Thinking about ways you can build a better startup? If you went through Thomas’s list, you probably came up with at least a dozen ideas of your own. Yet ideas are just that: ideas. They’re nothing until we implement them.
During the implementation stage, startups have to clear a number of hurdles in order to succeed. Perhaps the greatest hurdle is that of competition. It’s not enough to come up with a great business. That business has to outlast the competition. That can be immensely difficult when the competition has billions of dollars in market cap.
Dominated by giants
Whenever you start a new business, you have to consider the environment you’re entering. If you want to get into the e-commerce business, for instance, you have to consider Amazon’s dominance.
If you want to start a publication with an advertising model, you have to consider how much of the market Google, Facebook, and Twitter take for themselves. Even those who want to make money from affiliate sales have to consider Google’s massive intrusion into the space lately.
Unless you are building a product or service you can sell to an under served segment of the market, chances are your startup will face off against the giants in your industry or niche.
Even if you do create such a product, the giants will follow — with more money and human power than you. The easier it is to implement your idea, the quicker the giants will chase, and catch up with, you.
The only way to evade them is to think on smaller levels. They are giants, after all, and while that imbues them with many advantages the average person can’t match, it also handicaps them in a small number of ways. Finding these handicaps is often essential for a startup’s success.
Thinking physical
Virtual shopping has undoubtedly made our lives more convenient. Instead of waiting on huge lines and dealing with crazed shoppers during peak season, we can sit at our desks and find what we seek. Yet that doesn’t come without its drawbacks. The sense of discovery is diminished in virtual shopping, and people still crave that physical connection.
Focusing on not only physical products, but physical presentation, can give your business an edge. Many giants, notably Walmart, do have this physical presence, but there remain ways to subvert their dominance.
While there are products sitting on shelves at Walmart, there is little in the way of discovery. Products you already know exist are lined up systematically. Breaking that mold can help your startup stand out.
Having physical space means paying rent, utilities, and public-facing staff, but those costs needn’t break the bank. It’s all about scale, and you can keep your scale small to start.
Plenty of small retail space is available, from older businesses that didn’t have the time or inclination to adapt. Succeed where they failed. Services such as Storefront can provide short-term retail space, allowing you to stay far more agile than giant competitors.
That agility becomes easier with the evolution of payment systems. Just a few years ago you’d have to invest in a POS system, and tech support to go with it, in order to run a physical store. Just last week I was at a bar where they used an iPad as the register.
Mobile credit card processing even extends to cell phones — a gentleman at a farmers’ market last week checked me out with a GoPayment attachment to his iPhone. All of these developments make it easier to gain an advantage with a physical presence.
Thinking local
If you’re thinking physical, by default you must think local. Physical stores must have static locations, and therefore must be, well, local. But that’s just one part of the word’s definition. Businesses can be local in many different ways.
Local to a niche. Long tail economics has exposed us to thousands of niches that branch off from the mainstream. While the biggest winners are the large companies that aggregate these niches, it can still pay to serve certain dense, lucrative niches. (It’s also possible to create a product that turns an underserved niche into a lucrative one.)
Staying local to a niche means retaining focus, something the giant retailers do not have. They must be all things to all people. Combine that with limited shelf space, and the niches get crowded out. Finding lucrative niches and then serving them can be one way for a business to remain local.
Local to communities. Oftentimes communities form around niches, but there are other types of communities that businesses can serve. Identifying these local communities, and then identifying with them, can help propel a local business. With the support of a community, a business can make advances that less connected ones cannot make.
There might be more small businesses now than ever, but that doesn’t mean starting one is easy. Every time a new company forms, it has to compete with titans not only in its industry, but also the ones that dominate retail in general.
Traditional advice is to differentiate, but what does that mean? It means that small businesses need to find physical and local advantages. Only there will they find the weakness in the Death Star.
About the author: Joe Pawlikowski writes, edits, and markets for multiple blogs, mostly focusing on technology. With whatever time he has left he leaves personal thoughts at Joepawl.com
