Yeah, we probably told you not to compete as a small business owner. In fact, you must have read either an email or a blog post from me telling you not to compete.
That still hold water 100 percent and I’ll tell you why. “Collaboration” is the new “Competition”.
In other words, as a small business owner, it makes more sense to collaborate rather than compete especially if PRICE is the only parameter for competing.
Several things come into play before price is determined, so if you don’t have exactly the same indices with another business owner, competing on PRICE alone is close to foolish.
Now to the obvious question; how then do you compete?
Before I share with you areas to look if you must compete, you need to know clearly why you want to compete. In other words, country your cost. Would competing help you attract new customers at a reasonable cost? Is it sustainable? Would you be able to retain old customers? Etc.
So…HOW DO YOU COMPETE IN THE MARKET PLACE?
There are majorly 2 places to look if you must compete.
1. PORTFOLIO GAP
2. CAPABILITY GAP
PORTFOLIO GAP is basically looking at the segments (in trade) your competitors are not paying attention to at all. The goal is to offer something different/extra others aren’t offering to customers.
Let me help you understand; A car dealership company who only sells cars but don’t help with after sales services like repairs or even rentage already created a portfolio gap. If you’re are to compete with this said company, you can then take advantage of this gap and start repair and rent services alongside your regular car sales services.
CAPABILITY GAP is plainly exploiting the segments (in trade) where your competitors are currently playing but doing terribly. The goal is is to offer something better than your competitors are already offering.
Still using the same car dealership example, if your competitor gives after sales services but have been terrible at it or their repairs have been known to be analog, costly and time wasting, that’s a capability gap. You can then compete on that basis to offer a digitalized repair service which is cost effective and timely.
Like I said earlier, before you begin competing, count your cost, analyse and re-analyse. You don’t want to get in to find out that your new model isn’t sustainable. You would end up creating a new gap for your competitors to exploit.
Fun fact; A BUSINESS PLAN helps you identify and understand gaps your competitors have created.
Peace, Love and Cold Zobo