A little competition is good for you…
Sure, competition can be daunting for most small business owners, but it can also be empowering and rewarding. Healthy competition can be likened to vegetables: while you’d rather not eat them, you know they’re good for you and will contribute to your long-term health.
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In fact, while competition is often viewed as a negative factor in business, every small business owner, and its customers, can benefit from a competitive marketplace. Whether you plan to differentiate your business to increase profits, market share, or sales – competitors can create massive value for your business if you embrace them.
Essentially, healthy competition can help every small business:
1. Create loyal customers.
When you are faced with stiff competition, serve those that matter most – your customers. As you compete for customers, create value by delivering winning customer service experiences. Most importantly, continue the conversation and seek to learn what’s important to your most valuable clientele.
According to TIBCO Loyalty Lab, “customer value resides in a relatively small percentage of highly-engaged, frequent-spending, loyal customers. Typical distributions show 50% of profitability comes from as little as 10% of the customer base.” (Source: The Loyalty Imperative: No Longer An Option, Whitepaper)
Learn what makes your top 10% tick, find out what drives their purchase behavior and understand what they truly value. Then take your newfound customer insights and spark informed and engaging marketing conversations.
2. Develop and refine a winning business strategy.
Competition forces every small business owner to better understand the marketplace and develop a strategy, a plan of action, to meet broader goals. The higher purpose of strategy, in business, is to manage risk and shape the foreseeable future to the best of your ability. Independent studies indicate the, “strongest [companies] in terms of revenue and size are stronger in business strategy than their smaller counterparts.”
For example, The Creative Industries Innovation Centre (CIIC) suggests, “At a minimum, your business strategy should: 1) identify customers and a customer need, 2) define your products and services, 3) include a sales and marketing plan, 4) establish some financial targets, and 5) determine the resources, equipment and staff required to meet your customers’ needs.”
3. Discover hidden weaknesses with a business ‘physical’ exam.
Competitors will inevitably help you discover hidden weaknesses and shore up potential liabilities. Embrace this reality by hiring specialists with the sole purpose of identifying the weak links throughout your organization.
For example, financial statement audits and compliance audits, conducted by an accountant or CFO service, can provide assurance that your financial statements are reported in accordance with accounting principles. Additionally, “with the cost of litigation skyrocketing, many business owners [can] minimize their potential exposure to claims and lawsuits” through a legal audit, according to law firm Ogden Murphy Wallace, PLLC. Attorneys at Spadea, Lanard & Lignana also insist that a legal audit of your business can “save you time and money in the future by preventing problems down the road.”
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