Thomas Magnuson, CEO – Magnuson Hotels
09 June, 2021
Springtime 1963 in Wallace, Idaho. Population 2,412, a highway silver mining town on Montana/Idaho border.
Elvis Presley films Viva Las Vegas. Beatlemania begins in London. President John F Kennedy calls for a civil rights bill to outlaw discrimination. Martin Luther King readies his “I Have a Dream” speech.
I was only 8 when my dad told me we were going to own a motel. Even though it was a modest 2 story exterior corridor motel made of cinder blocks, he decided in grand fashion to name it the Stardust after a trip to Las Vegas.
He wasn’t a hotelier, but he ended up owning it after one of his accounting clients went bust. At the same time, my grandfather Harry Senior, had just been laid off his job as a butcher only two weeks before his retirement, even after working for the same firm nearly 40 years.
So, Harry Senior and I were dispatched as the motel operating team which meant we ended up doing everything. I look back on those times of learning how to grind brass motel room keys, working the front desk, folding sheets, making coffee for truckers and assembling 88 bed frames as one of the happiest times of my life.
When I met my wife Melissa in 1990, she was a single mom juggling 3 kids and a dozen employees in her signage and advertising company in Coeur d’ Alene, Idaho. At that time, corporate or government advertising contracts didn’t go to small women-owned businesses, they went to the cigar smoking men’s clubs. On the day of one of our first dates, Melissa had just received an order to apply new vinyl lettering on 50 trucks for a local security company, and she patiently gave me a lesson on how to letter trucks in her parking lot.
Unprotected by government subsidies, the corporate shell, the entire small business family is vulnerable, but usually stronger than Marvel superheroes because the job must always done. The choices are simple-the job must always be done.
As Covid has rampaged the world, small independent businesses will face the survival moment. The big are getting bigger, and the small vanishing. Starbucks vs neighbourhood coffee shops, Amazon vs local retail, Netflix vs theatres, Deliveroo vs restaurants, grocery delivery vs the local store.
While some businesses have received government assistance or some type of loan holiday, the true economic aftermath of Covid starts to happen within the first 2 years as economies slow, as they did post 9/11 and 2008.
While millions of kitchen table dreams across the world won’t be able to withstand this duress, large corporate scale has the means to thrive upon it by scooping up troubled assets and repackaging them as something shiny and new.
In our family Melissa always said, “There are no angels, no one will rescue us but ourselves.” And isn’t this true for you? Major corporations have scale, access to capital, and billions in government bailouts such as those received by the airlines and automobile manufacturers. Other than some smaller government checks during 2020, how many total bailouts have happened for motels, grocery stores, book shops, butchers, hairdressers or advertising companies?
For small businesses to overcome these overwhelming corporate advantages, we need to realise how massive we are in numbers, and how overpowering the collective strength can be when focussed. Did you know that in 2020, the number of small businesses in the US reached 31.7 million, making up nearly all (99.9 percent) US businesses? In the UK, small and medium size businesses number 6 Million, also 99.9% of the business population.
The second thing we need to do is reclaim our mojo by reconnecting with why each of us and our small businesses are special. How many of us remember the thrill of our grand opening? The moments when the whole future was ours to design and we knew we could not fail.
I had an old marketing professor at university named Marty Marshall. Marty used to say that there will always be competitors who are bigger than all of us, with more marketing money and resources. And that we never want to get into an arms race with someone bigger.
The solution is, we need to stand tall for something. How can I become the world’s biggest, best or only at what I do? How can I rise above the mass advertising of the biggest brands with a uniqueness and authenticity that sells itself.
Standing tall for something leverages your company’s smaller size as an advantage over larger competitors. Standing tall for something is about accelerating your one true differentiator vs a world of sameness.
The way around this begins with a theory called “identity over image.” What this means is that old school advertising in the era of mass marketing used to spend big money on creating an image for a product, an image to “convince” people to buy their product or service, that it was superior because it was a ‘loved’ brand that created memories. Such as Heinz ketchup at family BBQs, or Campbell’s soup served by mom.
Often times, the purchaser ended up unhappy and dissatisfied because they purchased an image that did not correctly convey the true attributes of the item. A waste of money for the advertiser, for the customer, and lost credibility for the seller.
When we are faced with competitors far bigger than we will ever be, we need to ask ourselves “who am I truly, what do I really have to offer, and to whom does it matter?”
Stand tall for something means we need to identify why we are the world’s biggest, best or only at what we do. To have such a razor sharp differentiation, that we are unassailable, especially when we can niche market and identify the micro markets who need what we have to sell.
In the mid 1990s, the economy of the town of Wallace Idaho, which was once the Silver Mining Capital of the World, has become a ghost of its once vibrant self. To make it worse, a new US interstate Freeway link had just opened up, bypassing our town, and our hotel occupancies went from the 70% level down to the low 30%. As there were 2 local ski areas, some locals took to advertising the local skiing as the next Park City or Aspen. The truth was, the skiing was small town level, and local services were not developed to meet the image that was being promoted. It failed.
Melissa and I asked ourselves, “what do we truly have here, and to who whom does it really matter?” We realised was the small town was surrounded by almost 9000 miles of old logging and mining roads. We noticed that there was an increase in snowmobilers with expensive gear towed by new top of the line trucks. With a little market research, we found how fast snowmobiling was growing but that there was only one true destination for snowmobilers, and that was West Yellowstone MT, which advertised 650 miles of tails.
Over the course of months we developed a local and multi state coalition of businesses, government, and in December 1995, we held a grand opening for the Silver Country 1000 Mile Trail System. The biggest snowmobile trail system in the world. We advertised “We’re not Aspen. You won’t find Ralph Lauren shops or goat cheese pizzas here, just an authentic Western town with hot tubs, prime rib, and 1000 miles of trails you can ride to from the front door of your local motel.”
We issued a press release and sent it to over 300 USA newspapers (this was pre internet). What this means is you and your friends stay up all night folding, stapling, stamping on the floor of an unused Best Western banquet room. It only took one hit, and it was massive, when our Silver Country 1000 Mile Trail System headlined a January 23, 1996 New York Times. That week, we received over 3000 phone calls, and the story was picked up around the USA.
Immediately, hotel occupancies skyrocketed, and the local economy boomed. We then extended the concept to the World’s largest ATV, Dirt bike, and mountain biking trail system in the world. Twenty five years later, the local economy has consistently grown with a complete transition from mining to tourism.
Standing tall for small business can start anywhere. Do you really think people will want more Starbucks locations or more small coffee shops staffed by mom and dad with grandma baking in the back? What about a local grocer who knows your name and will deliver because you can’t get out?
For all of us to beat the corporate Goliaths, we need to see ourselves as we really are, and what great qualities we have in ourselves, our businesses, our friends and colleagues. Remember, the number of small businesses in the US reached 31.7 million last year, making up nearly all (99.9 percent) US businesses. In the UK, small and medium size businesses number 6 Million, also 99.9% of the business population.
If we can stand tall together for who we are and what we believe in, it will not only be ok, we will thrive. And there will be a lot more Davids, and fewer Goliaths.
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