Most companies large and small have at least one competitive edge that can give them an added advantage in running their business.
- Large businesses: Typically more resources in labor and equipment to run projects.
- Small businesses: Typically fewer channels to go through allowing for quicker response time.
- Large businesses: Typically more accumulated knowledge.
- Small businesses: Typically owner is hands on and can solve problems quickly.
- Overseas company: Low labor rates.
- Your company: Proximity to your customers, allowing you to service them.
Within those categories the differences start to expand. Just like professional sports, the superstars tend to specialize in one area. While they may be capable in a variety of areas, there will be one at which they can excel. Even within a certain field such as pitching, there are some who are better relievers than starters. Just like the athlete who tries to play all positions, a business that tries the same will not succeed very well — if at all. The secret will be finding where you excel.
Let's say you're in the construction trades. How do you decide what to specialize in? Maybe you worked for other companies where you gained knowledge of a number of facets of the trades. You were good at all but excellent at one.
- You enjoy working by yourself but don't like supervising others.
- You like working with a crew but have trouble working by yourself.
- Rough carpentry is fun, finish carpentry is a chore.
- Tile work fascinates you.
From this standpoint, you decided to go into business for yourself. Many startups try to be too many things for too many customers, rather than being focused. For example, the cabinetmaker who likes the hands on design and building of designer cabinets, but wants to service the production market as well. As things grow he becomes tied to the business end, rather than the design end. This can lead to production and quality issues which may be hard to overcome.
My cabinet company has several competitive advantages as well as disadvantages.
- Advantage: A 15,000-sq.- ft. shop. Excellent for production and housing employees
- Disadvantage: My primary market is 250 miles away. Not great for hands on customers.
- Advantage: Prior history of sales and marketing via trade shows allows me to reach consumers.
- Disadvantage: No local showroom.
- Advantage: Unique products such as the KornerKing corner cabinet solution.
I use my competitive advantages to service the customers who are looking to replace worn out or outdated kitchens from prior years. They are looking to update their kitchen with modern conveniences such as rollout trays, built in waste bins, corner cabinet solutions like the KornerKing, and improve the layout. They are not looking for a designer kitchen with the latest designer touches. Most of the cabinetry fits into the stock sizing prevalent today, needing just a few custom sized pieces.
Our production model is based on this and allows us to profitably service the price conscious consumer. This allows me to replicate cabinets and not re-invent the wheel each time. Our employees are trained in producing this style of cabinets and the learning curve is reduced significantly.
Many of my compatriots in the cabinet trade are true custom cabinetmakers. They concentrate on the unusual wants of their customers and have the experience and mindset to build the one-of-a-kind pieces. The difficulty they have is finding employees who can do what they do. Compare it to a relief pitcher whot is great at striking out left handed batters. They are a specialist in their trade. This is their competitive edge and can make them a superstar in their field.
Are you willing to specialize? Are you willing to turn away work when it doesn't fit your superstar role? If you continue to try to be all things to all people, your image will become blurred and the customer you are seeking may not be able to pick you out from the crowd. For our cabinet shop, painted cabinets aren’t our strong point. As a result, we turn down this type of work. If you are a contractor who specializes in total project management and the homeowner wants to do part of the work, does it benefit you to take on the job? Are you better off turning it away? The answer is probably yes.
How do you determine what the best fit is for you and your company? Most of us have had jobs that went smoothly and jobs that went poorly. When you start to see a trend develop it becomes easier to define your niche…Your superstar role. If you are a painter, you may find that exterior work is the best for you and you get the greatest rewards from it. If your trade area allows it, make that your niche. Only diversify if you truly want to develop another area. If you are growing your company, then you may be able to have employees who cover these different areas.
Study your business and determine what your competitive advantages are. Sharpen your focus and your image. Look at how you can use a sharper image to get your message through in your marketing. Life is short and you don't want to spend too much time in the wilderness.
Pete Mai, owner of KornerKing and Old School Cabinets in Big Falls MN, is a CMA associate member and part of the CMA Authors Guild..