Consider whether your business has significant points of difference, a distinct competitive advantage or a unique selling proposition. Do so objectively, honestly and with the input from someone outside of your business … it’s difficult to make these judgements for people who are inside the business (because they’ve often worked hard to get it to where it is or they will be proud or just their familiarity with the business can blind you to some realities). Avoid defending your current situation rather than objectively evaluating it. The reality for many businesses is that they can not validly claim they’re different from their competitors. They simply say things like “good customer service”, “competitive price”, “good people”, “convenient shopping”, “quality product”, “sound advice”, “good value”, etc. Those statements are all being made by competitors. Too many businesses unwittingly align their strengths to points of difference .. they are not the same. Strengths simply get a business into the competition; they don’t win it.
Here are five suggestions to help your business:
- Your business doesn’t have to be different to others to succeed … but if you’re not you have to be able to make enough sales to be profitable. For example, alternative supermarkets and television channels are pretty much the same but both are successful. But, if a business is similar to its competitors, it has to have an effective selling process, being:
- effective marketing of its products;
- high quality sales people;
- high quality pre and after sales service;
- effective use of data relating to suspects, prospects, leads, presentations, sales and revenue; and even
- effective use of digital marketing.
These five elements of the sales process are significant in breadth of coverage and they should all be examined in detail by every business as to performance in each. Holden sell cars because they perform in most or all of those areas; so do the other businesses mentioned above.
- If you want to be different through non product differentiation, at least three possibilities come to mind:
- Be the most expensive on the market (or one of the most expensive). High price tags have been successfully marketed around the world to represent superior quality … perfume, clothing brands, cars, jewellery, confectionery, etc. So, rather than trying to be price competitive (whittling down margins and being a price taker) you may be better off to make yourself more expensive.
- Deliver the product to the purchaser faster than anyone else. This may involve some re-engineering within your business but that might be easier than trying to distinguish yourself through the product itself.
- Stand out in the marketplace by being a bit silly or extravagant. It’s actually not difficult to do that and it can be cost effective; but it does take some courage and initiative. Some of the world’s top entrepreneurs are a bit of “out there” so take a bit of licence to stand out, as they do.
- If you can’t stand out from the crowd via either of the previous approaches and your business is battling to survive as you are, you may be facing a fairly challenging future. So, without being negative about it, be realistic about your business’s future if you fundamentally stay the same and, if it may not be all that positive, then maybe you could consider diversifying into different products, integrating vertically or horizontally or merging with another business . There are clearly significant costs in each of these options, as well as serious time, effort and expertise, so the choice between the three cannot be made lightly, if one is to be made at all.
- One of the biggest risks business owners and key people take in their careers is being associated with a new business. Unfortunately, from that point on, too many take fewer risks as they move through the years and that can spell trouble. Sometimes the biggest risk is to take none. People who have the courage and foresight to start a business or somehow be part of one, should continue to demonstrate that courage to take risks to create ongoing success. There was little predictability of success when starting (and, in fact, most startup businessesbudget for losses in the early periods) so that shouldn’t stop the making of significant changes, ongoing.
- Design your product / value proposition to be significantly different to others . That is a sound approach, to state the obvious. But it can require significant resources and the competitive advantage generated can also be short term if the differences initially can be copied. So, you will have to continuously reinvent and there is nothing wrong with that, as long as you’re prepared to do so.
Footnote : If a business is not travelling all that well and it’s either unable or unwilling to make fundamental changes in the move forward (to improve profitability) then it may be time to consider selling out. That’s not harsh. Sometimes the failure to consider that option can lead to a business just dwindling and become worth less and less each year. Biting the bullet in a timely manner is better than just experiencing continuous downturn.
Going from good to great is difficult … staying there is extremely rare. 50% of the world’s Fortune 500 companies drop out inside three years, having made extraordinary effort to get to that level.
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