Honoring Small Business Week; Celebrating 5 distinct advantages
May 2, 2018
This is part 1 in a series on small businesses in manufacturing. Check back tomorrow for part 2.
Small Business Week (April 29-May 5) provides an excellent opportunity to celebrate the high success rate of small businesses in the manufacturing industry, while also offering advice for further growth. In this digital era of fast paced change, small businesses are ideally suited to seize unfolding opportunities. Their nimble nature, ability to make fast decisions, willingness to reinvent business models, and a passion for innovation give small businesses an important competitive advantage.
A recent White House report on the value of small businesses says, “Historically, small businesses are responsible for two out of every three net new jobs created in America,” and the Bureau of Labor Statistics reports that “over half a million new small business are launched each year in the United States, creating more than 2.5 million new jobs per year”
The Small Business Association founded the week-long event in 1963 and continues to lead awareness efforts with multiple activities and events. Saturday, May 5, the SBA will be livestreaming award ceremonies along with announcing the National Small Business Person of the Year. Other activities include a virtual conference (May1-3) a Twitter chat on Friday, May 4 about tips for starting and growing a business.
More facts about the role small businesses in today’s economy:
-Half of all small businesses survive five years or more.
-The SBA says more than half of Americans own or work for a small business.
-Entrepreneurs also help create two out of every three new jobs in the United States, yearly.
It’s a good time to be a small business in manufacturing. While all manufacturers obtain value from new technology, the more agile and proactive companies are ideally suited to take advantage of digitalization. Here are five characteristics of small companies which can be exploited to further enhance opportunities.
Agility. Small businesses are typically unencumbered with massive, slow-moving investment partnerships that can substantially hinder speedy decision-making and agile response to changing market conditions. Small businesses, often family owned or controlled by a small group of stakeholders, can easily pivot in a new direction without needing to persuade a multi-tiered investment structure to agree and approve.
Small businesses should exploit this advantage by being alert to pop-up opportunities with short ramp-up times and high yield. They should boldly go where the big companies can’t, such as emerging micro-markets, niche products, and gaps in services. Predictive analytics will help small businesses spot potential trends early.
2. Customer-centric. Small businesses tend to be closer to their customers. Because there aren’t multiple complex organizational matrices, the customer often has direct access to key decision makers, beyond the typical account representative or customer service agent. The small business is more likely to listen to a customer and truly engage in meaningful dialogue on product design and service issues.
Small businesses should exploit this advantage by touting the capability and using it as a competitive differentiator. The company should spotlight this strength in social media and document the positive relationship with case studies. Customer relationship management (CRM) solutions and tools for online collaboration will help manage the ongoing relationships
3. Partnerships. Small businesses often turn to partnerships with other companies to expand their services and capabilities for one-off situations. This willingness to partner opens many opportunities, providing virtually unlimited bill of materials to offer customers and prospects.
Small businesses can take this strength even further by actively pursuing compatible partnerships that can be assembled as needed and disbanded when no longer relevant. Co-manufacturing on select products or market offerings makes sense for innovations that have a short lifespan. These short-term partnerships offer a low-risk way to venture in a new direction, learn the market, and take advantage of a partner’s knowledge base. Software solutions with online portals for connecting with partners help manage the relationship, allowing integrated networks with key people beyond your four walls.
4. Under the radar. Small businesses often operate under an invisibility cloak, unnoticed as they work to develop break-through products and devise totally new solutions. This stealth ability means they can prototype and market test products with lower risks of having intellectual property compromised.
Innovation, therefore, should be a high priority small companies. They should exploit their anonymity and explore new concepts without the fear of every step being watched and copied by unscrupulous competitors. This undetected head-start means the aggressive company can take the new product to market and have an extended grace period before the inevitable knock-offs appear. Product lifecycle management (PLM) solutions provide important tools to help manage the design, testing, and deployment stages of a product, making innovation more streamlined.
5. Cross-trained team approach. In the typical small business, employees often wear many hats. Due to limited staffing, cross-training is a necessity and simply part of the company culture. Everyone pitches in where needed. Employees are highly engaged in the day-to-day success of the organization and feel comfortable making suggestions and providing feedback on processes and products.
This is one of the most important qualities a small business can exploit. The team approach should be cultivated and rewarded. Employees throughout the organizations can use reporting tools and KPI-tracking dashboards to help monitor for customer satisfaction. In the same way, the culture of innovation and continuous improvement can be reinforced, encouraging employees to be highly engaged in the welfare of the organization. Modern ERP solutions with built-in best practices and user-defined dashboards help personnel become highly engaged. No matter their role or location, they have easy access to the tools they need to make insightful decisions and contribute to the team’s success.
These five strengths show why small businesses are well suited to face today’s challenges in manufacturing. Their size offers many advantages, such as greater agility, which can be positive forces for growth.
Check back tomorrow. In part 2, we focus on challenges small manufacturers face and how technology can help.