Why Scotland can succeed with Small Business Values

small biz scotland

 

Thursday 18th September is a monumental day for the people of Scotland – The simple question is “Should Scotland be an Independent Country?” I shall omit political views and focus this article on how Scotland can become a great wee nation by applying the values of a successful small business. I’m an advocate for Small Business and believe smaller companies have advantages over larger ones, such as the ability to connect 1:2:1 with their customer base, long term sustainable growth and specialising in key business functions – after all Small Business is Good Business.

Decentralisation

The centralisation of power in a company and country grants that power to a select few. In business individual departments have less control over their budgets, management have less influence on how to operate with decisions being made by the higher echelons of a company whom have little to no local or specialist knowledge of those departments.

A fairer distribution of powers is surely more conducive in the hands of local authorities. How is it possible for someone in Westminster to know what the people & businesses in schemes of Glasgow & Edinburgh really need? Who hears those voices, listens to their concerns they air on a daily basis? Regardless of the party in power, surely it’s local Councillors and Authorities who should be in control of distributing budgets, setting policies and delivering what everyday voters desire?

Borrowing

Borrowing facilitates growth, but only by assuming increased risks. You may achieve growth quicker, but you’ll pay more. The UK like most of the developed world managed to create a boom & bust situation by excessive borrowing. Smaller nations must control borrowing, by doing so you reduce the interest payments and decrease risk. There’s no requirement for small nations to be the biggest and best, growing sustainably over the long term should always be the solution over short-term rapid growth.

Harness strengths in Key Local Industries

A Small Business has infinitely more knowledge about say women’s fashion that a supermarket has – they’re not generalists, they specialise in knowing the needs & trends of their market segment, materials and styles. Scotland is undeniably a world leader in industries such as Science, Renewables and Oil & Gas. Take Oil as an example, as each day passes that natural resource depletes, this has created an emphasis on renewable energy like wind, solar and tidal energy.  Michael Porter’s Diamond model emphasises the benefits of comparative advantage such as:

  • Enhanced knowledge base & skilled labour
  • Condensed rivalry resulting in innovation & increased investment
  • Increased government investment (such as renewable energy)
  • Growth in related & supporting industries

An independent Scotland doesn’t need to become successful via economies of scale. By simply focusing resources like labour, money & government support into key Industries a competitive advantage can clearly be achieved. Just look at Aberdeen’s Oil & Gas sector (now including renewable energy) or the Bush Estate for Science in Edinburgh, localised specialism’s in flourishing industries can be created – but only through efficient utilisation of resources and enhanced powers for local authorities.

It’s simple Economics, with overall budgets being squeezed due to austerity cuts the laws of opportunity cost dictate that you can only buy A or B, never both.  Being small isn’t a disadvantage, although big companies will tell you otherwise. Instead of biting off more than you can chew, do the small things well and success will follow.

Marketing Automation vs Personalisation

personalisation

The question of automation vs personalisation for a company is all about saving time and money whilst increasing efficiency. Whereas the perspective of the customer is about receiving good customer service and feeling valued.  So the question is “What does your business value more? – Costs or Customers?”

Advantages and Disadvantages

I’d pick personalisation over automation every time, but as a business grows they must consider all options on how to communicate effectively with their customers. Here’s some of the advantages and disadvantages of automation and personalisation:

Automation benefits:

  • Cost reduction
  • Saves time
  • Reaches a high volume of customers

Automation negatives:

  • Error prone
  • No human contact
  • No personalisation
  • Just another number

Personalisation benefits:

  • Customer service
  • Individual attention
  • Deliver bespoke products/services
  • Increases chances of repeat business

Personalisation negatives:

  • Time consuming
  • Costly to scale

Automation vs Personalisation is simply the choice between quantity over quality. I always like to place myself in the shoes of the customer – what type of service do they expect? Customers are individuals and expect to be treated accordingly, how special do you feel knowing you’re just another number receiving generic marketing communications?

Small Business vs Big Business

How can big businesses connect with a vast volume of customers without using automation? – More often than not, they simply can’t. Can you imagine the amount of money, time & employees that would be needed for a company with thousands/millions of customers to connect on a 1:2:1 basis? But that’s acceptable, as long as time and money are being saved – the customer is last on the list of priorities.

Small businesses on the other hand don’t have the resources to connect with a high volume of customers, personalisation is necessary.  Let’s take email software as an example, rather than sending 1,000 generic emails with a 1-2% response rate, try studying 10 customers and sending personalised emails with bespoke offerings relating to those individual/business needs. Guaranteed your ROI improves, your responses will increase and you’ll develop a reputation for being a customer-centric business. If more small businesses take the time to connect with each individual customer, rather than applying a mass-market approach, then this can be used as a distinct competitive advantage.

Achieving economies of scale isn’t the holy grail of business, growth must be accomplished over a longer period of time, growing too big too fast can and will destroy many businesses. Focus on what you have now, your strengths, your weaknesses and most importantly your customers. By being a customer-centric business you can personalise almost all Marketing communications which results in customer retention, recommendations and an increase in overall customer value. Perhaps customers of larger companies wouldn’t be so keen to move to competitors if they feel valued – personalisation over automation every time.  🙂