Creating a Sustainable Competitive Advantage for Your Small Business

Building a competitive advantage for your small business means creating assets and defenses for your brand and sales that competitors simply can't simply replicate. We delve into some methods for building an unbeatable business.

Getting a leg up on the competition — and keeping it there — takes more than a solid product, smart marketing and savvy management. You also need a way to achieve a long-term competitive advantage, a strategy that will provide a sustainable edge over rivals.

“The experts often talk about the importance for large companies to win a sustainable competitive advantage,” says Sarah Gerdes, CEO of Business Marketing Group, a San Francisco-based firm specializing in management and partnership consulting. “But, it’s important for other businesses, too.”

How do you pull off a sustainable competitive advantage? Try these tactics:

A long-term contract

Signing a deal with customers that allows you to be their regular vendor makes it nearly impossible for competitors to take business away from you. That’s what Doc Parghi, vice president of worldwide sales and business development at five-year-old AppLabs has done.

From the beginning, the Philadelphia-based software testing company strategically inked one-year contracts, focusing on startups that are more likely than bigger companies to go for such deals. At first, AppLab’s approach was to spend three to six months proving itself to customers, then asking for a long-term deal.

But when it became more established, AppLabs took a different tack, proposing a one-year agreement during initial negotiations, with the understanding that clients would sign on after a few months if they were satisfied with the service. More recently, AppLabs has nailed down four such agreements with Fortune 50 companies, two of which renew automatically. The tactic has helped AppLabs double revenues every year.

Exclusive distribution rights

If you can arrange to become the only company distributing someone’s products, you’ll have a nearly impregnable competitive advantage. Just look at Travis Schneider, CEO of StarBrand Media.

The three-year-old Los Angeles-based company has a Web site — www.starbrand.tv — where fans can order fashions and other products featured on popular TV shows and movies. To make it happen, Schneider has locked up exclusive deals with movie studios and networks allowing him not only to feature the items, but get word on what the actors will wear before a TV show airs, so he can be ready at the jump.

Exclusive geographic rights

Arrange to be the sole vendor of a service or product in a specific area, which AppLabs has also tried.

It signed an agreement with a software company to be the only provider of testing services for that firm’s overseas clients. It also made a deal with an association to be its exclusive partner in India. While the tactic hasn’t been as central to AppLab’s success as its long-term contracts, there’s been a handsome payoff.

Exclusive access to a resource

You might be able to win the right to use a technology that gives you a significant edge in the market. In this case, you don’t own the actual patent. But, by locking up exclusive use under certain circumstances, you can still gain a tasty advantage over rival businesses.

Even if you’re not the only one with access to the resource, you’ll still be ahead of the game if it’s something that’s hard for others to lay hands on.

That’s what Eric Ling figured when he started Bubbles Tea and Juice Co., in Columbus, Ohio, a year-and-a-half ago. He uses a special machine that seals plastic cups airtight and prevents leaks. Ling doesn’t have exclusive rights to the device, which is made in Taiwan, where he grew up. But he thinks it’s unlikely to be used by local competitors. “It’s not that easy to find unless you have a connection back in Taiwan,” Ling says.

Go for the gold: a patent

Of course, the piece de resistance is to win a patent for your own technology or product, giving you a legal monopoly on its use. Take Fortius One, a one-year-old firm in Washington, D.C., that provides geography-based business intelligence.

Its patented mapping and analysis tools “provide us with an invaluable advantage,” says CEO Daniel Abraham. Better yet, because the technology was developed by the company’s founders as part of their doctoral dissertations, Fortius One has been able to get around the usual restrictions on intellectual property ownership.

While the university where researchers develop their inventions generally owns the patents, that’s not always true for technology developed as part of a dissertation, Abraham says: “It’s been clearly vetted legally just who the rights belong to.”

Our bottom line

The more you can lock up the use, distribution or sale of a product or service, the better off you’ll be — and the more likely it is that competitors will eat your dust.

Anne Field is a freelance writer at StartupNation.

Total
0
Shares
Previous Article

What’s OUT! What’s IN! The 'Wayne Gretzky' Small Business Trend Spotting Strategy

Next Article

Free Your Mind

Related Posts
supply chain
Read More

How to Keep Vendors and Clients Happy During Supply Chain Hiccups

Supply chain breakdowns are happening due to global disruptions, rising costs and increased consumer expectations. Businesses can't always stop supply chain hiccups, but they can learn from them and limit their impact on vendors and clients. How a business responds to a supply chain issue can have far-flung effects. A company that is proactive and...
Read More

The Fear of Commitment: Why ‘No Obligation’ Is Music to Your Customers’ Ears

We live in a world with endless options and opportunities: where to live, where to eat, where to travel. Things to do, things to see… …Things to buy.  With so many options (and many at their fingertips), why would customers want to commit to something? They wouldn’t. And often don’t. After all, having too many...
home-based businesses
Read More

The Value of Home-Based Businesses to Economic Recovery

The challenge of America’s economic recovery, in the wake of the COVID-19 pandemic, is to spread it to every community – and especially those that have been historically excluded. The key to meeting that challenge is to appreciate the civic and economic value of an overlooked resource: home-based businesses. There are about 16 million home-based...
Read More

How to Support Employee Mental Health and Avoid Startup Burnout

When it comes to finding the right job — and staying there — candidates are looking for a lot, especially in a virtual setting. Gone are the days where foosball tables and free snacks constituted benefits. Of course, we still love them, but there has to be more that matters. People are primarily looking to...