A lot of people make the assumption that skills taught in a business school like management and leadership is only necessary in the corporate world that they wish to leap into. However, truth is that managerial skills are much more important in a local small business setup compared to the corporate world. In a large business, employees often have standardized processes to follow and sophisticated technology systems that can process information. Consequently, the decision making process is mostly about completing all checklists to arrive at a solution.
In a small local business however, the ecosystem is a lot more chaotic. There are no decision making tools to use or standardized processes to be followed. Also, considering that most of these businesses work with a captive audience that they cannot afford to lose, it leads to situations where decisions are taken emotionally rather than rationally.
Take the example of your neighborhood handyman. Most of his clients come from word of mouth referrals from existing customers. Also, in a lot of cases, such handymen work in designated areas of the city where they could easily commute to from home and where their existing clientele resides. In such an ecosystem, customers often have a bigger bargaining chip, especially if there are multiple handymen to pick from. As a result, even in cases where the business owner may see it necessary to raise prices or fire a customer, they may not always follow it through for fear of losing influence within the ecosystem.
So how does a local business owner use management skills taught at business schools to tackle these solutions? Here are a few tips:
Creating Incentives To Repeat Orders : A lot of local businesses offer points to customers for every order which can be redeemed as gifts. This is a classic example of incentivization. Typically, all business operators are the same in the eyes of a customers. But when a business incentivizes customers for repeat business, these customers are more likely to continue with the operator for future needs as well.
Customer Satisfaction Is Key : Thanks to the captive audience explained earlier, most local businesses still regard customer service more critical to their bottom-line than large businesses. According to Jay Barnett, a small business entrepreneur and owner of floor maintenance company Priority Floor Care, a lot of business schools ironically have customer relationship management courses and yet, it is the large businesses that need to learn how to get it right from small business owners.
Mind The 5 Ps : The first lesson in marketing is getting the 5 Ps right. They are product, place, promotion, price and profit. As a local business operator, it is extremely important to benchmark your product or service against competition and making sure you offer the best solution to the customer. Also, unless you offer a service at the customers' doorstep, where your business is located becomes extremely critical to your success. Similarly, unless you operate in a business with little competition, it is important to get the pricing right and profits optimal so that you can have a high enough margin to sustain a business while not losing customers due to high price.
In a small local business however, the ecosystem is a lot more chaotic. There are no decision making tools to use or standardized processes to be followed. Also, considering that most of these businesses work with a captive audience that they cannot afford to lose, it leads to situations where decisions are taken emotionally rather than rationally.
Take the example of your neighborhood handyman. Most of his clients come from word of mouth referrals from existing customers. Also, in a lot of cases, such handymen work in designated areas of the city where they could easily commute to from home and where their existing clientele resides. In such an ecosystem, customers often have a bigger bargaining chip, especially if there are multiple handymen to pick from. As a result, even in cases where the business owner may see it necessary to raise prices or fire a customer, they may not always follow it through for fear of losing influence within the ecosystem.
So how does a local business owner use management skills taught at business schools to tackle these solutions? Here are a few tips:
Creating Incentives To Repeat Orders : A lot of local businesses offer points to customers for every order which can be redeemed as gifts. This is a classic example of incentivization. Typically, all business operators are the same in the eyes of a customers. But when a business incentivizes customers for repeat business, these customers are more likely to continue with the operator for future needs as well.
Customer Satisfaction Is Key : Thanks to the captive audience explained earlier, most local businesses still regard customer service more critical to their bottom-line than large businesses. According to Jay Barnett, a small business entrepreneur and owner of floor maintenance company Priority Floor Care, a lot of business schools ironically have customer relationship management courses and yet, it is the large businesses that need to learn how to get it right from small business owners.
Mind The 5 Ps : The first lesson in marketing is getting the 5 Ps right. They are product, place, promotion, price and profit. As a local business operator, it is extremely important to benchmark your product or service against competition and making sure you offer the best solution to the customer. Also, unless you offer a service at the customers' doorstep, where your business is located becomes extremely critical to your success. Similarly, unless you operate in a business with little competition, it is important to get the pricing right and profits optimal so that you can have a high enough margin to sustain a business while not losing customers due to high price.