Are you Scared of Copycats?

“What if a novel idea strikes your mind, you come with a fresh, new product or service, and then someone else copies your idea and start selling a similar version?” This was one of the questions a student asked me at a recent conference. “If fear of copycats holds you back, you can’t do anything new,” I replied quickly. Well, I know I wasn’t wrong in that opinion, but still I can feel the pain when this happens to someone. Yes, frustrating is the right word.

But in the world of business we face it every day. There is hardly any choice but to face it. Sure, copyrighting or trademarking might help, but this may cost you a pretty penny, and probably this is the reason why most of our small entrepreneurs hardly find it a good option. They just prefer to ignore it, and even if a handful of small firms invest in intellectual property protection, it’s not easy at all for them to monitor infringements or to fight a legal battle against copycats. And finally, there’s even worse than that — copycats may just legitimately tweak your ideas.

How much can it really hurt? It depends. What if the duplicate version is only a poor imitation of your original product, service or marketing message? It’s hardly a problem. When the copycat fails to bring that life or energy to something as you have done in creating the original one, it’s really difficult to outsmart you. What the copycat does will never get the heart of the original version, and is therefore destined to get only lukewarm response in the market.

But you may not be so lucky every time. What if a copycat takes your idea and makes it better? What if a big guy turns into a copycat, goes for a large ad campaign that is much beyond your small budget, and starts taking clients from you? That’s not fair — you shout inside your mind, but nothing is in your hand that can prevent it from happening — a sense of helplessness and anxiety starts to creep into your mind, and suddenly you feel caught in the grip of negative thoughts. Now, all of your positive energies are gone.

This is where we go wrong. The key to fighting copycats is being more innovative while, on the contrary, dwelling on the negative squashes our ideas. This can make things worse. So, stay focussed and keep innovating. Try to improve your work before someone else does. In this race, whenever a copycat does better than you, just try to learn what makes it better and strike back. And always focus on enhancing your business’ intangible values such as reputation, branding and image. These things can’t be copied.

Working hard on a unique idea and then getting copies is never a pleasant experience, but don’t let this fear hold yourself back from doing something new, and even if someone rips off your idea, instead of ruminating about it, just take it as a part of business. No doubt it’s really difficult to keep copycats at bay, but you can certainly be ahead of them by thinking afresh and keeping innovating. Never let anger, worry and negative thoughts take your focus off the positive.

Make the Best of your Small Marketing Budget

Marketing is essential, but If you are like the majority of small entrepreneurs your marketing budget is limited. You need to take every step cautiously, and make sure that resources allocated to marketing are used efficiently. Every rupee matters, and a bad decision on where to spend your marketing money can be fatal for your business. That’s why every small business is always in a dire need to optimize its limited budget.

First of all, what I think necessary is to use low-cost marketing channels. Small and medium enterprises should always go for marketing methods, such as up-sells and cross-sells, referral programs, websites and online sales, B2B advertising, business cards, e-mail newsletter, etc. These are inexpensive tools and can be used easily to get your message out to your customers on a regular basis, which you can’t do with expensive TV ads or big commercial hoardings. Your limited budget doesn’t allow that.

Even if an SME can afford big-budget marketing, I don’t think it a smart idea to “copy” what the big brothers are doing. Marketing rules under which large businesses operate are often not applicable to smaller firms. For example, large corporations usually try to differentiate themselves on branding and to achieve that they invest huge money on advertising and marketing materials, but if a small firm imitates the same strategy, this will only place its business on the home turf of larger companies, inviting severe competition.

Target marketing is another effective way. A common mistake made by small enterprises is that they try to market to everyone, and as a result, spend their time and money on addressing a large market the needs of which they are not capable of serving. On the other hand, target marketing makes a firm much more focused — you know exactly whom to address, which channel to use, what to write, and mend your marketing accordingly. This, needless to say, can cut down your marketing costs significantly. A small business can be more successful by narrowing down its focus and picking a niche small enough to dominate.

Another way — we all know but often don’t care enough — to achieve marketing optimization is by promoting to existing and past customers. Earning new clients is important, but at the same time it is equally important for a small business to retain the past and existing customers. The biggest asset your company has is your customer base, and keeping it intact can save you a lot of money as it costs less time and money to encourage a repeat purchase than to get a new customer. Follow-up can play a crucial role here.

For any business, marketing is crucial for success, but it can also be very expensive, and when it comes to a small enterprise, the more it can optimize its marketing activities – advertising, public relations, promotions, sales, and others – the better it is. The key to this lies in awareness that will eventually lead to clear seeing of what works for you and what doesn’t, and how to make a small marketing budget work.

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KEEP A CLOSE EYE ON FINANCIAL PERFORMANCE

What do you do to keep track of the financial performance of your business – this may seem like a puzzling question to many small business owners. Whoa! Do we really need to do that? Most of the small business owners will tell you that their smaller size doesn’t need this. Lack of time and limited resources are cited by them as other prime reasons. There are so many things to look after, so many things to spend on, leaving not much time and money for doing “something extra”.

This is a wrong approach. Whatever the size of a business, I think a firm should follow a formal accounting system, not merely for the purpose of producing financial statements which need to be submitted while applying for bank loans, but also to manage finances properly and monitor business performance efficiently. Secondly, every small business should implement some financial performance indicators and spend a few minutes every month to track what is happening in their business. Let’s see why.

The results of your operating decisions appear in your firm’s financial statements, and they can help you answer key and crucial questions like whether you will be able to pay off debt in time, how much debt your firm is using, are you getting a good rate of return on your assets, and so on. To get answers to these questions and understand the financial effects – positive or negative – you must have the basic idea about some key financial ratios like current ratio, debt ratio, inventory turnover ratio, etc.

Since the traditional financial reports are published quarterly, half-yearly or annually, I also recommend every small firm to regularly monitor some key performance indicators (KPIs) useful to financial management. Measures like Debtor Days (accounts receivables / sales x 365) that tells how quickly cash is being collected from debtors, Liquidity Ratio (cash and equivalent / current liability) that measures ability to turn short-term assets into cash to cover debts, Inventory Days (inventories / purchases x 365) that tells how many days the goods you purchase stay in your warehouse, etc. can let you know a lot about how you are doing financially.

For small firms, it is easy to ignore financial evaluation, unlike sales and operation, but by doing that they usually invite nothing but trouble. On the face of it, your finances may seem in order, but underneath the surface there may be something that needs your urgent attention. A performance evaluation mechanism in place will ring the alarm bell for your small business before a problem turns violent.