3 Big-Business Things a Small Business Must Do
If you're running a small business, you don't have the same resources that your larger competitors do, so you have to pick and choose where you make investments. Even so, there are certain areas in which it's important to be on a level playing field. If you don't offer these three things like the big boys do, you may alienate customers.
The good news is that for two of the three, you can easily find the tools to make it happen. The third is tougher. You can do it, but you'll have to rely on your ability to pick the right merchandise and work with your vendors.
Gift cards are something every company should offer. Image source: Getty Images.
1. Gift cards
A couple years ago, for Christmas, my mother got me a gift card for my favorite local coffee shop. It was not a convenient digital card like Starbucks (NASDAQ: SBUX) offers that can be added to the chain's app on my phone. Instead, it was a physical piece of paper that I had to present when buying. Once I made a purchase, a new total was written in.
It was clumsy and felt awkward to use. I used it once -- spending maybe half the value -- and then lost it somewhere in the depths of my backpack. The overall system was just clumsy and felt outdated.
Now that same coffee company uses Square (NYSE: SQ) for payments and has implemented its gift cards program. That allows it to sell both online cards and traditional gift cards and let customers store redemption information digitally.
This program makes the business feel modern, which makes it easier to sell gift cards. That's important, because according to Square, customers spend an average of 16% more when using a gift card.
2. Loyalty programs
A loyalty program doesn't have to be high tech. Yes, it's easy enough for a small business to use Square, Shopify (NYSE: SHOP), or even a WordPress plug-in to create one. It's also possible to have a satisfying program using low-tech methods.
Even a classic like a punch card toward getting something free can encourage customers to come back. Loyalty programs can also simply recognize good customers by giving them a standard discount. That could be awarded based on how much someone has spent or how often they visit.
The goal of a loyalty program is to make customers feel like insiders. That leads to more visits and, in theory, keeps them from shopping at your competitors.
3. Liberal return policies
This one is a challenge because small companies don't have the same leverage with their vendors that bigger companies do. That means that returns that can't be put back on the shelf become losses. If, however, you don't take returns or you have a strict policy, you risk scaring customers away.
To manage this and make sure you're not swamped with returns, you want to make sure customers get what they need in the first place.
For example, when I ran a large toy and hobby store, we often had to dissuade parents from buying gas-powered radio-controlled cars for their young kids, because experience had shown us that younger kids had better experiences with battery-powered cars. Those were cheaper items, though, and we sacrificed sales by making sure some customers got them. But that was a short-term sacrifice that dramatically cut down on returns.
Start small, think big
As a small-business owner, it's easy to make excuses as to why you can't compete with bigger companies. But while it might take more work, in the important areas, you can offer many of the same perks your bigger rivals do and couple that with the personal service that can give you an edge.
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Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Shopify, Square, and Starbucks. The Motley Fool has a disclosure policy.
