Monday, July 4, 2011

The Subversive Business Model

The word "subversive' is one with negative connotations;  For many small businesses it is the only way to survive and grow.  I have spent a lifetime in the world of "small" and I currently market a niche product to a niche market; thus I find my company wedged between three major niche retailers and we have to differentiate ourselves from a variety of indirect competition in regards to product:  One could not ask for a better position! 

The big keep getting bigger and the small keep disappearing; but that is only because the small do not exploit niches; they do not find the 'archilles heel' of their much larger competitors.  I know that no matter how great our success, and at projections of 50 million in annual sales in 5 years, I plan on growing rapidly, but in the big scheme of things that will not even equal 10% of what any one of my major competitors will achieve.  In fact, for a year I was an affiliate of one competitor and we were earning over $2,000 a month from the affiliation which we invested back into them by buying their consumer mailing list! 

Look for barriers to entry, or 'moats;"  a niche by definition has distinct barriers, and as a small business you can exploit those for your own benefit.  In my case, we screen print shirts, and all of my competitors sell screen printed shirts.  But, the fundamental difference is that they import theirs while we do our in house, thus we can react quicker, and offer more customization, which they will never be able to do.

A major competitors takes months or even a year to bring something to market, and a small company should be able to react overnight.  One of my competitors has 60,000 employees!  Can you imagine trying to implement a change in an organization that size?  The internet has totally revolutionized our world, and it has become the 'achilles heel' of the dominant businesses in industries.

The most critical factor of the subversive business model is to seek out collaborators rather than see everyone around you as competitors.  The reality is no one can answer the question, "how big is your market?"  

In my niche, there are 76,500,000 obese American adults and in another poll, the average American owns 26 tee shirts, which means that my   market could cap at 2 billion tee shirts!  But, that is just obese adults, it does not include all the world, nor does it even begin to define my market; some people are just big rather than obese.  All I want is a 10th of 1% of this market and I will surpass my goals!  Since the average plus sized or big and tall consumer has considerably less than 26 tee shirts and close to zero screen printed tees getting to my goal doesn't require competition with anyone.

The key is to always remember that you can only defeat yourself in the world today.  As Tom Anderson, the founder of MySpace stated in a recent comment in regards to Facebook/Google+:
"But quickly I saw that it’s really hard to layer in social to features after the fact. At MySpace we had the luxury of having social first, and building the products on top of that layer. Then I choked and Facebook realized that vision. ;-)"

If you know your niche, and you have defined your business model, then  execute....and don't become intimidated and choke.

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