It used to be that you could point to an of-the-moment business trend that proclaimed to be the silver bullet for succeeding as a small business. Become more specialized in your product area or market segment, the experts once advised. Later, the trend was to broaden your product offering as much as possible—perhaps by merging with another company, selling to a larger firm, or joining a buying group. Invest in an Internet strategy, we heard in the mid-'90s—if you don't, you'll be out of business before you know it. More recently, the charge has been to document the value-added services and cost savings you provide to customers. Once you've accomplished that, move beyond documentation and begin charging fees for some of those services.

Each one of these strategies is good advice, but none of them will work all on their own. Today's wisdom says there is no secret weapon to succeeding as a small company; there is no one single thing a small business should do to ensure survival. Instead, a comprehensive approach that involves a lot of soul-searching to figure out just what your company does well and how it can use those competencies to best serve the marketplace is the order of the day.

Steve Short is a student of the current wisdom. He bought Updike Supply, a small cutting tools and abrasives specialty house in Dayton, Ohio, 10 years ago. After a career in the automotive industry, Short entered the world of industrial distribution knowing next to nothing about it, and set off learning the business through a variety of sources—Updike Supply's employees; industry peers he met through the Industrial Supply Assn.; and the company's customers.

What he says he's learned is that there's no magic key to success when it comes to running a small business. Instead, it's like a secret recipe—one that each company has to create on its own. Updike Supply's recipe includes a continued focus on cutting tools and abrasives, and a specialty in providing two types of solutions to customers' problems—applications and technical support, and inventory management programs.

"When we strategized as to what could differentiate us in the marketplace, we essentially said that we have to be solution providers—first with technical and process applications, and second with inventory management solutions," says Short, whose one-location distributorship employs 23 people. "Then we developed business plans to support each of those."

Along the way, Updike Supply has made an acquisition, expanded its product line with complementary items (including general MRO and safety supplies), invested in new technologies, and developed a formal documented cost-savings program. The comprehensive approach has helped grow Updike Supply to five times the size it was when Short bought the company. The firm now serves customers throughout Ohio, Eastern Indiana and Northern Kentucky, and is building a larger headquarters facility to accommodate its recent growth.

"There's no one magic key," Short explains. "It's just been a matter of understanding what products we needed, what our customers needed, and then tailoring our services to meet those needs."

A small distributor in Colorado, who asked not to be identified, had a similar experience five years ago. Two key industry trends merged and had a profound impact on his company: integrated supply and the migration of manufacturing to Mexico and China.

"We thought we were insulated from that in Colorado," he explains. "But those two trains collided, and we had to quickly figure out what our core competencies were."

Those competencies, they discovered, were the same things they'd been doing for years: specializing in a particular product niche, and providing documented cost savings programs to customers. The key was finding a way to apply those competencies to markets beyond the traditional manufacturing plants the company had always served. They had to find a way to serve the construction industry—the fastest-growing segment of their local economy.

The problem was that this firm was not a construction distributor. Some market research revealed an opportunity, however: serving the many ancillary businesses to the construction industry—the cabinet-makers, counter installers and others that are a vital part of that business. In the end, the distributor found that it could apply the concepts with which it found success in manufacturing to a new and growing market. It just took some thought, research and creativity.

The distributor says he's also had success working with new suppliers—especially small companies. Introducing what he refers to as "niche products" has helped build business in the local market and open new opportunities through national accounts. Essentially, his company has been asked to replicate what it's doing for local customers at their sister plants in other regions.

Short says Updike Supply has experienced a similar turn in its customer base. Many of the accounts his company served just five or six years ago no longer exist in the local marketplace, so they've had to reach out to new industries, as well. Another strategy has been to get bigger with the traditional customers that were left—thus the need to expand product lines and services. In doing so, Short emphasizes the importance of understanding where your company fits in the big picture.

"I think, in general, manufacturers are looking for the same things I've said about the customer," Short says. "You have to see where you fit. You should select your manufacturer partners to be a fit."

It all comes down to understanding your business, understanding your customers, and applying those concepts to your marketplace, say Short and many others like him.

In fact, a panel discussion at May's Industrial Supply Conference and Trade Fair in San Antonio dealt with this very issue. The panel, which included distributors, manufactures and end users, was hosted by the Industrial Supply Assn.'s Small Specialty and Emerging Members committee, which represents members with less than $7.5 million in annual sales. Short, who recently became president of ISA, was the distributor representative on the panel. Though his firm falls outside of ISA's definition of "small," Short offered insight on how small companies can use best practices to grow their business.

The panel was moderated by industry consultant Dr. Bill McCleave, who asked a series of questions about the relevancy of small, specialty and emerging suppliers to industrial customers. Here's a look at some of the questions asked and issues raised about the role of the small supplier:

What are the attributes industrial customers use to measure their suppliers? Quality and on-time delivery were part of the discussion, but most panelists agreed that those things should be "givens" in today's marketplace. Cost also figured high on the panelists' list—specifically, helping customers find cost savings and productivity improvements. Developing customized programs and resolving problems for customers were also top issues.

What makes smaller suppliers special in dealing with industrial customers? The personalized attention they provide and the easy availability of the president/owner were two of the top issues mentioned by the end users on the panel.

Short echoed those sentiments. "Flexibility, a sense of urgency—those are things we run our company on," he said. "It's powerful when you say to the customer, 'You have my word. This is what we'll do.'"

Indeed, flexibility and a lack of bureaucracy came across as feathers in the small distributor's cap.

"When you need answers, you can get them," said end-user Jim Rhodes, director of corporate purchasing for Fiber Glass Systems, based in San Antonio. "Time is still money. There's no time to wait for answers."

Small distributors' ability to provide custom programs, including inventory management, also figured high on the list.

Do smaller suppliers effectively demonstrate their value-added capabilities? If so, how? Yes and no were the answers from the panel members. But one thing is for sure, they said: Never assume that your customers understand all that you do for them. You've got to prove it.

As Short explained, "Don't assume your customer knows you so well that they know all the service and value you provide." He followed up with a first-hand example: One of his customers was recently sold to another corporation, and, as he explained, "The business changed overnight." Updike Supply found itself in the position of having to justify its existence to the new management of the company, something it was able to do by pointing to written documents that explained the programs, services and cost savings the distributor had been providing for years.

Are there some natural barriers that small suppliers must overcome to be considered by industrial and commercial customers? The simple answer: yes. Those barriers include financial and personnel resources—in general, a lack of resources to support the company's (and the customer's) growth. Breadth of product line and lack of name recognition were also listed as key hurdles small companies must overcome.

Despite the hurdles, small companies stand to win big if they take the time to analyze themselves, their customers and their marketplace. The trick is being nimble enough to tailor solutions to each customer's problem—and realizing that you can't be everything to everybody.

"Every customer is different, and that's where you have to understand your customer, your business, and what you can do to solve that customer's problem," Short explains, adding that smaller distributors are often in the best position to do that. "A larger competitor may have their program and say to the customer, 'here's how we do things.' The smaller distributor, on the other hand, can be more flexible—have a greater sense of urgency."

For Short, value has become the name of the game. And if you think about it, he says, that's something everyone in the channel is dealing with.

"The bottom line is, simply peddling product isn't enough," Short explains. "It used to be that— even 10 years ago—you had the product, the end user needed the product, you pushed the product to market. Things are different now. The end user is more sophisticated, and they're looking for someone who can bring value above and beyond the product...[Distributors] have to understand where they fit in that scenario and where they can differentiate themselves from the competition."