A business is built using the raw materials of money, time, skill and effort. Given that these raw materials are widely available, why do most businesses fail, and those that survive stall as they hit a performance ceiling? The answer lies in the blueprint we use to build our businesses, which is developed by how we position our business in a competitive environment.
How you position your business in a competitive industry impacts your ability to scale and grow revenue and profitability and secure a future capital gain through a successful exit.
Positioning is often considered relative to competitors. What makes your business different from your competitors and the better choice for customers in your industry? It starts with a competitor analysis and informs how to apply your raw materials to build a business that wins. And with that, when I ask, “What makes your business stand apart in your industry,” product criteria and service features are cited compared to recognised competitors. Whilst interesting, I think it’s flawed and informs the development of a blueprint that limits growth.
Here are a few reasons why:
Who are your competitors?
It is impossible to identify all competitors as we all have cognitive and confirmation biases that close our eyes to alternatives and new thinking. Developing your blueprint in response to a competitor puts you in the unenviable position of being led by that competitor rather than leading them. It will keep you constantly on the back foot.
Same, same, but different
Today, you are not even in the game unless you have a solid product, service or competitive price. They are hygiene factors, and any product or price advantage a competitor enjoys today is unlikely sustainable. Out of necessity, the raw materials of time and money erode product and pricing advantages.
A different approach, repeated annually
To achieve a distinctive positioning, change the rules of engagement for competitors by creating a unique blueprint against which you build your company. Since your products and services are mostly similar to your competitors, the buying experience your customers want offers insight into a valuable positioning statement.
A business owner I have worked with for 16 years now hit a ceiling of £8m annual revenues after 25 years of establishment. His bakery competes with over 5,000 other bakeries, mainly producing similar products.
After positioning in the hospitality sector and narrowing focus on multi-national hotels and national hotels only, he gained the insights that fundamentally repositioned his business as a 365-fresh-baked goods continental breakfast provider. It informed his company blueprint and allowed him to develop marketing, sales, fulfilment and administration activities that solved the problem of continental breakfasts for these hotels and created a consistent, predictable buying experience for the management team that weighed in on supplier selection. 16 years on, the same business enjoys £89m annual revenues, and competitors’ attempts to dislodge him fail continuously. Their value propositions remain trapped in the convention of a better product, price, or service promise.
In a competitive and overserviced market, positioning your company as an ideal buying experience for a tightly defined segment will yield the blueprint that sets you apart. That blueprint informs the business model to keep you ahead and your competitors on the back foot.
