We introduced you yesterday to part one of this article on global businesses and the difference between local and global businesses. There we talked about a business that could only succeed by reaching wider. But what if that isn’t necessary? Today, a look at the local small business market, and our final predictions for what to do for your business in 2020.
Your business is doing well. But what’s next? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.
Lillian’s Story: Thinking Locally for a Small Business
Lillian owns several fusion yoga/barre studios in New York City. Her target was much larger than her audience, in that she served mainly women between the ages of 24 and 45 (she had some male clientele). Lillian had 3 studios in the city. For her, opening a new space was as relatively inexpensive since her capital expenditures (equipment, etc.) were low. Her main costs were rent and labor/training for her talent.
Let’s Look at Lillian’s 3 Factors
What are the business’s ultimate goals?
Lillian was happy growing at her current pace. She was doubling her business every 2-3 years, so she didn’t feel the need to expand faster. She had been approached by the tele-fitness and e-commerce industry, which is a growing part of the market and is trying to globalize (e.g. Peleton, etc). This would enable her to reach more clients in a very cost-effective way, but Lillian enjoyed the ability to personally interact with her clients. That personal touch was key to her brand.
Target market size?
While technically Lillian had a niche market, her market was much larger than Stan’s. Plus, her business model was such that she could be very profitable with 100-200 clients per studio per day. This meant that she only had to reach a small fraction of her niche to continue her growth trajectory.
Capacity for Growth?
Lillian’s model didn’t carry the same economies of scale as Stan’s. Lillian’s model was more labor and training intensive for her employees and talent. Each new class required a trained instructor. Each instructor could only teach 3-4 classes a day before hitting burn-out. Her need for skilled labor was a stumbling block for globalization.
Lillian's Small Business Was a Great Candidate for Staying Local
We are strong advocates for staying local… when it makes sense. Small businesses that focus on their local community benefit from a deep understanding of their customers, support from other local businesses, and most importantly, local marketing and buzz.
Local marketing is more efficient and arguably more effective than national or global messaging.
According to a recent study, 50% of people who searched for a store or business visited that location within 24 hours and 60% of searchers said they make use of the information they find on local ads or the business’s webpage
Geofencing is also an effective tool. Reviews are key as we’ve mentioned before. They are key to a local market strategy.
According to one survey, 86% of consumers read reviews for local businesses.
Staying local has many benefits if your business model can support it.
Predictions for 2020: Going Global or Staying Local?
We predict more businesses will be asking themselves this question in 2020 than at any time before. Technology has advanced to the point where globalization is relatively simple. The success of Alibaba is a clear example of this trend. Shipping and warehouse logistics have also become less expensive and complex. More and more merchant systems are developing ways to be more global, so it makes it easier for their customers. All these trends continue to simplify the process. Globalization used to be only available to large corporations, but no more. Yet local small businesses are a necessary part of the community they fit into.
What’s the Right Choice for Your Small Business?
We hope that after reading this that you understand that this decision is not a one-size-fits-all answer. Like almost everything in life, it depends on your unique set of factors. However, we believe if you do the homework and use the three factors to analyze your business, it will make the decision easier for you to make.