“Focusing solely on what you can do better than any other organization is the only path to greatness.” Jim Collins, Good to Great
Niche strategies create competitive advantages for small to medium-size businesses. They allow you to differentiate your company from potential competitors by demonstrating an expertise in particular product or service as well as an in-depth understanding of your clients’ unique needs and wants. To illustrate this point, just take a look at INC’s Fastest 5,000 growing companies in any year. You will notice the vast majority of these companies are focusing on a unique product, service or industry. Our coaching firm has also seen this firsthand as many of our clients qualify to be on INC’s 5,000 list.
While a niche strategy may make common sense, it is not the most common strategy used among small businesses. If you happen to be one of the few companies that have a solid niche strategy, you can skip this column and wait for some of my upcoming columns on people management. However, if you’re not using a niche strategy, this column will help you explore ways to refine or develop your competitive advantage.
We start most of our coaching engagements by asking our clients to describe how their company is unique. The most common answers include:
Our company is unique because:
- We provide great customer service
- We deliver a high-quality product or service
- We have the best prices
- We win because of our relationships
The challenge is that these answers rarely create competitive advantage and are quite possibly a symptom of eating your own cooking. Your competitors are most likely saying the same thing and feel the same way. I know, you are probably thinking, “But in my case it really is true.” Even if it is true, your competitive advantage is not scalable and has a high risk of being diminished.
To create your niche strategy, first answer these three questions:
- Do we leverage our core strengths, and do our strengths provide a competitive advantage? (If we don’t have strengths that yield a competitive advantage, how can we develop competitive strengths?)
- Do we focus on a niche market? (The niche market can be by industry, customer type, geography or a combination of all three.)
- What problem or need can my company solve that is not currently being addressed in the market place?
Finding your core strength may be fairly easy. Understanding your competitive differentiation requires a bit of market/competitive research. Too often, I’ve heard entrepreneurs exclaim how their company is the “only one” when a simple Google search identifies hundreds of competitors. I am not suggesting you focus on your competitors, but to simply understand how to develop a niche strategy that wins.
The Three Dimensions of a Niche Strategy
It is a very powerful statement to say, “We’re the only company that ...” There are many ways you can leverage your current strengths and make this statement about your company. The Holy Grail is when you can say, “We are the only company that provides this product/service in this industry in this geography and provides this type of guarantee.”
Cornerstone Business Advisors provides access to experts in business strategy, management, process and finance. The Cornerstone team includes former C-Level executives, successful entrepreneurs and advisors who offer unmatched experience in delivering advanced, custom-tailored, results-oriented solutions for business leaders. Cornerstone has worked with hundreds of companies that range from fast-growth start-ups to Fortune 500 corporations. It developed the Performance Culture System™ to help clients implement best practices and drive high performance throughout their organization. For more information, visit www.launchgrowexit.com, call 910-681-1420, or email [email protected].