Ask an Expert: Being small has its advantages, especially now
— -- Q: Hi, Steve. With the current strain on the economy, we all know that businesses are looking for ways to better compete in their markets and grow in the downturn. We have noticed that many small businesses are capitalizing on their flexibility and pivoting their businesses to enter new markets. Agree? — Deanna
A: I know of very few small business people who would trade their lot for a gig with a big business, even given the steady paycheck and benefits that would come with it. The lack of freedom alone would likely emotionally pummel most small business owners (and in fact, probably did — that is why they left).
But it's not called "big business" for nothing: Large corporations have bigger budgets, better resources, more people — a whole host of bigger and better advantages small business can only dream of.
But, to quote the wizard in The Wizard of Oz, "You've got one thing they haven't got," namely, the ability to adjust quickly and move fast. You are the speedboat to their tanker. And in an economy like this that is no small thing. The best small businesses shift course, quickly.
Here's an example: Polly Liu is the founder of Beau-Coup.com, a website that started out offering an amazing array of wedding favors. Ms. Liu and her husband started the business because, while looking for unique wedding favors for guests at their wedding, "we seemed to come across the same set of products from vendor to vendor." They knew they could do better.
Beau-Coup.com was born not long thereafter and while the site is great and the business quickly became successful, the question arose: How to grow, and more importantly, in what area? This is where being a nimble small business really comes in handy. Beau Coup used Google Analytics and Google AdWords to research and test out new possibilities. They concluded that the next natural extension for them was, maybe not surprisingly, the baby market. Beau Coup soon began to sell favors, accessories, and party supplies for lots of non-wedding events like baby showers, bar mitzvahs, birthday parties, and so on.
The two Google tools Beau Coup used are indeed a great way to test new ideas inexpensively and quickly, but they are not the only way. There are in fact plenty of online tools available that can help you too do some market research and make some smart decisions about what's working, what's not, and which way to head next:
•Google Analytics, as indicated, is a free tool that analyzes how visitors interact with a site — from how they found it (referrals) to what they do when they get there (navigation). Savvy marketers can use this info to make smart decisions. For example, by testing new products and seeing which visitors click on most often, you can determine which are most popular. You can then emphasize them in ads, move them to more prominent pages on the site, expand inventory with similar items, etc.
•Microsoft AdCenter allows you to place ads throughout the Microsoft world — on MSN, Bing, etc. and because such ad campaigns are easy to change, they are a good way to effectively and quickly test something new and hunt for new customers. Example, a sporting goods retailer who wants to try his hand at selling archery equipment can create ad campaigns related to bows and arrows, targets, etc. and see what ads and which key phrases work best.
• AT&T (whom I do some work with) allows you to place ads using the online Yellow Pages, on mobile devises, in search engine results, and more. They also have some great local search options.
•Google AdWords, as you likely know, allows you to place ads on Google and throughout the Google world.
• Of course the other big player is Yahoo.
All of these tools allow you to try something new, inexpensively, and see if it works. If this idea of shifting into new markets is of interest to you, here are a few tips to keep in mind:
1. Consider line extensions:A line extension is, as the name suggests, simply a logical expansion of the line of products you already carry. But remember to think broadly — Beau Coup did not just consider wedding products, they thought about celebrations generally.
2. Consider new customers:Who else may be interested in what you offer? How can you reach them? What might they want?
3. Start small, tweak, expand:The beauty of these tools is that you can look before you leap. Test, see what works, don't spend a lot, test some more, analyze results, and then go for it.
4. Keep your brand in mind:Going in a wholly new direction could hurt your brand. Be careful of that.
Today's tip:Know a great woman entrepreneur? Ernst & Young is looking for her. The company is now hosting its second annual Entrepreneurial Winning Women contest. Winners
• Receive ongoing personalized business advice from Ernst & Young professionals as well as entrepreneurs, executives and advisors;
• Will get to meet role models, coaches and mentors;• Will connect with possible investors, partners, customers, and suppliers; and • Can participate in formal and informal educational sessions
Ask an Expert appears Mondays. You can e-mail Steve Strauss at: sstrauss@mrallbiz.com.And you can click here to see previous columns. Steven D. Strauss is a lawyer, author and speaker who specializes in small business and entrepreneurship. His latest book is The Small Business Bible. You can sign up for his free newsletter, "Small Business Success Secrets!" at his website —www.mrallbiz.com.