NUSOUTH

11.17.2006

If you're looking for a David-versus-Goliath story, consider Hussein Warmack in the role of the guy with the slingshot.

In April 2005, Warmack founded

United Beverage Group Inc., an Atlanta-based drink company whose products compete with soft-drink powerhouses such as The

Coca-Cola Co. and

PepsiCo Inc.

The fledgling firm, maker of Nu South Lemonades and Southern Sippers, now distributes its products to 900 stores in seven states, and Warmack hopes to be in more than 2,500 stores a year from now.

Image:Mr. Warmack/Founder

While still just a dot on the beverage map, Warmack is optimistic about the company's prospects.

His advice to other small companies squaring off against the giants of their industries: "Be innovative," said the former Coca-Cola brand management executive. "Differentiate yourself from the competition."

Another David: Bill Falconer is co-founder and CEO of

Mid-Town Consulting Group LLC, a 12-employee firm that competes with management consulting giants

Accenture Ltd. and

McKinsey & Co.

According to Falconer, the company had $600,000 in revenue in 2004 and grew business to $1.7 million in revenue in 2005, a 183 percent increase.

The company projects $2.1 million for 2006 and $3 million-plus in revenue for 2007.

Clients include

Bank of America, John Deere and

EarthLink Inc.

"A small company doesn't sell a brand name, it sells trust," Falconer said. "We develop close relationships with our clients, and we manage our business very tightly. You need to treat every dollar like it's your last."

It's not easy operating a startup in a world of large-scale competitors.

But experts and business owners say by providing excellent customer service and finding your niche, it's not that hard for the David’s to win the battle.

"Actually, it's so easy it's frightening," said Steve Bloom, chairman of the Atlanta chapter of the SCORE Association.

A Washington, D.C.-based nonprofit, SCORE (Service Corps of Retired Executives) puts veteran businessmen to work helping small businesses get started and grow.

"Large companies can become so big that when market conditions change and opportunities present themselves, they can't respond [quickly enough]," Bloom said. "By the time something gets through all those layers of management, the opportunity is gone."

But small businesses have the advantage of identifying specific niches and quickly responding to them, provided they have knowledge and experience in that industry, said Bloom.

"When you can give customers what they want or need, you can capture market share, and I don't care who the competition is," he said.

In the process, he said a hard-and-fast rule for small companies is to never denigrate the competition -- ever.

Instead, small businesses should concentrate on bringing added value to their customers -- understand the needs of your client, what the competition offers and what makes your business different.

"Basically, you need to determine how you can help your customer do business better, even if that means recommending a competitor," Bloom said. "Do that and your clients will realize that you're in business to help them, and they won't forget it." Not bad-mouthing the competition can pay dividends in other ways, too.

"Some deal may be too small for a large company or not quite in sync with what it does, and that company may refer a potential customer to you," Bloom said.

With United Beverage Group, the 36-year-old Warmack is targeting the youth market with a line of flavored lemonades pegged to different states: peach in Georgia, mango in Florida, blueberry in North Carolina, etc.

Warmack has also launched an interesting marketing dichotomy: His company sponsors a race car on the ARCA circuit driven by Steve Wallace (son of NASCAR's Rusty Wallace), and aspiring rap musicians in territories the company has entered.

"The world is starting to merge," he said. "Music is crossing over. Walk in the pits in NASCAR and you'll see a lot of guys listening to hip-hop. Go up to Harlem and you'll see kids wearing NASCAR jackets."

Warmack said consumers need a compelling reason to switch brands. So he emphasizes trendy packaging, distinctive flavors and crossover promotions.

"We couldn't survive if we were just another lemonade brand," said Warmack, who spent five years doing marketing for Coke. "We'd be dead in a week. Kids ... want something new."

Warmack, whose venture is backed by the Southfield, Mich.-based Hantz Group, echoes Bloom's belief in small-business customer service.

"Being small, your biggest advantage is your ability to be nimble and listen to your customers," he said.

Indeed, the biggest mistake new entrepreneurs make "is not clearly identifying who their target audience is," said Raj Pai, chairman of the Metro Atlanta Chamber's Ambassador Program, which helps smaller companies in business development.

"A small business needs to clearly define who it is and what it does," said Pai, CEO of Planet Synergy, a 21-employee firm that assists companies with offshore outsourcing.

Pai said an entrepreneur faced with Goliath-like competition can take many steps to get established, including: becoming an expert in the niche, someone executives turn to for help; and developing an effective Web site that carries customer testimonials.

"The Internet has leveled [the playing field] for small companies," he said.

Even large companies sometimes prefer to work with smaller vendors, Pai said. "There's less red tape."

Load that slingshot

Raj Pai, chairman of the Metro Atlanta Chamber of Commerce's Ambassador Program, offers tips for small companies competing against big competitors:

Define your expertise in a compelling way.
Brand your business to "stand tall" among competitors.
Clearly communicate the tangible benefits of working with you.
Make it easy to transact business, such as by developing an effective Web site.
Provide verifiable references from satisfied customers.
Offer free trials and flexible contract terms.
Network as much as possible, including volunteering for nonprofit organizations.
Offer top-notch customer service.
Produce high-quality work with meaningful warranties.
Under-promise and over-deliver.
Seek constant feedback from customers.
Keep up with the latest technologies and business practices.
Update your business plan regularly.