How would you feel if I told you there was a way – that with a couple of hours of time spent learning and perhaps a few hours of work – within days or weeks – growing your business would start to feel effortless and natural? This concept works so well that once you start to apply it, you’ll start to question why things may have felt like such a challenge before.
Are you familiar with the term ‘competitive advantage?’ Do you know what it means and why it is so important for your business? In a series of posts, I’ll be sharing with you some insights into competitive advantage. I’ll walk you through understanding what a competitive advantage is and how you can use it to grow your business. By the end of this series, you’ll understand how owning a competitive advantage can help you earn more, doing less.
Over the years, when working with small business clients on business and marketing strategy, one of the biggest challenges seems to come with defining the client’s competitive advantage.
Typically, a conversation with the business owner will go like this:
Me: “What is your competitive advantage?” (usually asked because it’s not even clear to me from looking at their website)
Them: “We provide the <insert x>,” where “x” is typically the best pricing, the best service, the best customer support, the best results.
Right away, I know we have a problem when I hear a response like this. Before you can define your competitive advantage, you first have to know exactly what a competitive advantage is. A response like this is indicative of there being a disconnect or a lack of knowledge.
Before I get into looking at what a competitive advantage is, let me explain one important thing…
What a Competitive Advantage Does For Your Business
A competitive advantage gives you edge over the competition. It allows you to get more than your fair share of the potential market.
A competitive advantage can be based on being the lowest priced in your market, however, competing on price is rarely ever a good idea – especially if you are running a small business. There will always be another company who can come along and offer the same service or product at a lower price.
A competitive advantage is what makes you different from your competitors. It allows your company to stand out.
For most types of small businesses, having a solid competitive advantage means you don’t need to compete with the big guys. You don’t need to mass market. Marketing expenses can be significantly reduced. The more you are able to refine who your prospects and buyers are, the more you can refine your marketing message. Your conversion rate skyrockets. Your ROI (return on investment) can grow at phenomenal rates. Word-of-mouth marketing takes on a whole new meaning as you find yourself with an enthused fan base who will drive others like them to your business. These are prospects that come to you with their wallets open. They are pre-sold that you are the best because of the competitive advantage.
I’m sure you’ve heard the expression, “Work smarter, not harder.” My own spin on this is, “Earn more, doing less.” For small business owners and professionals, having a solid competitive advantage is the simplest way to both of these things.
Defining a solid competitive advantage has important implications
- It can help you focus your efforts on that segment of potential buyers who would be most likely to respond
- It can help guide you in decision making about expanding your company’s products and services
- It can help you structure your marketing message to hone in on that one specific message you want to best communicate to your best potential buyers
Competitive advantages are rarely sustainable
One thing that is important to understand about competitive advantages is that they rarely last long. Maintaining a competitive advantage is a never-ending cycle of continually working on ways to maintain that edge. Sustainable competitive advantages by companies such as Apple are quite rare. Even Apple has to work at it by being in a constant product development/improvement and marketing cycle.
How do you create competitive advantage?
There are three parts to creating competitive advantage:
1. Do something that is different from your competitors.
2. What you do that is different has to be seen as being more valuable than what your competitors are doing – making you the preferred option.
3. Being able to target those who will recognize this value.
How strong your competitive advantage is often comes down to how powerful a mix of these three things you can create.
What about personal branding?
For small business owners and professionals, personal branding has become increasingly important in today’s competitive market. Personal branding is just an application of competitive advantage.
In upcoming posts in this series, I’ll be looking at the different kinds of competitive advantages. I’ll then take you through some specific examples so you can understand how competitive advantages work in the real world.
Talk To Me
To help me understand where you – as a reader of this blog – is at – I’d love if you could share in the comments below or on on my Facebook page – what you understand about competitive advantage, whether or not you feel you have one and what you would like to know more about on this topic. I want to know how much time I should spend on working on this very important subject with you and how that time can best be spent.