Entrepreneur
Strategy isn’t optional — it’s your business lifeline. Although it’s tempting to get lost in numbers, margins and growth rates, these metrics alone won’t ensure your success. You need a comprehensive plan that goes beyond figures — aligning with your company’s core strengths and with the competitive landscape.
Perhaps the most critical part of this process is identifying the niche verticals in which your business can do things nobody else can. The goal may not be as fanciful as it sounds if you follow a process. Different businesses approach it in various ways, but the most successful ones typically follow five crucial steps.
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Step 1: Identify competitive factors
Begin identifying the universe of competitive factors in your industry. Don’t limit your analysis to what your business is doing; define your competition broadly. For example, if you own a coffee shop, your competitors aren’t just Starbucks and Dutch Bros. Anyone offering a coffee fix is your rival, from the gas station to McDonald’s.
Think about what sets your business and your competition apart. Is it the cost of your coffee, the ambiance of your café, your service speed, your use of eco-friendly products or your community engagement? List it all now; we’ll prioritize it later.
Related: Is Focusing On a Specific Niche Really That Important?
Step 2: Brutally honest self-assessment
Time for some tough love. It’s easy — and honestly, natural — for you to believe you’re the best in every category. But let’s face it: you probably aren’t. Gather feedback from your customers and your competitors’ customers through surveys. You can also leverage tools like the strategy canvas.
The first step in a strategy canvas is to score yourself and your competitors on a Likert scale of 1-5. There are many ways to dial in your self-evaluation. Consider hiring an external consultant for an unbiased assessment. Encourage your team to give candid feedback and create an environment where they feel safe to be vulnerable and honest. Analyze online reviews and social media feedback. These platforms can offer a wealth of information about how your customers perceive your business.
To provide accurate scoring, you also need to understand your competition. Visit their stores, review their website, read their reviews, try their products, and objectively evaluate how they stack up to you. This isn’t about copying them but instead understanding where you stand in the competitive landscape and identifying areas for improvement. A strategy canvas or any other self-assessment tool isn’t about patting yourself on the back — it’s about identifying where you truly excel and where you don’t.
Step 3: Identify your superstar factor
Now, use this intel to pinpoint your competitive advantage. Focus on cost leadership, differentiation or targeting a specific industry segment. What’s your magic?
Consider the less apparent strengths that your business might possess. These could range from specialized knowledge, unique customer service practices, innovative production methods or even a particular corporate culture that resonates well with your target audience. In a crowded market, finding your uncontested and underserved market space allows you to build a loyal customer base and defend your position against larger competitors.
Sticking with the coffee shop example, maybe your superstar power is sustainability. As a smaller, more agile operation, you might source your coffee beans directly from local, organic farms, ensuring the highest quality and freshness while supporting local agriculture. Starbucks, serving millions of customers across the globe, simply can’t compete in the same way you can regionally.
Related: Here’s How You Can Pick and Master Your Niche
Step 4: Deploy your competitive advantage
Now that you’ve identified the niche vertical where you can dominate, don’t waste resources beefing up weak areas where you’ll never lead. The best-case scenario might only see you gaining minimal ground on your competitors or remaining slightly behind. Alternatively, you might consider enhancing areas where you are on par with competitors, like pouring money into your brick-and-mortar locations to gain an edge. But this is also a risky proposition, and your competitors may be doing the same thing — with neither gaining much ground on the other.
Instead, double down on your strengths. This isn’t about just keeping up; it’s about setting the pace. Find the gaps your competitors neglect and claim them as your own. By amplifying what you already do well, you can create a distinct competitive advantage that sets you apart in the market.
As a sustainable coffee shop, target college campuses and make sustainability and community engagement your banner. Your unique selling proposition can resonate deeply with the student demographic, creating loyal customers who appreciate your coffee and your values.
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Step 5: Tackle the “business ego”
Confront your business ego. Love your brand, sure, but be realistic. Competing with giants like Peet’s Coffee, whose parent company has a roughly $10B market capitalization, might not be realistic. You won’t out-Peet Peet’s coffee overnight, and you may never do so. Instead, find a niche you can dominate. In this case, aim to be the go-to sustainable coffee shop on college campuses.
Other businesses face similar ambition challenges. A wealth manager might dream of serving only the ultra-wealthy, but taking on Goldman Sachs and Morgan Stanley may not be realistic at the early stages. Instead, focusing on a niche like managing finances for educators could be a smart move.
Embrace the process
Building a solid strategy requires hard work, reflection and a willingness to adapt. Forget about being a small fish in a big pond and consider a new pond altogether. Remember, it’s better to dominate in open water space than to flounder in a bloody, red sea of competitors.
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