The year 2021 is coming to an end with a lot of goods costing almost double what they did in January. Inflation has marred the little progress recorded by small business owners since the hit caused by the Coronavirus pandemic of 2020. The little optimism which came from the lift of the lockdown, roll-out of the vaccination program, and reopening of several industries has been dampened by these happenings. We are seeing prices increase across the board. In fact, no sector has been spared.

Why does this affect small business owners more than their big counterparts?

The cost of raw materials has significantly risen. Several operations costs from rents, to utilities, have also gone up. The result is that every business has to pass on this cost to consumers in form of higher prices. Both big, medium, and small businesses have to do this.

However, the big businesses have economies of scale to their advantage. Due to large purchases and production scale, they can afford to only increase prices slightly and still stay profitable. For small and medium-scale businesses, the story is different. Trying to compete with the ‘big guys’ in pricing will be near impossible. Even if you had stocked up before the price went up, you will run out of supplies sooner or later.

There are a couple of suggestions I think small business owners can apply to cushion the effects and try to stay a bit competitive. These tips may be more for businesses that sell physical products, but they can be tweaked to apply to other kinds of businesses.

Up your customer service game

As an entrepreneur, you can foster a more profound, more grounded, more close-to-home relationship with your clients and customers. Client support/customer service has the same amount of significant worth as any product, solution, or service that you offer. Truth be told, 90% of individuals use customer service as an influence when choosing whether or not to patronize a brand.

Many bigger brands will not be able to pay much attention to customer service, just because of the sheer size of their customer base. As part of creating an excellent customer experience and managing your online reputation, use constructive feedback from customers to improve your services. This shows them that you care about their experiences and sets them apart from the pack.

Differentiate your product

Since you already know that you cannot win this fight on the pricing scale, work towards differentiating your product from what is generally available. Add some little ‘frills’ here and there, something extra to keep going. Improve the quality of your product so that when consumers are trying to justify their reasons to purchase from you, they can find logical reasons too. Things like speedy complaint resolutions, quicker deliveries, request for reviews and feedback, and the likes can do a lot to influence more of the market your way.

Value-added services

There are some value-added services and benefits that could actually influence some customers to choose small businesses over the bigger brands. In addition to your improved customer care, you can look at things like offering warranty, installation services, discounts on subsequent purchases, etc. All of these could be part of a customer loyalty program where customers get small perks for choosing you over others.

Identify and stick to markets where you have the highest proficiency

If you can identify markets that give you some level of control due to your high level of proficiency and comparative advantage, this is another way to go.

Indonesia wants to keep it home and make sure that its leading startups are funded with local funds. Yes, the Indonesian Government has launched a Soonicorn fund to invest in Indonesian startups that are on the track to become Unicorns (valuation of at least $1 billion).

Indonesia, on Wednesday, officially launched a venture capital fund that will target local startups with a valuation of over $200 million. The Merah Putih Fund, launched by president Joko Widodo — also known as Jokowi — aims to back ‘soonicorns’ or startups that have the potential to soon become unicorns. “The market potential is big.

Currently, we have 2,319 startups and it is increasing every day. We have one decacorn, seven unicorns, and so many soonicorns that will be pushed to the unicorn and decacorn clubs,” Widodo said at the inauguration of the Digital Generation Acceleration Movement in Jakarta.

At a private level, this is the vision of Tekedia Capital: empower people to have access to invest in the most promising startups in their localities. Learn more about Tekedia Capital here and join the Syndicate.

There have been men and women who successfully managed established businesses and brands, and yet when they decided to start up a business, they did not go far. There are also people who have started up a business from zero and grown it perhaps to $500,000 in revenue per annum but could not take it beyond that level.

Do you want to know why this is? Simple. It requires a completely different skill set to start up a business and takes it from zero revenue to hundreds of thousands in revenues. It also takes another set of skills to take it from that stage to a multi-million dollar revenue company. This is why you see some founders grow the business to a point and then step aside to let some other people take the business to the next level as CEO.

At the very beginning of the business, from the pre-launch stage, you need entrepreneurial leadership to move the business up to the point where it could be generating hundreds of thousands of dollars in revenue. At the next stage, it requires managerial leadership to move the business to a multi-million dollar company, and if the business has to get to the point of being listed in an exchange, it requires corporate leadership for that stage. Of course, intensive personal development could lead one person to have all of them, but it is not often we find such people.

In subsequent posts, I will talk about the skills needed for the growth stage of a startup but today, let’s look at two critical skills a startup entrepreneur needs to have.

Creating the product

At the very start of the business, all you have is an idea, and maybe a strong conviction that it can solve a problem or series of problems. The onus is on you to build or create a product from that idea, and you need to have the skillset for it. You should be able to create, modify, and continuously tweak the product until you get what the market needs.

This is a skill that not everyone may have. Some persons may be good at driving growth in sales, but not so good at creating it. Some others may spend months on the drawing board planning and replanning but unable to create an acceptable product. As a startup entrepreneur, product development is a key skill for you to possess. The presence of a product/solution is equivalent to an official announcement that the business has started.

Engaging and on-boarding initial adopters

Another skill that is critical for the entrepreneur at the startup stage is the ability to engage and onboard early adopters of your idea or product. This could include partners, investors, friends, and family, your first 100 or more customers, etc. This skill is different from that of moving the products into the hands of hundreds of thousands of customers.

At this stage, you are dealing with a small customer base. This is more like the point where you have to convince the first set of persons that the product is worth trying out. You may not have a huge capital to fund massive marketing at this point, so a lot of it will depend on your personal communication, networking, and marketing skills.

Once you have gone past this stage, the next skill set needed is for the growth stage of the business. We will talk about that in a subsequent post.