When Small Means Strong

When COVID hit in early 2020, I watched small businesses face challenges that would have seemed unimaginable just weeks earlier. Some had to close their doors overnight. Others scrambled to reinvent themselves in real-time. But what fascinated me most was how differently businesses responded to these challenges - even businesses in the same industry, facing the same restrictions.

Not All Small Businesses Were Created Equal

A major study of over 5,800 small businesses during those early weeks of the pandemic tells part of the story. The numbers were brutal: 43% of businesses had to temporarily close, and employment dropped by 39%. Most businesses had less than two weeks of cash on hand. But these numbers only scratch the surface of what was really happening.

Some businesses were hit harder than others. Restaurants, gyms, and entertainment venues saw their revenues vanish overnight. Meanwhile, professional services firms mostly managed to keep operating, even if it meant figuring out Zoom calls from their kitchen tables. But here's what really caught my attention: even within the same industry and similar financial situations, certain businesses showed resilience while others folded.

What Made the Difference?

I reviewed thousands of business cases developed with our small business customers to find answers. The common thread I found was that certain business owners stuck to their convictions to deliver something important to their customers, even when doing so was unconventional. Their customers stayed loyal, and in many cases rallied around them because these owners leveraged three principles in their business strategy: Positioning, Proximity & Purpose. They apply to all underdog small businesses, but the most resilient businesses are the ones that use them to their advantage. While the power of following these principles was demonstrated dramatically during the pandemic, they're just as valuable in normal times.

1. Positioning

Big companies have to be all things to all people. Think about your local Walmart - they need their stores to work for literally everyone. But small businesses? We have the freedom to be different, to focus on serving specific customers in unique ways. I'm not just talking about picking a target market - I'm talking about building your entire business around deeply understanding and serving particular customers exceptionally well.

Every business that made it, focused in on their core customers in their own unique way. For example, a small gym that we worked with was built to serve busy professionals. Everything from their class schedules to their workout programs was built around these customers' specific needs. Their members stuck by them during the pandemic lockdowns, continuing to pay dues even with the gym closed. The gym stayed focused exclusively on these busy professionals when restrictions were lifted, adjusting for social distancing, changing schedules, and taking advantage of their member’s newfound ability to work from home. Instead of trying to compete with big fitness chains with online programs or other new trends, they locked in the loyalty of customers that valued them. That's exactly what happens when you commit to your unique positioning and serve your specific customers really well.

2. Proximity

Big companies spend millions trying to understand their customers. They build elaborate data systems, run focus groups, and hire consultants to tell them what their customers want. Meanwhile, small business owners? We talk to our customers every day. We know their preferences, their stories. We don't need an algorithm to tell us when something's not working - we can see it in our customers' faces.

I've seen many different ways businesses take advantage of this, but this closeness was invaluable during the uncertain times of the pandemic. Business owners were forced to adjust, often dramatically impacting the experiences of their customers. Inside stores and restaurants all over the country, businesses did their best to follow public health directives. While corporate entities set blanket policies across the country that were insufficient for some and over the top to others, small businesses implemented policies in a way the needs of their communities valued. They were community members themselves, after all.

3. Purpose

I've also noted a common thread among these successful small business owners - they're in it for something more than shareholder returns. Don't get me wrong, making a profit matters. But there's usually something more driving them. Maybe it's serving their community, solving a specific problem, pursuing a passion, or maybe just to have personal independence. While big corporations carefully craft mission statements in boardrooms, small business owners live their purpose every day.

During the pandemic, I saw businesses that had built genuine connections with their communities find support they never expected. Local bookstores across the country were struggling, but in so many cities and towns, customers organized campaigns to keep them afloat. You can't manufacture that kind of loyalty with marketing campaigns - it comes from years of being a real part of your community.

Beyond Survival: Building Resilient Businesses

The lessons from COVID aren't just about surviving a pandemic. They reveal something fundamental about building resilient businesses. Every small business naturally has access to these principles - but not every business develops and leverages them effectively.

Think about your own business. Do you know exactly who your core customers are? Not just their demographics, but their real needs and challenges? Are you building genuine relationships that go beyond transactions? Is there a deeper purpose driving your decisions?

Turning the Underdog Principles into Strategy

What's particularly exciting is how these natural advantages can shape every aspect of your business strategy. When you truly understand your core customers and have built real relationships with them, pricing decisions become clearer - you know the value you're providing and can price accordingly. Customer acquisition becomes more focused because you know exactly who you're trying to reach and what matters to them.

These principles can transform how you think about customer loyalty too. Instead of competing on points programs or discounts, you can build loyalty through genuine relationships and shared values. Even operational decisions become clearer when viewed through the lens of these advantages - you can focus your time and resources on what matters most to your core customers.

I've seen businesses use these advantages to make bold decisions that might look risky from the outside but made perfect sense for their specific customers. Like the contractor who decided to stock only one type of granite countertop, or the restaurant owner who limited their menu to just a few exceptional dishes. These choices wouldn't work for businesses trying to serve everyone, but they created stronger, more resilient businesses for owners who understood their underdog position.

Looking Forward

The challenges facing small businesses go well beyond the COVID pandemic. Economic cycles, changing consumer preferences, new competitors, and local disruptions are impacting small businesses all the time. The businesses that will thrive won't be the ones with the biggest budgets or the most advanced technology. They'll be the ones that have built special for their customers, leveraging the Underdog Principles.

Here's what I've learned from working with thousands of small businesses: success isn't about trying to compete with big businesses on their terms. It's about recognizing and leveraging what makes us different. When you build your business around genuine relationships with specific customers, guided by a clear purpose, you create something that big businesses can't easily replicate.

The small businesses that emerge strongest from challenges are often the ones that stay true to these advantages even when it means making unconventional choices. They're not trying to be everything to everyone. They're focused on being something special to specific customers who value what they uniquely offer.

Making Your Move

As you think about your own business's future, consider how you might better leverage these principles. Could you position your business more tightly on specific customers who truly value what makes you different? Are you building the kind of relationships that create resilience during tough times? Does your business help you deliver on broader purpose?

The beauty of these advantages is that they're already available to you - they're built into the DNA of small business. The question is how you'll develop and leverage them. In an increasingly uncertain business environment, these advantages aren't just nice-to-have features. They're the foundation of building a business that can thrive through whatever challenges lie ahead.

Remember, being small isn't a limitation - it's an advantage. When you embrace these principles and build on them strategically, you create something powerful: a business that's not just surviving, but truly thriving on its own terms.