What’s Your Competitive Advantage? Focusing on What You Do Best

With the holidays upon us and businesses vying with one another to get people into the store, I am unfortunately reminded of an old client of mine I will call Sarah. Sarah had a women’s clothing store that historically did very well this time of year.

Until the year in question.

Determined to break her own records, Sarah decided that December would be her month for a huge sale and lots of sales. She bought extra inventory of some items that she saw in a competitor’s catalog, figuring they had to be hot if chain stores were featuring them. She set aside a lot of money for a television and newspaper ad campaign, she hired extra help, and she put up her huge SALE! sign.

It was almost the last sale Sarah ever had. She lost a bucket of money that Christmas.

Now, why was that?

The first and main reason was that she tried to play the business game on the field of her corporate competitors and not on the field of her own strengths – that of small business.

Sarah was never going to be able to undercut the prices of her chain store competition – they had volume and scale that allowed them to buy and sell for far less than she ever could. Sure, her sale got some people in the door, but between her extra overhead and slim margins, she was unable to sell enough volume to make up the difference.

What she should have done instead was play to her strengths, not theirs. For instance:

  • Instead of stocking what the competition was selling (for less), she could have stocked funky, unique items that her customers could not have gotten elsewhere.
  • Instead of having a huge sale and all of its attendant attention on price, she could have made her store the cozy, warm, fun destination shop where price would be a secondary issue. Sarah could have had hot cider ready for her customers, and maybe a fun daily giveaway for answering the holiday trivia question of the day.
  • Her staff could have been prepped and financially motivated to be even more personal and personable. National chains hire seasonal holiday help that can never be as good as an employee who has been with you for years and who knows your customers well.

Small businesses often want to know how to compete against larger competitors. The story of Sarah is a lesson in what not to do, and what to do. The answer is – play to your strengths, don’t run from them. The best part of a small business is that they are small.

No goliath can compete with that.

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