Small Business for Dummies. Veechi Curtis

to sell his services as a market influencer.

Referring to the strategic advantages listed in the preceding section, have a think about which of these advantages could be relevant to the example businesses. You can see how I’ve rated the strategic advantage potential for each of the four businesses in Table 2-1.

      Have a look at Table 2-1 and see if you agree with my assessment of potential advantages. For example, can you think of ways that someone with a lawn mowing business could get an edge over competition with added value services, location or lower costs?

TABLE 2-1 Rating Businesses According to Potential Strategic Advantage

	Lawn Mowing	Acupuncturist	Toddler Safety	Market Influencer
Added value	Maybe		Yes
Exclusive distribution
First cab off the rank			Yes
Intellectual property				Maybe
Location	Maybe	Maybe	Maybe
Lower costs	Maybe
Obsession and drive				Yes
Perfectly matched team		Maybe	Maybe	Maybe
Specialist skills		Yes

Justifying Why You Can Succeed

      In this chapter’s preceding sections, I explore the concept of strategic advantage in relation to a range of possible businesses. I like to work with examples in this way because the different business scenarios help to highlight how this concept changes so much depending on the context.

      In this section, I help you to apply the concept of strategic advantage to your business. If you’re struggling to come up with anything that’s special about your business — maybe you haven’t stumbled on that winning idea quite yet — please do persist. The process of identifying your strategic advantage is even more important for you.

      Uncovering your inner mojo

      One good way to broaden your sense of where your strategic advantage may lie is to look at your existing customers and their buying patterns. (Or, if you haven’t started your business yet, imagine what these answers might be.) Ask yourself these questions:

       When customers come to me, why is that?

       When potential customers go to my competitors instead, why is that?

       When potential customers make an enquiry but end up not purchasing my goods or services, why is that?

       Are the benefits I offer (or intend to offer) to my customers unique?

      I like asking these questions because getting the answers usually means engaging in some market research. This naturally crosses over with competitor analysis, which I talk about later in this chapter.

      

Honest, ongoing market research that compares the benefits your business provides to customers against the benefits your competitors provide is essential to business success.

      Asking three key questions

      For a strategic advantage to be really worth something — in terms of the goodwill of your business or your likely financial success — this advantage has to be something that you can sustain over the long term.

I like to think that any really strong strategic advantage should have three attributes:

       The advantage can’t be easily copied by others. The ideal strategic advantage is one that’s really tricky for your competition to copy. Examples are a winning recipe or flavour (think Coca-Cola), a unique synergy of skills within your organisation, or expert knowledge that few others have.

       The advantage is important to customers. Think of the farmers who switched to growing organic produce in the early 1990s, before organics became more mainstream. Many of these farmers did really well because organics were so important to particular customers. (And although the advantage was relatively easy to copy, many authorities required a seven-year lead time with no chemicals before a farm could be officially certified.)

       The advantage can be constantly improved. If you can identify the thing that gives you an edge and constantly work this advantage, you have a strategic advantage that is potentially sustainable in the long term.

      

When Steve Jobs and Steve Wozniak started Apple, one key strategic advantage was their match of skills (Wozniak’s knowledge of electronics and Jobs’ marketing skills), along with a mutual interest in great design. The synergy of their skills was hard for others to copy, the beautiful design was something that customers really wanted, and Apple was in a position to continually improve and develop this advantage.

      

Don’t fall into the trap of thinking that because you’re cheaper than everyone else, this is a strategic advantage. Being cheaper than everyone else usually means one of two things: Either your business isn’t as profitable as it should be, or your competitors can grab your strategic advantage at any moment just by dropping their prices, too. Usually, being cheaper than others is only a strategic advantage if you have some special skills, technology or volume of production that enables you to be cheaper.