While it is understandable for small and medium-sized (SMB) retail businesses to feel overwhelmed by their large-scale competitors, especially when comparing cash flow, they, in fact, possess clear competitive advantages. Technology can be a catalyst for capitalizing on these advantages, and when implemented properly via solid vendor relationships, it allows SMBs to surpass competitive businesses, including major brands. This is illustrated by a 2014 Deloitte study, which found that SMBs embracing technology outperformed those that are slower adopters.
Recognizing the advantages of technology – including cloud, customer relationship management (CRM) and a host of other solutions – savvy SMBs are factoring it into the budget. A 2015 Palo Alto Software study found that 81 percent of small businesses plan to invest in technology within the year, with 48 percent anticipating spend reaching $5,000. And, due to the leanness of their operation, SMBs can investigate and implement cutting-edge technology far more smoothly than larger scale operations. Their lack of bureaucracy and limited number of locations create an unparalleled nimbleness. And yet, implementing technology can be a daunting task.
Balancing Risk and Reward
A June 2015 poll by SMB Group found that determining how different solutions could help their businesses was the leading challenge cited by U.S. small businesses. Other challenges from the study include implementing new solutions and upgrades, as well as protecting their companies from threats. As a result, the SMB market is cautious. Owners are striving to thoughtfully approach innovation, while balancing risk (directly linked to costs).
Due to the expensive nature of developing and maintaining infrastructures, SMBs are logically drawn to investing in technology solutions that are delivered as a service. Such services are increasingly appealing, as identified by research from IDC, which found that 21 percent of SMB retailers are interested in cloud/hosted alternatives to what they now run on-premises. With an ability to choose from a variety of different vendors, SMBs can be selective in who manages solutions.
Creating a Positive Vendor Relationships
Working with a vendor should reduce the burden for SMB owners. So, when engaging with outside resources, it is vital to observe a few best practices, including:
- Clearly articulate business needs: Before investing capital, business leaders must first identify the areas of opportunity. A business plan, including an evaluation of the current and future business state, is key. Where is the business now? And, where does it need to be in five years? From there, SMBs can prioritize their clearly articulated needs and understand where a vendor may fit.
- Investigate providers with success stories: It is easy to be distracted by the latest and greatest tool (that’s why the first point is so important). But it is also key to pursue relationships with vendors who can prove their value. Look for customer testimonials and case studies, along with media placements. Ask for vendors with references. Ultimately, remember that some of the least glamourous technology solutions are highly reliable and positively impact the bottom line.
- Watch the data: An effective solution will provide metrics that illustrate the value of the technology. It is vital to not let data go ignored or unused. Rather, SMBs should get in the habit of consistently reviewing data in order to recognize trends, act on opportunities and understand how improvements (or mistakes) made with their business are reflected in key metrics. This will allow for operational optimization and ensure vendor resources are delivering on their promises.
While technology has significantly altered consumer behavior, SMB retailers grow their bottom lines by partnering with vendors that employ tactics that deliver on business strategies. Cost-effective, nimble technologies enable forward-thinking SMB retailers to address industry challenges and ensure sustained success.
This article was originally published in SMB Retail and written by Bill McCarthy, ShopperTrak’s General Manager of Americas
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