woken up at 3 o’ clock in the morning and wondered, ‘Is my bank going to make it? How am I going to pay my credit cards? How many employees do I really need to carry into 2009?’ ” said Henry Dubroff, a small-business owner and co-author of the book “Battling Big Box: How Nimble Niche Companies Can Outmaneuver Giant Competitors,” which will be published in January by Career Press.
He hopes the book will be a guide for the growing ranks of people trying to start a business after a corporate career, as well as those already fighting in the small-business trenches. In the book, “big box” refers to any large competitor a small niche company faces.
“The people who make it through this particular recession, and who have the courage to start a business in this time, really need a new kind of road map,” said Dubroff, who founded a weekly business newspaper, Pacific Coast Business Times, in Santa Barbara in 1999.
The book, which was co-written by journalist Susan J. Marks of Denver, is peppered with excerpts from the notebooks Dubroff has kept to track the sometimes wild ride he and his business have been on for almost a decade.
Dubroff, a former business editor of the Denver Post and onetime Denver Business Journal editor, writes about what it was like to skip a paycheck for three months to cover bills and severance payments after difficult layoffs at his fledgling business.
The book also taps often-used examples of famous entrepreneurs, such as Kinko’s founder Paul Orfalea and MackayMitchell Envelope Corp. Chairman Harvey Mackey. They have good advice, but small-business owners may find the experiences of Dubroff and other owners of still-small businesses quoted throughout the book even more applicable.
Dubroff spoke with The Times last week.
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Where do most small businesses fall short?
A lot of people who start companies, or who are running companies that are niche companies, come out of a larger business environment. So one thing about cash management, you really have to scale the business to the size of the market; that’s critically important. Don’t build a company to handle $10 million in revenue if you are likely only to get $5 million early on.
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What’s the best step a small company can take when it comes to branding?
You really have to understand how the brand functions in the marketplace, within the market niche. What we’ve learned about our own company is that we are a business-to-business company, so we want to brand in front of the chambers of commerce, economic forecast projects, things like that. A lot of niche companies are business to business.
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Do small businesses have a particularly hard time creating an effective sales culture?
There are two reasons why small companies don’t make it. One is the lack of customers, and No. 2 is the inability to control cash. So you can have your people empowered and you can have your brand identified and you can understand your market and your niches, but sales, revenue, is the oxygen supply for any business.
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How does a small company keep focused on sales?
Part of what we’ve learned is you need pricing that’s logical and you need salespeople out there in the market. But you also need to align your organization, and this is particularly true in business to business, to align your organization so you can establish strong relationships with your customers.
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So building relationships is the biggest key to sales?
It’s very important for everybody to understand their role. It’s amazing how many different relationships you can have, from the CEO to an accounts-payable person. If those people are happy, and your people are paying attention, you are going to get a lot of business from that customer as long as the product is good and you are doing it in a timely way.
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Some entrepreneurs say they don’t need a business plan because it’s too static and confining.
You need some sort of a plan because one of the things I’ve learned is that these benchmarks that you do are extremely helpful. It’s really easy to get caught with your nose to the grindstone with the immediate needs of the business: The fax machine broke. It costs $500 to replace it. Should we lease it? Should we buy? It’s important to step back.
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What does a good business plan look like?
It could be a simple four- or five-page document that outlines a goal, some risk factors and how you are going to get there. Every business needs some sort of planning document. It should be focused mainly on one year, unless you think it’s going to take a long time to get the product out the door. You could have a short narrative and then financials go out five years.
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What can a busy small-business owner focus on to help ensure success?
It’s really important to have a good bookkeeper or accountant. We’ve been very fortunate. When we began to generate a lot more revenue, we borrowed an idea to evolve this cash tracker tool that I use now on a weekly basis. I can tell at a glance whether we’re doing good, doing OK or Henry needs to kind of sit down and think about what the next couple of months are going to look like.
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What do the next couple of months look like?
Despite the economy, our customer base has been astonishingly stable and our readership has been very stable. That makes me nervous just because a small-business owner has to have something to worry about.
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