5 Things Small Businesses Must Do to Beat the Competition

It’s just at the top, they say, especially for leading companies because they’re ahead of the race and have less competition. This is a myth. If you are in business, you can never be out of the competition. Companies are always competing with each other to launch new products, update established products, change price points, improve promotions, and expand the customer base. The legendary battles between Coca-Cola and Pepsi, Microsoft and Apple, Google and Yahoo have set precedents for how companies analyze competition and currency strategies to win in the marketplace.

If you are a small business, the competition is no less stiff. In fact, it’s more of a challenge because you may not necessarily have the financial muscle and marketing arsenal to beat your competitors. Therefore, what helps you compete ahead of your competitors is careful competitive analysis, strategic planning, and the implementation of a well-designed growth plan.

Let’s see how small businesses can keep up with their competitors without spending all their resources on promotion:

1. Analysis of the competition

This is one of the most crucial aspects of your entire plan to outperform the competition. There may be multiple companies in the same industry you operate in, but not all of them are competitors.

• Start by checking those companies that offer the same type of product or service that you offer.
• Narrow down the list of competing companies to those that are in direct competition with you in terms of your demographic, geographic, and psychographic target audience.
• Make a list of the companies that outperform you in terms of

(1) Better product/service quality
(2) Most competitive price points
(3) free or value-added offers; If any
(4) Larger customer base
(5) Largest network of retailers/distribution/franchises

• Carefully analyze your product/service offerings to see where your product/service is falling short and what else you can do to update or improve it.

• Take a close look at your estimated costs and margins to zero in on the best prices you can offer. Depending on the nature of your product/service, you can decide what will turn out to be the best return for you: higher volumes and lower margins, or lower volumes with steeper margins.

2. Improving your Product/Service

The next important step in beating the competition is having a winning product or service. There is no use injecting money into promotion if your product/service does not match customer satisfaction.

Study your competitors’ products/services in detail and work to improve your own basket of product or service offerings. The improvement does not necessarily have to be expensive. Even minor tweaks or clever repackaging can give your entire range of products or services a new appeal. Get real practical advice from other business owners in your CEO club or CEO association. CEO peer groups are a great resource for consulting with non-competing business leaders on how you can improve your product/service without breaking the bank.

3. Decide your positioning

It is important to study how your competitors have positioned their products/services. Look for a niche where you can firmly entrench your product or service. Serving a niche gives you a competitive advantage of building a captive audience and enjoying ongoing customer loyalty, especially if you can maintain the quality and price of your product/service.

For example, if you are in the restaurant business and have a significant concentration of immigrants in your area, introduce some dishes or cuisine on your menu that are targeted at the local immigrant community at attractive prices.

4. Who doesn’t like gifts?

Free offers or value add-ons are always an attractive bonus for customers. Add a free offer, special discount or value-added service offer for any product or special offer or during the holiday season. Such offers, if strategically placed, attract new customers. You can get some good ideas on free offers from your fellow CEOs at your CEO club or CEO association.

5. Expand your customer base

Don’t restrict the reach of a larger customer base if your product/service allows for expansion. But before you do, build on your existing customer base by providing better quality and consistent, reliable after-sales service. Small businesses often fail to retain their existing customers when they cut corners in after-sales service. Once you’ve built a loyal customer base, spread your wings further.