Take on Competitors by Claiming Your Niche

Do you know who your direct competition is? If you’re a small business purveyor of artisanal popcorn, you might think your direct competition is other popcorn providers — big or small. You might even consider only those in the same regional area as you as your direct competition. But what about other firms that provide salty snacks and movie fare? Or other local snack sellers? Your direct competition isn’t always obvious, and even when it is, it can be tough to compete. Once you’ve got all of your direct competition down, you can slowly start to create a plan to tackle and outperform your competitors.

Here are a few tips to help make this happen:

  • Provide amazing customer service. If there’s one place where small businesses have the upper hand, it’s the attention they can provide to each and every customer that walks in the door or clicks into your website. Making every customer feel like they’re your first and most important gives you the “personal touch” advantage over bigger companies and is a step in the right direction for repeat business.
  • Take advantage of technology. In today’s market, having a strong web presence is paramount, but it takes more than a website. With social media channels on Facebook and Twitter, you can tackle customer service quickly, giving you an edge against larger retailers that might not have the time and attention for each and every customer. When you do setup your website, provide e-commerce, provide a mobile website and be sure to keep dynamic, fresh content coming so that search engines will keep your website at the top. Also, spend some time figuring out how users are getting to your competitors’ websites to make sure you cover all of your SEO (Search Engine Optimization) bases.
  • Court your current customers. As a small business, you have the ability to pamper your current customers in a way that larger retailers simply don’t. Create rewards programs, special sales for repeat customers and run ambassador programs to use your current customers as brand evangelizers. Whereas large companies tend to see a faceless crowd of consumers, small businesses have the opportunity not only to acknowledge their consumers but to make them feel like royalty.
  • Know your niche and stick to it. Many companies take on more than they can handle after perfecting the art of a simple service or product. Small businesses that stick to what they know, what they’ve perfected, they have a greater chance at keeping their consumers. Everyone goes to Marco’s Taco Cart for lunch because he does tacos well, not because he offers a little bit of every cuisine. When a large retailer takes on every market, it becomes a jack of all trades and a master of none. Be the proud master of your niche, and your customers will take notice.

If you’re confident in your business and focus on personal service, you’ll have no problem taking on your direct competition. Know your niche, dive into the digital market and big retailers will have nothing on your small business!

Your Competitor Lowered His Prices: Don’t Panic, Follow These Strategic Steps

As the economy continues to struggle, many small business owners are finding that they have to compete more and more for consumers’ attention and wallets. It’s no secret that price can be a huge motivator in people’s minds today as they go about making their purchase decisions. In an attempt to keep their sales levels up, many business owners have slashed prices. But are these deep discounts helping or hurting their businesses?

Should You Lower Prices?

Let’s say that your big box competitor down the street decides to offer their products at fire sales prices. Should you do the same? Before you run to lower your prices in order to match your competitor’s offer, you shoudl first consider if it’s really going to help.

1. Take Stock of Your Business

The key is to understand your place in the market before you decide to change you current pricing.  You should ask yourself the following questions:

  • Will a Price Cut Really be Effective in Bringing in More Revenue? Most businesses can categorize their clientele into segments, and each of those segments has different needs. For example, if you own a curtain company, you may have clients who want inexpensive, functional curtains or blinds, as well as those who are willing to pay for more expensive, specialty items. If you have big competitors that can afford to slash their prices, you may be tempted to do the same. But the truth is that you will only be able to lower prices in the category of less expensive products in order to attract price-conscious consumers.
  • How Are Your Profit Margins? It doesn’t do any good to sell your products at a loss, no matter what your competitors are doing. Have an in-depth understanding of your cash flow and profit margins, and if a competing business lowers prices below that, then you just have to be real with the fact that you won’t be able to compete on price. In the case of the curtain store mentioned above, your efforts could be focused on either cutting costs, or even better, finding ways to add value to your products. Which brings me to the next point…
  • Where are the places where you can add value? Not all consumers care about price alone;  many will buy according to the great customer service and value they get with their purchase. With this in mind, before you lower prices check to see how you can add value while keeping the price the same. With the curtain store, for example, you could hire customer service representatives who can help consumers match colors and plan the decor of a particular space. You could also offer to measure the windows for free, guarantee a quick delivery, or install inexpensive child-proof cord-holders. Just keep in mind, however, that you should do some research before making any offers to be sure that your customers will indeed see it as a value-added feature or service.

2. Consider the Competition

It’s also important to understand why your competitor has lowered prices in order to determine your reaction. The three most common reasons are:

  • To Take Over the Market. Many times, fledgling companies think that if they can quickly gain a large percentage of the market share, they’ll set themselves up for future growth. However, many business owners fail to plan for what will happen when they are the biggest company around, but aren’t earning an acceptable profit. A price increase at that point won’t likely go over well with consumers, and they may end up shutting their doors. Those companies that stood firm during the price wars and continued to offer great service and a valuable product reap the benefits.
  • To Create Better Purchasing Power. Manufacturers offer better prices to companies that buy more, and a business owner may decide to lower prices in an attempt to have the ability to order more product and get those prices. This can be a dangerous game, because once an owner achieves better wholesale discounts, he or she will have to maintain the volume in order to keep the discount. And to do that, sales may need to continue at an unacceptable profit margin.
  • To Grow a Market. Sometimes business owners in a new market will offer low prices in order to make that market grow more quickly. For instance, some businesses offer discounts to new customers, or on new products to introduce them to their customers. This is typically short-lived, and once consumers have been made aware of the new product, prices are adjusted upwards.

Final Thoughts

It’s important to know what your business’s price points are, how your business is perceived by the public, and what your competitor’s motives are before you decide what your response to price discounts will be. Once you take all of these factors into account, you’ll be in a better position to make your pricing decisions. Remember, your goal is to ultimately increase revenue, and if you make a poor choice, you could damage your cash flow in the long run.

Author Bio: Suzanne Kearns is a small business contributor for Money Crashers Personal Finance where she writes about business finances, marketing, entrepreneurship, and more.

What You Should Learn When Spying on Your Competition

spying on your competitionSuccess depends on how effectively you can differentiate your products, services, and solutions from those offered by your competitors. In order to build and maintain your unique selling point among customers, you need to be aware of what your competition is doing. Although “spying” is an extreme term, focused attention and research on your competitors will help your business stay one step ahead!

1. Identify your competition. The first thing that you need to do is find out who your competitors are. If you do not know this information off-hand, then you can do a little research. Check the phone directory, do an on-line search to find out which businesses in your immediate market are offering similar products or services.

2. What marketing techniques do they use? Next, you should look at your competitors’ marketing strategy. To do this you should collect and examine your competitors’ marketing material, such as brochures, print advertisements, web pages, and articles in which they were featured. Also look into any broadcast advertising.

3. What is the selling point? After examining your competitors’ marketing strategies, you should be able to determine the different selling points that each company is promoting.

4. What is the customer experience? Another important piece of information to have about your competition is what it feels like to be their customer. You can go to a competitor as a mystery shopper, check out their websites, or call up for an estimate of services to see what the customer service is like. You can also talk to their customers to see how satisfied they are, and to find out why they choose to do business with a certain competitor

5. Where are your competitors holding? Find out if your competitors’ business is growing, maintaining, or declining. You can do this by looking at their stocks, available financial statements and reports, or credit and background profiles. This will give you vital information about market demand and how well your competition is tapping into it.

9 Sure Ways to Make Your Business Fail

Business FailureAccording to the Small Business Association, the majority of newly established small businesses will not survive past five years. Such statistics may not sound encouraging if you have recently started your own small business, but with a little bit of planning you can easily buck this trend.

The following are a few key factors that, if left unattended, can cause even the best business idea to be unsuccessful:

1. Lack of effective planning. Business planning is a continual process of setting goals, developing plans, and working every day to achieve them. Proper business planning spans all areas of the business including budgeting, tax planning, growth opportunities.

2. Failing to monitor the business. Planning means nothing if you are not monitoring how well your business is running and making necessary adjustments. You should pay attention in particular to your daily cash flow, productivity, and the movement of products through your business.

3. Lack of necessary cash flow. One of the biggest reasons why small businesses fail is that they are unable to get the funding they need when they need it. Keep your options open. Even if you are having difficulty securing a standard business loan, know that there are other financing methods available to small businesses, such as equipment leasing, invoice factoring, vendor financing, and business cash advances.

4. Ineffective marketing techniques. Marketing is essential to expanding and maintaining your customer base. If your current marketing techniques are not bringing in customers, then reevaluate them. If you do not have the time or knowhow to effectively market your business, then hire someone else to do it.

5. Ignoring competition. Business success depends on how effectively you can differentiate your products, services, and solutions from those offered by your competitors. Your unique selling point is your greatest asset. In order to maintain your competitive edge and stay in touch with current market trends, you need to be aware of what your competition is doing.

6. Out of touch with customers. Having a personal relationship with customers is an important asset that many big corporations do not enjoy. In order to maintain good relations with your customers, you should focus on quality products and service, monitoring customer satisfaction, and asking your customers for suggestions or improvements.

7. Not actualizing employees. Many small business owners do not realize the potential hidden within their own workforce. When your workers are happy then productivity rises and customers have a more positive experience that can lead to an increase sales. Your workers are also a source of business-improving suggestions and problem-solving ideas. Therefore, make sure to establish a system of employee advancement as well as a system that recognizes good work performance.

8. No research and development. To be successful, a small business must set aside time and resources to research and development to determine possible areas of expansion and to implement cost-cutting techniques. This ensures that the business is running efficiently and improves flexibility in response to market demand.

9. Lack of information. Most business owners have either never received a formal business education or are inexperienced with running a business, and they may lack the tools and ideas necessary to successfully run their businesses. The good news is there are numerous guides, articles, and tutorials available on line (like Entrepreneur , or the Wall Street Journal) that can give you practical advice and an extensive business education.

Don’t become a statistic!