Home – New Forums Starting your journey Playing with the big boys! but fly under their radar….

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  • #967247
    5869#deleted
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    Good evening all!

    I was wondering what the community thought about trying to take on a much bigger company that is well established, but at the same time fly under their radar just in case they take your idea and run away with it with their vast resources.

    1. How would one market online without tipping “them” off?
    2. Should a small business fly under the radar or go toe-to-toe?
    3. Is there anyone out there that’ll support the little guys or start-ups when the big boys come knocking?

    Open to all with an opinion!

    #1024862
    James Millar
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    I think it completely depends on what the product or service is and how mature the market is for it (which is different to when there are big existing players in an allied market). Generally the more mature the market is for the product then the more likely there will be a range of existing competitors. If it’s a new product or market then you may have a greater chance of success – even if you are small.

    A key principle in startup business is that it’s often best to be the second into a new market rather than first or third. The first has to spend big dollars establishing the market and first building underlying product awareness (which takes time and money). The second effectively monitors the progress of the first and jumps in when it’s a proven success (like putting in golf). There is less need to establish product awareness at this stage so the second player only needs to build their own brand awareness as an alternative (which is cheaper) – and consumers generally like to try an alternative if one player has had effective monopoly supply of a new product or service. The third incumbent has a harder time as they don’t have as much of an “alternative / wash off” advantage and the market is generally heavily controlled by the two initial players by that stage (if they have done a good job as fast movers).

    The major variation on this comes back to your concern. A big / well resourced player (that is already established in allied markets) can be a risk even if they come in as a direct competitor well down the line. Herein lies the principle of good “trade sale” exit positioning for an SME. A big player will often find it easier and cheaper to purchase an existing small operator as a “bolt on” to their existing operations. They get the brand of first to market player (and often retain use of that valuable brand rather than make immediate changes to align with their existing corporate identity), the other IP, systems, processes, HR etc etc. We have completed successful trade sale deals where the one larger player purchased the smaller competitor and continued to operate both businesses completely separately (using their separate original brands etc). In effect they owned the two major players selling the exact same products against each other (the only thing to be careful of here is trade practices / anti competition law if you own all of the suppliers within the one market place).

    So from all that – fundamentally a small player can actually profit from the participation and presence of a larger competitor. More direct thoughts on your concerns are;

    1. How would one market online without tipping “them” off? Not sure this is possible as marketing and sales inherently involve the broadest possible public consumer awareness. The marketing gurus here may have some tips on this though.

    2. Should a small business fly under the radar or go toe-to-toe?

    Toe to Toe if you’re first to market or have a stronger product, better following etc. All the time positioning yourself to sell to your competitor for the right price (and making them aware of it). You may need to raise capital to assist with this.

    3. Is there anyone out there that’ll support the little guys or start-ups when the big boys come knocking?

    If you are talking consumer support for your product then generally they will make decisions based on the fundamentals of quality, price, support etc (as compared to what your competitors offer). Big or small, Australian owned or foreign – these days people are less inclined to make decisions on these matters alone so don’t rely on the “Aussie Battler Business Philosophy”.

    If you are talking support from investors then it’s purely assessed on a business / risk / investment return basis. You can be small with great prospects and secure funding for expansion capital. Obviously PE investors will assess the commercial risk of being a small operator with big competitors (but equally they will see an opportunity for effective trade sale exit to them).
    Do not let the fact that you are small be a complete deterrent. It can be an asset as well.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1024863
    Michael Milgrom
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    Very nice reply from James.

    I would just like to add that you should view the problem (opportunity?) from a different perspective. You write about “trying to take on a much bigger company”. Don’t look at it this way or you will always be a “me too” company, just playing follow the leader. You should look for their weaknesses, look for demographic that they do not market to well (say the elderly) and market specifically to them. Basically look at segmentaion of the big guys market and see which areas he is weakest in. No-one is all things to all people, every company is better at some things and not so good as others.
    So do not look at it as head to head, look at it that … my company is fantastic as delivering this service/product to this particular market segment.
    Make it look like you have a different vision for the service/product that you can portray to the market and internally to the company.

    Hope this helps.

    #1024864
    Steve_Minshall
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    Hi,

    I would guess that our ‘big boys’ competition would be the likes of Repco and Supercheap. What I do is pretty much ignore them and focus on my niche like a bull terrior. I do watch their marketing efforts as much out of interest as anything but they always seem very crude. Throwing thousands of dollars at a TV campaign and discount the hell out of products at peak sales times.

    As a micro business we decided what specifically we wanted to be experts in and win in that segment on attention to details. Our adwords campaigns are extremely focused where as a lot of really big companies just seem to be all over the place with their web strategies.

    If you do want to go toe to toe I think Richard Branson was the master at this. He took on the big record companies by sheer bravery by taking on bands like the Sex Pistols when no-one else would touch them then the battles he had with British Airways and his Virgin Atlantic service were stunning.

    However, I may have read it wrong but I think you want to try something the big boys are not doing but may be interested in once alerted to it. My advice would be get stuck in and keep running. If a large corporation sees an idea that is good it is my belief that no-one will do anything for ages. One of the biggest weaknesses I see in large compaines that favours the little guy is the ability to get stuck in and get on with things. If a soloist has a good idea they can start putting it in to action tomorrow and be off and running and before the big guys even see it the concept can have evolved. Sure big companies can throw lots of resources at things but in practice they don’t unless it has been discussed to death, planned and budgetted for. All of which takes time.

    #1024865
    5869#deleted
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    Thanks All!

    Very detailed and well worded responses. I’ll bookmark this forum for future reference!

    Again. I’m absolutely shocked with the level of detail.

    Many Thanks.

    #1024866
    Anonymous
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    Hi Melvin
    Great to know you found some helpful answers (and thank you to everyone who’s commented so far!)

    Can’t wait til the cat is out of the bag and we can learn more about your new venture!
    Jayne

    #1024867
    5869#deleted
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    I can’t wait either! my little quirky idea is certainly different… i don’t think (from my research) that it’s been done or attempted before… it’s certainly ambitious! i hope i don’t disappoint anyone, including myself! =D

    #1024868
    James Millar
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    melvinbuenafe, post: 29569 wrote:
    Thanks All!

    Very detailed and well worded responses. I’ll bookmark this forum for future reference!

    Again. I’m absolutely shocked with the level of detail.

    Many Thanks.

    It was quite an important question so it deserved some effort in reply. Thorough analysis of your market and competitors is so vital in the pre startup phase (to determine both opportunities and threats).

    Best of luck with it.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
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