If there’s one thing almost all small business owners can agree on, it’s this: now more than ever, growing a small company is no easy feat. And for those businesses that depend on local customers to choose them over some online corporate giant (we’re looking at you, Amazon), it’s not just difficult—some days, it might feel impossible.
We hear you. No matter what product or service you offer, there’s going to be some competitor that’s bigger than you, one you might feel like you can’t compete against.
While some businesses will inevitably be tougher to compete against than others, there are ways small business owners can differentiate their offerings and still win. Even when behemoth competitors dominate market share, there are steps business owners can take to carve out a nice slice of the marketplace pie for themselves.
Here’s how to do it.
First, don’t compete based on price.
This one might seem obvious for some small business owners, but it’s something that needs to be reiterated. For most small businesses, price should not be the main focus of your core offering.
Some of you might be thinking, what?! But everyone cares about price! I have to offer low prices or I’ll never survive!
Ok, we get it. Price can be an important determinant in choosing one company’s products or services over another. And some industries naturally lend themselves more to price sensitive customers than others.
But ask yourself, is this why your customers come to you in the first place?
Unless you’re selling an extremely commoditized product, the answer is probably no. More than likely, customers choose your small business for some reason other than price.
Because here’s the ugly truth about competing based on price: there’s always going to be someone, somewhere that can offer a lower price than you. Period.
This is especially true when you’re dealing with competitors like Amazon, Walmart, or other large online companies. The volume these companies produce allows them to achieve economies of scale, which ultimately translates into the lowest prices in the industry for customers to enjoy.
So, if you’re a local bookstore owner, don’t fall into the trap of price-matching with Amazon or Books-a-Million. You won’t win. Cost leadership can work well for some companies—particularly some industries—but for most small businesses, this is not the right strategy.
This doesn’t mean you can’t offer competitive prices. That’s still important. Unless you’re in a luxury market, you need to keep your prices within a reasonable range that most customers will find acceptable.
There’s a big difference, though, between offering competitive prices and competing on price. The former allows your business to offer good prices while achieving some other strategy; the latter forces you to develop a laser-like focus on efficiency, volume, and becoming the cost-leader. Don’t confuse the two.
So, if you don’t compete on price, what can a small business owner do instead? How can they make their business stand out from the masses?
Focus on something unique your company can offer.
The small businesses that thrive today, even in the midst of stiff online competition, are those that have found a unique purpose and can subsequently provide greater value to customers than cost-leaders.
Don’t let the word “unique” intimidate you. Some entrepreneurs feel like they have to offer something grand or extraordinarily interesting in order to entice customers to their storefront or location, but this simply isn’t true.
A unique purpose simply means this: you’ve found one particular thing your business can offer to customers that makes your company more favorable than others.
Let’s dissect this.
The importance of one key offer
Ever heard the saying, Don’t try to be everything to everyone? Or how about this: Try to please everyone, and you’ll please no one?
That’s often the way business works. You can’t offer every possible benefit to your customers. If you try, you’ll likely end up being mediocre at everything. Or you’ll go broke in the process.
Instead, ask yourself, what’s one key thing I can offer my customers?
For some, they’ll find the answer in their original purpose for starting the company. For others, they might need to assess what competencies they have been able to build over time.
However you arrive at this answer, you need to keep it focused on one main offer. One goal. One singular purpose.
Let’s think back to that bookstore example. If you’re a bookstore owner, and you know you can’t possibly offer Amazon-like prices or free shipping, you need to focus on something you can offer that Amazon can’t.
Maybe you decide your business should be a children’s bookstore that helps kids find the joy in discovering new books. If that’s your angle, then create an imaginative experience when children walk through your doors. Train your employees to be experts in children’s novels and help kids pick out books based on their interests. Host events where characters read books.
Your options are endless for how to deliver this purpose, but the point is this: it’s one singular purpose. One unique offer.
An offer that makes your business more favorable than others
Unfortunately, it’s not enough to simply claim what your purpose is and focus on delivering that purpose to customers.
You also have to make sure it’s something that’s going to make you more favorable than your competitors. And when you’re dealing with competitors like Amazon, it needs to be something that customers can value over price.
Again, it doesn’t have to be something crazy innovative. Something as simple as superior customer service or a fun shopping experience can make consumers choose your business over your competitors. You don’t have to reinvent the wheel; you just need to find something that works for your business and that will appeal to your audience.
A good place to start is by studying your competition. Start analyzing what those competitors are doing—and more importantly, what they’re not. If your competition is strictly online and you have a physical storefront, find some advantage of visiting your store that beats shopping online. Find the gaps in your competitors’ offerings. Think about what they could be doing to improve their products or services but have chosen not to—and then develop your strategy around this.
You will find your purpose and what makes your company stand out from all others. And once you do, run with it. Live and breathe your purpose in every action your business takes, in every interaction with customers.
Even the tiniest of companies have found ways to compete against corporate giants and remain profitable. And if you follow these steps, your small business can, too.