Giving Your Company a Sustainable Competitive Advantage
Starting a business can take an tremendous amount of hard work and motivation. It can take even more effort to successfully grow your small business. Unlike large corporations, which seem to have an abundance of resources to advance their companies, small businesses often lack the financial luxury and manpower to compete on the same level. As such, small business owners need to position themselves differently to keep up with the “big dogs” and obtain a sustainable competitive advantage.
Today, let’s look at what strategies small businesses can use to be successful and achieve growth
To grow a small business, entrepreneurs should consider a few a few questions. For starters, what differentiates your products and services from the competition? As I mentioned in another post, differentiating is not having the lowest price in town. For example, do you use the highest quality products or are your products all custom one-of-a-kind originals? Do you make house calls or 24/7 services? Have you been in business since the dawn of time with ownership being passed down from parent to child who instills a distinct set of values? It’s up to you to determine what sets you apart from the competition and maximize your strengths.
Ask yourself if you’re targeting the right market for you product and services. From time to time, I have clients who haven’t narrowed their focus enough. They think they need to be all things to everyone and take a scattered approach to running their business. What happens is they risk the potential of being good at nothing, which results in getting no piece of the pie. For example, if you’re selling baby cribs, your target market is likely soon-to-be parents and grandparents. There’s no reason to market to all parents and grandparents. Why? Because babies outgrow cribs between ages 1-2, so there’s no reason to market to parents or grandparents after the child no longer needs a crib. There’s probably a good chance parents have cribs for their babies prior to leaving the hospital. The bottom line is you need to think about who and when your buyers are most interested in your products and services.
Areas of Improvement
What can your company do better? A long time ago, I listened to a presentation or maybe I read it in a book. I can’t be sure. However, it talked about working on strengths rather than weaknesses. For example, I’m an introvert and socially inept at times. Not only am I socially inept, but social situations often leave me stressed. So let’s say I’m at a 4 out of 10 on the networking side. On the other hand, I think I do a pretty decent job when it comes to developing financial projections. In fact, I really enjoy putting them together, as I see them as somewhat of a puzzle. We’ll give me a 8 out of 10. It would be a lot easier for me to achieve a 10 out of 10 and become the financial projection guru than it would for me to bring my networking skills to a 10.
For your company, think of areas you do well at, but can step up your game. Allow your company to be the expert in those areas… the go-to company if you want that particular job done right. Likewise, take advantage of your employees strengths. Let them become an expert in specialized fields. It reminds me of when I went to get blood drawn one days. When I was younger I had AWESOME veins. A few years ago, I had an IV put in my left arm that ruined the vein. So, I was left with one awesome vein my right arm. The phlebotomist blew the vein, which left the arm unsuitable for a draw. Doh! She was tuck with my uncooperative left arm. What did she do? She brought in their MVP, who was able to find the vein and stick me with the smallest needle I’ve ever seen for a blood draw, and accomplish the job. Let your employees have the pride of being the best in something.
A Time for Every Season
It can be tempting to grow quickly. However, company growth should be controlled and make sense. For example, if you only have enough employees to take on X number of jobs a month, accepting X + X number of jobs for the month can put you in a position where you’re unable to deliver, which can affect your reputation. Likewise, expanding inventory to offer a larger variety of products to customers can also have consequences. For example, it may require you to acquire more warehouse space (costs $$), hire more salespeople to move the products (more $$), and increase your inventory turnover ratio (less percentage $$ for you). Before taking the next growth step, consider the consequences of the decisions and determine if it makes sense in the long run. Will your investment result in a better return?
Look to the Future
From time to time, I’ll say, if it’s not broke, don’t fix it. In business, that attitude will get you left behind as your competitors come up with innovative techniques to push their business forward. Research and development (R&D) should be a part of every business model. Even if you’re not developing new products, you should be researching the better products and ways of doing business.
Though I’m saying surpass the competition before they surpass you. You’ll also want to consider if making changes is the best option for your company. Everything new and shiny is not golden. Sometimes it’s beneficial to let others spend time, money, and efforts on products and techniques which still have kinks to work out.
What techniques have you used to give your company a leg up?