Competitive Edge

In his book, The Road Ahead, Bill Gates of Microsoft writes of "friction-free capitalism" made possible by developments in communications, chief among them the Internet and its World Wide Web. In this context, "friction" is everything that keeps markets from functioning as the "perfect competition" of economics textbooks. This friction can be a function of distance between buyer and seller, costs of overcoming this distance, and incomplete or incorrect information.

Friction manifests itself by causing barriers to entry for new competitors, limiting the number of outlets from which the consumer has to choose. Large companies, with multiple sales outlets, and economies of scale, have greater power to direct the marketplace.

The degree of friction in the developed world has been decreasing for some years now. Affordable air travel, overnight delivery, improved telephone and fax communications have shortened distances. Credit cards and toll-free numbers have spawned at-home shopping from sources across the country.

The Web has taken the friction in our economy down another notch. In principle, we can sell products and services to a worldwide audience as easily and effectively as our largest multi-national competitor.

In the friction-less economy, the challenge of differentiating ourselves from the competition becomes even greater. Successful small businesses tend to be those who can find some competitive edge, even when their product or service is similar to those around them.

Marketing professionals often call a business' competitive edge their "unique selling proposition," or USP. Pinpointing and refining one's USP, however, is not a simple matter. An approach is unique only in the context of our competitors' marketing messages.

Some marketing messages go beyond product and service characteristics. For example, Charles Revson, founder of Revlon, insisted that he sold hope, not makeup. Similarly, United Airlines sells "friendly skies," and Wal-Mart sells "always" the low price. Do these slogans convey how each company views their customers? Does their selling proposition appeal to your preferences?

Sharpen your USP:

? Put yourself in your customer's shoes; satisfy their needs, not yours.

? Know what motivates behavior and buying decisions.

? Find the real reasons people would buy your product instead of a competitor's. Ask them!

? "Shop" the competition, be open-minded about your product, and never stop looking for ways to make your product stand out.

Try now to recast your business idea in terms of its competitive advantage. Prepare an industry analysis (size, customers, trends, and competitiveness). Identify what you see as your specific market, and estimate the share you think you can capture.

The Web can be a powerful research assistant. Virtually every major business puts product and service information on the Web, including business directory services and magazines.

Search engines can help in improving your understanding of your industry, and the key success factors. Test the resources available on the Web. Visit sites of major companies in the industry, where appropriate. Search the archives of business magazines for articles that give background and statistics.

John B. Vinturella, Ph.D. has almost 40 years experience as a management and strategic consultant, entrepreneur, author, and college professor. For 20 of those years, Dr. Vinturella was owner/president of a distribution company that he founded. He is a principal in business opportunity sites jbv.com and muddledconcept.com, and maintains business and political blogs.

---

Entrepreneurs Just Get Better With Age

Q: I'm thinking about starting a business after I retire... Read More

Focus is the Key to a Successful Startup

The definition of a startup means you have very few... Read More

Before the Business Plan

Purveyors of conventional wisdom would have you believe that the... Read More

Dream It, Create It, Become It! Design a Dream Board

Have you ever heard of "Dream Boards" or "Treasure Maps"?... Read More

Cross Polination of Innovations in the Cleaning Industry

According to the latest edition of Pool and Spa news;... Read More

Electronic Tools for Entrepreneurial Success

"Half of any job is having the right tool" was... Read More

Business Is No Guarantee of Riches

Q: I'm thinking about starting a business since that seems... Read More

Venture Capital Negotiating Issues

When companies enter into negotiations with venture capital firms, there... Read More

The Business and Life You Want to Build

In the early days of my first consulting business, I... Read More

Business Planning for College Students and First-Time Entrepreneurs

More and more students, both in undergraduate and graduate institutions,... Read More

Work On, Not In Your Business

Are you busy? Everyone's busy! Ask anyone they'll tell you... Read More

Developing A Contract

As a service provider, the most important type of "boundary"... Read More

An Entrepreneurs Challenge

Living in the twilight zone has its advantages. In the... Read More

Oil Change Guys History; Part III

Studying the history of franchise companies is interesting is watching... Read More

Four Steps to Entrepreneurship

As more and more people start or consider starting their... Read More

Near-death Experience is the Mother of Invention for Two Dallas Electricians

To morning commuters, the hulking truck encircled with barricades and... Read More

The Entrepreneurs Dilemma

In business, you plan to protect your inventory, your unique... Read More

Is Now the Right Time to Become An Entrepreneur?

A number of economic changes are magnifying the role of... Read More

Entrepreneurial Emotions or It Seemed Like a Great Idea at the Time

It's your first business or the next Great Idea in... Read More

Methods of Generating New Ideas for Entrepreneurs

Summary: Even with a wide variety of sources available, coming... Read More

The Entrepreneurial Difference

Who would ever have imagined that going door-to-door in my... Read More

Angel Investors: 7 Online Business Plan Scams and 1 Real Deal

We've all seen the hype: "We'll put your plan in... Read More

Go Slow to Go Fast - Why Over 80% Of High Tech Startups Fail And What To Do About It

With billions of dollars of venture capital residing down the... Read More

The Ideal Length of Your Business Plan

How long should a business plan be? A business plan... Read More

Motivation and Commitment

Why do people start small businesses? The most frequently cited... Read More

Designing a Comprehensive Franchise Company Computer System

One of the most important management tools a franchised company... Read More

Why Every Student Should Start a Business

With the economic downturn, students in all the major business... Read More

Creativity & Entrepreneurship: The Creative Evolution of an Intellectual Property©

In each of us, there is a creative spark -... Read More

Pre-Money vs. Post-Money Valuation

When a company decides that it must raise capital, a... Read More

Financing Your Business

Anyone who is serious about making some money is already... Read More

Self-Esteem and the Entrepreneur

Isn't it funny how people think that being self-employed is... Read More

The Danger Of Hate

As you have shown an interest in starting a business... Read More

Innovation incubator: Build it and keep it running

If your company is like the one I work for,... Read More