Find and Harness Your Small Business Competitive Edge

Find and Harness Your Small Business Competitive Edge

 

Many owners know in their bones that there’s something special about the way they run their small business. Typically that something special is an untapped target market or product, but a more sustainable competitive edge is about reducing your costs and increasing capital in a unique way.

By focusing on business operations, you can differentiate your business from the inside out. It can lower production costs, shorten time to market and improve your cash holdings. Here's how:

1. Benchmark your operational efficiency

Initiatives such as Business Process Reengineering, LEAN, Six Sigma, and Just In Time are designed to cut costs, eliminate bottlenecks, and improve productivity—often resulting in a competitive advantage for companies that implement them successfully.

For example, say you’ve implemented processes to clear out bottlenecks from your workflow. As a result, you can produce more without additional capital expenditures. There’s a lot less stress in the workplace, and it feels like you’ve done it right.

But how do you translate this feeling into a competitive advantage?

Connecting with your banking partner will give you an objective analysis of how your business compares to competitors on a variety of key metrics: cost of goods and services, time to market, and inventory control just to name a few.

Benchmarking yourself against industry averages will give you a clear picture of what is concretely better about your business — and set goals for how to continue to surpass the competition.

2. Adopt a superior cash management strategy

In every industry, a strong cash position endows your business with the stability to support ongoing operations and the flexibility to finance new growth initiatives.

And so it’s difficult to understate the value of developing or improving a process that allows your business to gather financial data, benchmark it versus peers, model before-and-after scenarios for each recommended change, and address specific needs.

In practical terms, this means finding the hidden gems across your business that can surface additional capital. For example, it may mean helping auto dealerships optimize the interest rates received on their cash reserves. Or helping medical practices navigate the health insurance maze with custom payment solutions to improve cash flow and customer service.

3. Shoring up your advantage

Once you've established a competitive edge — maybe it's operational efficiency or cash management, maybe it's something else — and hopefully gained some traction as your business emerges from the pack, it's time to push even harder.

Successful business models always attract imitators, which presents a two-pronged challenge: First, you need to communicate to clients and prospects that the copycats are not as good as the original. And then its time to back up that claim with concrete results and constant improvement.

For the competition attempting to copy you, transitions to new ways of working require a learning curve and can be stressful – in other words, you do have time on your side to some degree.

But in that time, you’ll want to use disciplined marketing to keep clients and prospects aware of your unique differentiators. Expect the competition to make high-level claims that their offering is essentially a mirror-image of yours. Be prepared to counter tactically with specific examples of the benefits that only you can provide.

These benefits will emerge organically from an ongoing review process, designed to continuously improve the effectiveness of your strategies and processes. As you make improvements, you’ll continue raising the bar for your competitors.

Your path to differentiation

You can easily find out what differentiates you from the competition by speaking with a financial professional. Experienced bankers and consultants scrutinize business financials every day and often have specialized expertise across the industry spectrum. With that experience, they can offer practical insights into what’s special about your operations based on a close reading of your financial statements -- and be a key component to your competitive edge.

The views expressed by the author are not necessarily those of Fifth Third Bank and are solely the opinions of the author. This article is for informational purposes only. It does not constitute the rendering of legal, accounting, or other professional services by Fifth Third Bank or any of their subsidiaries or affiliates, and are provided without any warranty whatsoever.