If you were to listen to all the news in the last 12 months, you’d be forgiven for assuming that 2012 has been a dire year for small businesses. However, according to the Department for Business, Innovation and Skills, the number of private businesses in the UK increased for the 12th year in a row to reach 4.8 million by the start of 2012. Almost all are small – more than 99 per cent, in fact, and the small business sector is growing more rapidly than any other. So how are they doing this, and as a start-up, how can you get a slice of the action and take on Goliaths that are monopolising industries?
Typically there’s a perception that larger organisations have the advantage due to size and brand awareness. But there is one area that can make all the difference to enable David to succeed: recognising and acting upon an inflection point in the market.
Inflection points are a significant change or shift in the market place, such as in costs, regulations, production or technological advancements. These changes are important because they can create a more level playing field allowing smaller players to challenge and disrupt large incumbents.
Wherever there is an inflection point in the marketplace, it inevitably follows that there are a host of first-mover business opportunities to explore. This is because when an inflection point occurs, every company has to, in a sense, start anew. The key is to identify the inflection points as quickly as possible.
To fully take advantage of the inflection point, the start-up must be crystal clear on where they are strong against the big players. There are inherent advantages to being the little guy. In particular, small businesses can use their nimbleness and flexibility to be first to market with a new product or service, often without any competition.
Smaller businesses can also adapt more quickly to market conditions and be more targeted and personal with their customer base. This is often where the large players fail, the lack of personal insight coupled with products and services designed for volume sales and mass market deployment, mean that targeted offerings are more difficult to develop and generate business complexities seldom seen in smaller organisations.
It’s this need to focus on mass market offerings that often results in the big players missing or ignoring inflection points. In fact, inflection points often create conditions where incumbents are forced into unplanned investment. This often leads to slow innovation by incumbents, creating a void for smaller, challenger businesses to fill.
Recognising the inflection point and defining a target market is only the first step, the timing of launch is pivotal, as is securing the first client as soon as possible to reassure other potential clients. But rest assured, if you get the inflection point right – you will have the right foundation to take on Goliath, and win.
Boris Ivanovic is chairman and founder of fibre broadband service Hyperoptic.