Sustainable Competitive Advantage. Sounds important. And it is. But most entrepreneurs aren't exactly sure what it is - or if they have it.
According to wordiQ, a sustainable competitive advantage is "an advantage that one firm has relative to competing firms." Put more simply, it is the long-term (sustainable) superior (competitive) thing about your business that makes you better than your competition (advantage). It's important because if you have one, it will set you apart from others in your market. So, how do you know if you have one?
To have a sustainable competitive advantage, you must have an edge over your competition - something that sets you apart, that makes you unique. And it must be something that you can sustain long term. That's why things like being first in a particular market or pricing are not always considered to be competitive advantages. Your competitors can often catch up and even surpass you in these areas. What sort of things ARE considered competitive advantages? Intellectual property (patents, copyrights, trademarks, even unique domain names); a unique product or service with a plan for additional follow-up products/services that will keep you ahead of your competitors; innovative technology; or a large pre-existing customer base. What if you don't have any of these? Don't worry. It is still possible to build your advantage. Here's how:
1. Know your customers. And I mean KNOW your customers. It's not enough to say "my target market is individuals 45+ who want to become entrepreneurs." I need to know why they want to. What they expect to gain from doing so. In fact, I need to know every who, what, where, when, why, and how that I can possibly learn about them. This means research. (No one said this was going to be quick and easy).
2. Know your competitors. Who are they? Where are they? What do they offer that is similar to you? What do they offer that you don't? What do they do better than you? What are their weaknesses? A great way to obtain an advantage is to offer things your competitors don't. Don't try to compete in areas where they are better than you. Take advantage of their weaknesses. Uh-oh! More research!
3. Analyze your own business. What are your strengths? What are your weaknesses? What can you improve upon and surpass your competition? Are there areas in your business where you just can't compete? We call these distractions. Let them go.
4. Create your strategic marketing plan. Using all of the information you gained through your research, decide where you are going to focus your efforts. You want to put your time, energy, and money into the things that will bring value to your target market, and that you do better than your competition, or that your competition doesn't offer. Outsource or discard everything else.
5. Never stop learning - about your customers, your competition, or yourself. The way to keep your advantage is keep one step ahead of your competition by knowing what your customers want, and finding ways to provide value to them better and faster than anyone else.