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If you want your small business to compete successfully over the long-term in today’s dynamic and busy landscape, you’ll need to master your competitive strengths.
Whether you're a small start-up or a large corporation, the ability to gain an edge on your competition can make or break your business.
In this article, I’m going to explain the strategies that businesses can put in place to create competitive strengths — and how to sustain them over time.
Here are the links to the main sections:
What are competitive strengths?
Essentially, these are the unique resources and capabilities that can give your company an edge over your rivals.
They can come in various forms. Here are some examples:
Cost advantages — you may be able to produce your product or service cheaper than your competitors
Unique expertise — you may have specialist know-how or a proprietary technology that enables you to serve customers in ways your competitors can’t match
Brand reputation — your company may have a higher status in the mind of your customer, leading them to become loyal repeat buyers
Operational efficiency — you may have a more streamlined way of working that your competitors are unable to copy
What’s worth remembering is that developing competitive strengths is not a one-size-fits-all approach. To get it right, you need to have a deep understanding of the industry you operate in.
How to create competitive strengths
Here are some ways you can create competitive strengths in your business.
1. Identify your core competencies
Every business has unique skills and competencies that set it apart from its competitors. The start of a successful business strategy lies in finding them and making the most of them.
So it’s essential, first of all, that you know what your core strengths are so you can align them with your business strategy.
For example, what makes you different could be your personalised customer service, some sort of niche expertise or perhaps being agile and adaptive as market circumstances change. By making best use of these capabilities, you’ll be able to serve your customers in ways they value. And the more your brand becomes synonymous with the benefits your customers receive, the more loyal they should become.
If you have a larger business, you may also be able to leverage economies of scale, build research and development capabilities or broaden your distribution networks.
2. Innovation and differentiation
If your company can innovate, this could put you in a good position to create a competitive strength.
For example, you may be able to introduce a unique product or service that addresses unmet needs in the market.
It may depend on your resources but another way to foster innovation is through research and development efforts, creating cutting-edge technologies or offering novel solutions that disrupt the industry.
3. Customer-centric approach
Putting customers at the centre of your business strategy can be a potent competitive strength.
To do this, you’ll need to understand your customers’ pain points, preferences, and behaviours. This will then allow you to tailor products and services to their needs.
The advantage here for a small businesses is that you can build personal relationships with your customers. Customisation can be a powerful tool for establishing customer loyalty and dissuading them from trying out other suppliers.
And, if your funds allow, you can invest in data analytics and customer relationship management (CRM) systems to gather insights that can help further with your strategic decision making.
4. Efficient operations
Being able to operate efficiently is vital for your business.
You should always be looking at ways to optimise your processes in a way that reduces costs and improves quality.
You can also look to implement lean methodologies and supply chain optimisation to drive down your costs and enhance your productivity.
If you serve a particular customer segment, you may be able to tailor your processes so that they perfectly maximise efficiency in that niche in ways that suppliers to other parts of your market can’t match.
5. Strong branding and marketing
If you build a strong brand presence along with effective marketing strategies, this can be a significant distinguishing feature of your business.
To do this, you’ll need to focus on how you can create a unique brand identity that resonates with your target audience.
Once you establish some brand reputation, you should then use this to encourage and maintain customer loyalty.
6. Talent acquisition and development
If your workforce is skilled and motivated, this can be a valuable competitive strength.
You can attract and retain talent by setting out the growth opportunities your business offers and creating a positive work culture. You can also invest in employee training, development programmes and other benefits.
If you give your staff the opportunity to develop and use specialist skills, this can create a virtuous circle of staff job satisfaction and loyalty.
The benefits of being a small business
Small businesses often have the advantage of being agile and adaptable.
This flexibility can help you identify niche markets, experiment with new ideas and form close relationships with your customers.
To explain this further:
Focusing on niche markets
You can seek out under-served or specialised segments within your industry and then tailor your offerings to their unique needs.
This targeted approach can help you become a go-to provider in that niche.
Making the most of customisation
You can deliver a more personalised experience to create exceptional customer service.
This can be done by getting to know your customers individually and tailoring your interactions and offerings based on what they want and need.
Embracing innovation
As a smaller entity, you can pivot more quickly and experiment with new ideas.
By keeping an eye on industry trends and emerging technologies, this skill can help you stay ahead of your competitors.
As your small business grows
As your company grows to become a more medium-sized business, you’ll pass through a transitional phase. This is when you’ll want to scale your operations while maintaining your advantages of agility.
Looking at this in more detail:
Scaling with care
As you grow, you’ll need to ensure that your core values and unique strengths aren't compromised. So you’ll need to find ways you can scale in a way that preserves your company culture and customer relationships.
Expanding your market reach
To capitalise on your growth momentum, you might look to expand into new geographic markets or customer segments.
One of the benefits here is that diversifying your customer base can help mitigate risks (if done correctly).
Investing in technology
If your growth has been profitable, you should be able to invest in technology solutions that enhance your operational efficiency, data analysis and customer engagement.
Sustaining your competitive strengths
Creating competitive strengths is just the beginning. Sustaining them over time is equally important.
Here are some strategies that can help ensure your competitive advantages remain relevant:
Always look to improve
You should regularly review and refine your business processes. This will help you maintain your efficiency and quality.
Your approach should be comprehensive and include your products, services and customer experiences.
Be willing to adapt to change
The business landscape is always changing. So it’s important for you to stay attuned to industry trends, advances in technology and changing customer needs. You’ll need to adapt your strategies to reflect these changes if you want to stay ahead of the curve.
Invest in research and development
If you can allocate resources to research and development, your investment could help fuel innovation and ensure that your offerings remain relevant and at the forefront of what your customers want.
Be aware of your competition
You should always keep a close eye on what your competitors are doing.
By analysing their moves, strengths and weaknesses, you’ll be better placed to adjust your strategies and seize opportunities.
Nurture your talent
Your employees are key to sustaining your competitive strengths. If you provide ongoing training, career growth opportunities and a positive work environment, you’ll be better able to retain your top talent.
Make the most of technology
You should seek out and embrace technology developments that align with your business goals.
Automation, AI and data analytics can all work to your advantage — by enhancing decision-making, streamlining processes and improving customer experiences.
Put your customers first
It’s critical that you never lose sight of what your customers want, need and prefer.
If you’re continuously engaging with them, you should be able to gather feedback and make improvements.
Some small businesses that get their competitive advantages right
While the theory can be useful, it’s worth looking at how this works in practice. Here are some examples of the competitive strengths of some successful SMEs (small and medium sized enterprises). Whether it's through a commitment to sustainability, niche expertise, innovative products or personalised experiences, each has created a competitive advantage in their respective market.
Innocent Drinks (beverage)
Innocent Drinks is a small company known for its fresh and natural fruit smoothies.
Its competitive strengths include being a well-known and well-liked consumer brand. This brand recognition developed out of the company’s strong emphasis on sustainability, transparent communication with customers and a commitment to using ethically-sourced ingredients.
Innocent uses playful branding and is clear about its commitment to social responsibility. This has all helped it create a unique niche in the beverages market.
Neal's Yard Remedies (beauty and wellness)
Neal's Yard Remedies specialises in natural and organic skincare and wellness products.
Like Innocent, its competitive advantages include a strong consumer brand. The company has built up this brand through its commitment to sustainability, use of natural ingredients and holistic approach to well-being.
It has a reputation for high-quality, eco-friendly products and this has earned it a loyal customer base.
Greggs (take away food)
Greggs operates a nation-wide network of outlets selling hot and cold convenience food and drinks. Its customer proposition is good quality food, freshly prepared and sold at good value prices.
Its competitive strengths lie in its assets (it owns its own food preparation sites and logistics fleet) and its expertise (the skills to operate its network efficiently).
With vertical integration, Greggs can tailor what it does to serve its own needs — staying competitive on quality and costs even in a crowded market. This has enabled Greggs to build substantial scale, an advantage that further reduces costs.
Brompton Bicycle (bicycle manufacturing)
Brompton Bicycle designs and manufactures folding bicycles that are compact, versatile and durable.
Its competitive strengths include its innovative engineering skills, its strong brand and a loyal community of users.
Brompton's focus on urban mobility and sustainable transportation solutions has positioned it as a leading player in the folding bicycle market.
Higgidy (food manufacturing)
Higgidy is known for its handmade pies, quiches and savoury pastries. Its approach is to create products with a homemade feel.
This has resonated with customers looking for convenient yet high-quality options. With this in mind, the company prioritises artisan craftsmanship, use of quality ingredients and a focus on creating more modern comfort foods.
Thanks to its niche focus and effective execution, Higgidy has been able to build strong brand recognition and broad retailer distribution, which are now among its main competitive strengths.
Pukka Herbs (tea and wellness)
Pukka Herbs specialises in organic herbal teas and other wellness products.
Its teas are formulated with natural ingredients and have attracted health-conscious customers who want health-focused beverages. Pukka is dedicated to organic farming practices, ethically sourced ingredients and a holistic approach to health.
Pukka’s competitive strengths include its expertise in the health benefits of different herbs, its know how in developing great tasting teas and its network of suppliers through which it sources the ingredients for its products.
Premier Inn (hotels)
Premier Inn is the UK’s largest hotel brand, operating more than 800 hotels across the country. The brand proposition is a combination of high quality and good value for money.
Premier Inn benefits from several competitive strengths. Its strong rankings with customers ensure that almost all its bookings are made directly through its website, eliminating the cost of agency commissions. Its proprietary ‘trading engine’ software dynamically adjusts prices across its hotels to maximise revenues and profits. And its large size gives it efficient cost ratios and substantial bargaining power with suppliers.
Huel (nutrition)
Huel produces nutritionally-balanced meal replacement products.
The company’s products cater to people who want on-the-go and nutritionally complete meal replacement options that are convenient and environmentally sustainable. This aligns with the growing trend of health-conscious consumers.
The company’s competitive strengths include expertise in nutrition, know how in developing great-tasting products and a strong status symbol brand among consumers in this niche market.
Howdens Joinery (kitchen supplier)
Howdens is one of the UK’s leading suppliers of kitchens.
Howdens only sells to builders and kitchen fitters. Consumers can visit its depots for design meetings but they can only buy through the trade.
The trade-only model is Howdens’ first competitive strength. By building strong relations with tradespeople, Howdens ensures that end customers get efficient, high quality installation from accredited fitters who are experienced with the product.
This has boosted the brand’s reputation with consumers — adding a second strength.
Strong branding has boosted sales. With increased scale — a third competitive strength — Howdens has brought more manufacturing in-house, improving product quality, availability and costs.
Your strategy of building and maintaining your competitive strengths is ever-evolving
Overall, it’s good to think of your strategy to build and sustain competitive strengths as a continuous journey.
Irrespective of whether your business is a small start-up or established and growing, the principles of identifying strengths, being innovative, focused on your customer and ready to adapt all hold true.
And as you strive to create and sustain your competitive edge, it’s always worth remembering that there is no one-size-fits-all solution. Like every business, yours is unique and so you should tailor your strategies to fit within your specific industry, market conditions and your workplace operations and culture.
Don’t approach creating competitive strengths in isolation from your broader business. Your unique advantages should be integral to your overall strategy. They should also reinforce your brand identity. The objective should be to create an all-embracing value proposition that will appeal to your target customers and keep them interested.
The work of building and sustaining your competitive strengths is one where being open to learning will be of benefit to you. As you work on your competitive advantages, you should remain receptive to feedback from customers, employees, market commentators and others in your industry. Using this feedback to adapt and respond successfully to market trends can help you refine your strengths and seize new opportunities as they emerge.
Getting your communication right is key
Your competitive strengths should be clear so how you communicate them is vital.
You need to ensure that your whole business understands and embraces the competitive advantages you’re building. This should include everyone from your management leadership team to your front-line employees. You’ll be better placed if everyone is aligned with your strategies and values — not least because it will foster a cohesive and united effort to achieving and sustaining your company goals.
And never forget your customer
It’s always worth bearing in mind that competitive strengths are not just about outshining your competitors — they’re about delivering exceptional value to your customers, building a growth mindset in your organisation and making a meaningful impact in your industry.