Many times entrepreneurs and small business owners can learn a thing or two from looking at how big businesses are reacting in the current economic climate.
What are they doing right? What are they doing wrong?
After all – a lot of locally owned small businesses are dealing with similar issues – just on a smaller scale.
Let’s take a look at several companies that have found a way to keep growing in sectors where business has been slow.
CNN Money has an online piece that details seven companies that are seeing success in industries that have been struggling lately. We’re going to take a look at lessons we can learn from a few of those businesses. You can get the complete list at CNN Money.
Netflix: Thanks to a major national ad campaign and online ads all over the Internet, just about everyone has heard of Netflix. The online video rental service has a three-year annual earnings growth of 40% and three-year annual revenue growth of 17%.
But their advertising strategy isn’t what we want to look at.
While movie rental stores like Blockbuster and Hollywood Video are feeling the heat, Netflix now has 15-million subscribers and an impressive selection of titles.
It’s biggest expense is paying postage rates to mail you your DVDs. But they are finding a way to lessen that blow by making deals with movie studios and adding flicks to it’s collection of content you can watch online or even stream to your HD television.
The Lesson: Netflix realized it’s important to keep up with changing technologies and viewer preferences. If it decided to remain only in the mail order movie rental side of things, it might be struggling. Instead Netflix is giving customers more options and is staying at the forefront of the home entertainment industry.
Your small business also needs to watch changes in technology and where the future of your industry lies.
Coinstar: This vending business became a main competitor to Netflix when it bought Redbox – a movie rental kiosk company – from McDonald’s last year. It also owns arcade games, self serve coin changing machines and pre-paid card machines.
Redbox has become a hit with consumers during the recession because of its $1 per-night price. It’s picking up the pieces where Netflix left off. If it’s Friday night and you want to watch a new release movie – you won’t want to wait for it to come in the mail. Basically – Redbox is fast and cheap. People like that.
The Lesson: Coinstar’s Redbox reminds small business owners how important it is to look closely at the competition. What can you offer your customers that competitors are not? It also is important to remember that people are looking for ways to save.
Wonder how Redbox can afford to offer DVD rentals for so cheap? If you’ve ever rented from Redbox you’ll notice the insane amount of previews and ads before you get to the DVD menu. But people are willing to put up with that for a cheap movie night.
Chipotle Mexican Grill: The fast food industry saw a lot of decline in 2009. Chipotle Mexican Grill is the exception. It saw three-year annual earnings growth of41% and revenue growth of 23%. The company’s stock has risen more than 200% since McDonald’s sold its majority interest in 2006.
Chipotle uses organic ingredients to make its burritos, tacos and other Mexican fare. But it’s still considered a fast food restaurant. Chipotle’s pork and chicken are raised naturally and humanely (as humanely as possible before they come burrito stuffing). That gets PETA off your back as well.
The Lesson: Give the people what they want. Eating healthier and especially organic food is a huge trend right now. But it tends to be a lot more expensive and less convenient to eat nutritious food. Chipotle Mexican Grill has established a reputation as a healthy fast food option. Small business owners need to pay attention to trends – whether it’s going green, certain color choices, but also keep in mind that trends change and you need to find a way to change with them.
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Image: federico stevanin / FreeDigitalPhotos.net
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