Why Are They Doing So Much Better Than I am?
You may find yourself asking this question if you approach business with a “build it and they will come” attitude. You can set up a business with the same products, same prices, on the same street as your competitor and have vastly different results.
This is largely due to something behind the scenes, often intangible – the competitive advantage.
Now competitive advantage can come from a variety of things, and some are more obvious than others. For example, Walmart’s low prices are one of their advantages. They are a large enough corporation that they can vertically integrate, buy massive quantities for low prices, and maintain low margins in order to offer the lowest prices possible. It is practically impossible to compete with Walmart’s prices in any meaningful way.
You can also have more than one competitive advantage. Think about Amazon, how they have such a vast network of products and suppliers. This allows them to offer an incredible variety of products at a wide range of prices. There lies an advantage over big box stores, if they don’t have it you can bet Amazon does. Their next advantage is their quick ship times. Amazon offers same day delivery in some instances, and that can be a powerful driver for consumer purchases.
So, What Do YOU Do Better?
If you look at your business, or business idea and have no idea what you do better than anyone else it may be time to review your business.
It’s time to think through every aspect of your business from first interaction to collecting on sales. What can be improved? Where are your weaknesses? You will be able to find your specific answers better than anyone, but I’ll give you some hints.
You Are Your Advantage
If you have been following my series on How to Start a Successful Business You Love, then you likely already have one advantage. You built your business around your passion. You know your products inside and out and are able to effectively engage with potential customers. You are also likely to build trust easily and upsell when the opportunity arises.
If you have employees or have ever worked with another human, you know the importance of hiring the right people. Your employees can make or break your small business, especially in the early stages. If you start off right, you can set yourself up to have your team be your competitive advantage.
Imagine walking into a local coffee shop and all the staff are enthusiastic, have a deep knowledge of the products, and are extremely personable.
As you look around in your minds eye, are there customers in the shop? Does it seem like a place you would enjoy being in? My guess is that the answer to both of those questions is yes.
Of course, the quality of product plays a large factor, but passionate employees with a sense of shared ownership look for ways to improve your business. If you’re thinking that’s a ridiculous statement, then you have likely only ever had managers, not leaders. It’s your job to recruit the right people and turn them into passionate employees.
What do you have that the other guy doesn’t? If you don’t know the answer to that question, then you likely haven’t created any differentiations. A competitive advantage doesn’t have to be what you do better than your competitors. Sometimes its just what you do differently.
For example, Hooters is an extremely successful sports bar. There are hundreds upon hundreds of sports bars across the US, but few are better known than Hooters. Its obvious what they do differently and its crazy simple.
Netflix is another good example. While competition has adopted their approach, what made them successful was their unique model. While Blockbuster was the giant of the day, Netflix beat them by offering a different way of renting movies.
How do I Develop my Competitive Advantage?
- Think about what resources you have that access to that are more difficult for your competitors to access if any.
- Take recruitment seriously. Consider personality and competency tests. Don’t hire just to fill a spot, no matter how insignificant or “unskilled” you may think it is. Every job has value and the right people bring more than you could hope for.
- Can you leverage your location somehow?
- Can you get ahead on the technology to build efficiencies or make a more enjoyable client experience?
- Can you offer lower prices than your competitors? You don’t need to make $1million on your first sale if you can make $1 two million times.
- Build trust and recognition at any and every given opportunity. In fact, make opportunities. Go to events, host events, get your name out there and fix customer issues before they arise.
- Be a leader, not a boss. Don’t ask anyone to do something you wouldn’t do yourself. Lift up your team and encourage them. Celebrate their successes and build a sense of shared ownership.
Survive or Thrive?
Identifying and properly leveraging your competitive advantage can mean thriving instead of just surviving. Most small businesses fail, of those that don’t, the majority plateau quickly. Don’t be one that stops short.
If you enjoyed this article, don’t forget to like and follow. Next in this series on How to Start a Successful Business You Love we’ll be taking a look at how to develop a SWOT analysis for your business.