Small Business

Lessons from the small business underdogs

With a Coles supermarket just 65 metres from the doors of his storefront, independent grocer Patrick LaManna literally stares into the face of his competition every day.

But LaManna never bothers to visit his big business neighbour – not even to cast about for price comparisons.

Murray Goulburn still has a 10-year deal to supply Coles' private-label milk.
Murray Goulburn still has a 10-year deal to supply Coles' private-label milk. Photo: Edwina Pickles

"We don't focus on what they do," he says.

"We try to be competitive in our grocery range, but in our fresh food we charge what we think the product is worth.

Emma Dumas is taking on the big players with The Muesli.
Emma Dumas is taking on the big players with The Muesli.  Photo: Supplied

"Our stuff comes fresh every day from the market and the reality is with the big players they can't get it that fresh because they need to run through their own warehouse."

A challenging time

LaManna Direct, a 10,000-square-metre supermarket and cafe in Melbourne, opened its doors five years ago just months before Coles and Woolworths launched a price war. It was, and still is, a challenging time to do business in the supermarket industry, says LaManna.

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"It's a very competitive market, but it's not about competing with them – we compete with ourselves," he says.

"It was scary and it was tough in the first few years being such a big site, but it's definitely paid off and business is doing well."

Staying alive and thriving in the face of major competition is part of the daily grind for many small businesses. Going toe to toe with the big boys may seem like an impossible battle, but these underdogs know how to put up a good fight.

Exploiting weaknesses and highlighting strengths

It's all about all about exploiting their weaknesses and highlighting your strengths, says Philip MacGregor, managing director of Hardware and General.

"You can't go head to head with the corporates because they're just far too big and powerful," he says.

"So we try and differentiate wherever we can. We try to have a better range of quality products, more experienced staff who offer solutions to our customers, we have a price match policy and provide free delivery."

It really is a David and Goliath fight these days, because their size, their scale is far greater than anybody else in the market.

Philip MacGregor, Hardware and General.

The MacGregor family have been in the hardware business since 1960 and now own six stores across Sydney. The industry contracted when Wesfarmers, owners of Bunnings, bought out the BBC Hardware network in 2001. With the arrival of Masters the industry has become even tougher for smaller operators, with the number of independents hardware stores shrinking by 12.6 per cent in the past two years.

"It really is a David and Goliath fight these days, because their size, their scale is far greater than anybody else in the market," MacGregor says.

"It's a much harder business environment to operate in than it used to be. Fifteen years ago, before Bunnings came on the Sydney scene, what we did was competitive and successful against our competition.

"The trouble is, most of those competitors have disappeared – closed down, sold up – it was all too hard."

MacGregor's second-generation family business has been able to hold its own, and even open a new store this year, against the likes of Bunnings and Masters by creating a point of difference.

The company has specialised in the areas their competition don't focus on, MacGregor says.

"We're doing things all the time to differentiate ourselves," he says.

"We recently added a repair service for drills and power tools. So we're trying to be more relevant to our customers all the time."

Patience is a virtue

Staying ahead of the game is Emma Dumas' motto. She launched The Muesli in 2010, taking on major label Uncle Tobys and homegrown start-up Carman's Fine Foods.

In the past 18 months the company has taken on its first employee, opened a warehouse and added more upmarket stockists to its growing list. Annual profit is $200,000, but Dumas expects this to grow as her muesli makes a name for itself.

"I look to Carolyn Creswell and Carman's and I think 'Wow, she's a legend and what she's done as a businesswoman is absolutely extraordinary'," she says.

"But I guess I've always looked at our products as way more niche, targeting an area where we've been ahead of the game since coming to the market."

Dumas says doing business against bigger, better known brands is scary and slow-going.

"You have to be patient and you have to be smart about what you're doing and you've got to make mistakes and learn from them," she says.

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