What is your small business good at?
Does that unique advantage matter to your prospects and customers? Is that sustainable? Is it easy to copy?
In other words does your competitive advantage create value for your target market? Can you continue to compete for customers and market share based on that “position” in the eyes of the market?
Why is this so important?
Put simply, if you cannot create a marketing message that clearly states why someone should do business with you over the competition you will be forced to fight on price. A tough game to win UNLESS that is your business strategy and advantage.
If there was a business glossary for this concept it would be called “strategic positioning.” Properly thought out your strategic position will influence all of your business decisions including what you won’t do.
Standing for Something
Suppose you were a new business which of these marketing messages gets your attention:
We do small business tax preparation or We specialize in S Corp tax filing for small businesses open less than 5 years.
The second ad clearly states who they can help, why they are best to serve that target and also clearly state who they do not help. As you perform your strategic planning (otherwise known as deciding how you plan to compete) you must always remember you can only run a business within the scope of your resources, pick a position you can execute.
If you try to be all things to all people you will stretch yourself thin and it will be difficult to be “known for something.”
A nice side effect when you know your competitive advantage and build a strategic position around it you can charge premium prices.
The Basics of Choosing a Position:
There are essentially 3 core business strategies to dig deeper into a positioning for your small business:
- Low Price
- New product or service (first mover)
As a veteran entrepreneur I can tell you fighting on price is very tough, there will always be someone down the block willing to lower price to get business. If you choose to compete on price make sure it is only to attract new customers and not as the core of your business model revenue stream.
How about being first to market? First off there is actually two types of new: a new market completely or a new edition of something in an existing market. Being first and having “no competition” is a very slippery slope. You either have the whole pool to yourself or there is no water in the pool. Very tough to create a new market. A new twist on an existing product or service is not a bad way to go but how long will it be “unique” to be your competitive advantage?
How about being different? This is good as long as it creates value to your customers.
- A specific way of producing your product or service.
- A specific way of delivering value.
- Only small business that does what you do in a geographic area? Don’t take this for granted if this is you, say it loud! If nobody else is saying it be the first to claim it.
- Customer service.
- Distribution Channels.
- Is there some key feature that matters to a specific group of people? Is that group large enough to be considered a viable target market to sustain your small business?
This is a just a short list of ideas but the point is you REALLY need to decide how you are going to compete in order to have clarity for how you will make decisions.
Here are some questions to ponder over a large cup of coffee:
- What do you do? How do you provide value in exchange for money?
- Who else can say that?
Make a list and determine if there is any clear position for you or your competition. My guess is everyone is saying the same thing.
Next step: Spend as much time as you can online and offline searching EVERY business you come in contact with and look for something unique about how they create value. One key here is that it absolutely does not have to be from your own industry.
Final step: when you find a business with a really clear competitive advantage in their marketing message this is something to pay attention to and learn from. See if it can be a crossover concept in your industry.
You don’t need to reinvent the wheel but you do need to separate yourself.
A unique or different way of delivering value is a good chunk of the difficulty in increasing revenues. Compete on price or a well thought out strategic position. Get to work.
PS. Quality and hard work are a given in today’s competitive world. Look deeper.