This is a guest post by Stefan Preston, Principal at Ingenio Consultancy (and former Bendon CEO). He imparts his new experience facing the challenges – and benefits – of small business startups.
In 2008, after spending 15 years leading companies in the $100-$600M revenue range, I quit and started (amongst other things) working on 3 startup companies. It continues to be a huge challenge. Granted, the bigger companies are much more complex, but they are also really well resourced with infrastructure, people and capital. Plus they are able to easily meet consumer expectations, (which are set by global companies that operate in markets the world over – often without even having a local office. Bought something online lately?)
The demands on small business have never been greater.
So how do we compete?
One of the key success factors in growing a small business is to minimize overheads as much as possible, and IT has always been a money pit.
For instance, back in 2008 we at Ingenio looked at what we needed for our admin and customer-facing IT support, and cobbled together a number of solutions. Each one, at the time, seemed like best of its breed.
…And so grew a nightmare of servers, PC’s and a bunch of licensed software – all of which needed constant updating and telephone calls back to developers. I was having to fill in as a semi-competent tech whenever things fell over.
A year ago we started Rose & Thorne – a lingerie company that designs, contract manufactures and distributes lingerie through department stores, a boutique and (soon) directly online. This time we went about things differently. We had learned of an emerging ecosystem of cloud providers that together mimic the benefits of fully integrated IT – without any of the costs. We decided from the outset to avoid any investment in infrastructure at all and build the business literally in the cloud.
At Rose & Thorne we have Google Apps (email and shared documents), Dropbox (shared storage), Smart Payroll (payroll), Xero (accounting), Vend (retail POS), Unleashed (warehousing), Sweetspot (warehouse managment, shipping and logistics), Zoho (CRM). We also collaborate with our US-based graphic designer using Basecamp, and on shared screens using join.me.
A lot of these services are free or the costs are very low. All up we now enjoy functionality that is in many ways better than most large companies – and it’s certainly much more agile. With everything in the cloud we have no costs when we make physical moves or other changes in our operations. We pay around $200 per month for all these services.
So what does this mean for small businesses?
Most small companies are faced with the daunting task of growing market share against well-established competitors. So minimizing the cost of share growth is key. The absolute best way to grow share at low cost is to have some sort of innovation that delivers value to an end user – or cuts a lot of cost out of the delivery equation.
Most people think of products when they think of innovation but there are actually many areas where innovation can make a big difference. Aggressive uptake of low cost cloud tech is a potential source of process innovation (at least until the big companies catch up) – allowing small companies to offset the scale advantages of larger companies with nimbler and lower cost administrative functions.
Welcome to the benefits of being small!
Stefan Preston runs Ingenio business consultancy. Ingenio actively invests in and manages three early stage businesses including Bachcare; lingerie brand, Rose & Thorne Design; and NZ design firm, Essenze.
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About Tara Benedict
A former retailer (and unabashed nerd) who daydreamed about integrated POS software, Tara now delightedly recruits, promotes, and enables Vend's wonderful channel of add-ons and partners. An ardent sharer of Vend news and events, connect with Tara on Twitter, LinkedIn or Google+ and never miss an opportunity to meet up with the affable Vend team.