There’s no escaping competition when it comes to owning and operating a small or medium-sized business. You’re constantly facing a barrage of rivals who are trying to steal market share, customers, and ideas from you. It can be a tricky terrain to navigate, and some tactics like price-slashing can hurt your business.
The last thing you want is to lose business in an aggressive marketplace. But don’t worry, there are a few approaches that can help you grow your business in the face of rivalry.
Avoid a Price War
A classic strategy that competitors adopt is to undercut your prices. If this happens, you want to react in a thoughtful way. The last thing you want to do is impact your sales by narrowing your profit margins.
It would be shortsighted, and possibly harmful, to immediately lower your prices. It might increase the amount of sales you make, but it will decrease margins and profits. You could also end up in a price war that could hurt your business in the long run.
The best way to deal with a competitor undercutting your prices is to invest in marketing and advertising. Put aside price and communicate to your customers the value you offer. The goal is to make price irrelevant – and the way to do that is to focus on value.
Invest in Digital
Digital can refer to marketing, advertising, or even operations. By adopting a digital strategy and making your business less analog, you can evolve your customer experience and grow your sales. This might include a social media strategy that builds your audience or uses better accounting or invoicing software to streamline operations.
The idea is to impact your bottom line by making your business run with greater efficiency. This can help you keep pace with the growing pool of competitors who are looking for an edge – or might already have one.
Know Your Value Proposition
One approach to competition is to forget your competitors altogether and to adopt the adage of “know thyself.” By studying the marketplace and the economy, you can understand the factors driving each and even keep tabs on your competitors. Of course, none of this will matter if you don’t know how to position your appeal or uniqueness to customers.
Ask yourself the following questions:
- What problem(s) do my products and services help solve?
- How do I provide customers with the best experience?
- Do limitations exist? If so, are they worthwhile to fix?
Once you understand your value proposition, proof it against your competitors to see how you match up.
Rivalry is a reality for every business owner. You need to have a strategy to ensure that you won’t be undermined, but also that you don’t act in such a way that will prove counterintuitive. The factors working against your business can turn into engines that drive it to new heights. Let your rivals act aggressively while you act strategically.
Rob Shapiro | Contributing Writer