It breaks my heart to tell you how many small businesses I’ve come across that couldn’t make their business a success and had to close. It’s no secret that the number of small businesses that fail is high. According to the Australian Bureau of Statistics, more than 60% of small businesses cease operating within the first three years of starting.
You already know that running your own business is really hard. I’ve been a freelance marketing consultant for the last two years and I also now own & run an online store. I still have tough periods where money is so tight that all I can afford is cat food and rent, however, what keeps me going is the strategic foundation of my businesses. I know what makes both businesses different and special from the competition and who my ideal customer/client is, which gives me a pretty predictable conversion rate for the money that I invest back in. Let me explain.
What Makes You Unique?
If you look closely at any niche, you’ll find a lot of competition selling similar or the same products or services. Having a business without any competitors would be rare. The secret to success is to find a point of difference. It might sound obvious, but I’ve worked with clients that have either lost sight of their point of differentiation or have just copied a successful competitor thinking they could jump in with a ‘me too’ business and make money.
The Australian Bureau of Statistics says the biggest reason for small business failure is running out of money. Although there are many reasons for running out of money (money mismanagement, spending too much on the wrong things, underestimating how much things costs, not finding investors), one of the common reasons I’ve witnessed failure is the business not being able to differentiate itself from competitors and burning through money by advertising nothing special.
Do Market Research and Validate Your Business
It doesn’t matter if you’re selling a product or a service. Don’t invest too much time in the wrong niche. You need to research how much demand is in the market (if no one is looking for your solution, it will take an enormous budget to create a market). Who else is in the market space? You need to look at why customers will start dealing with you and not your competition (hint: don’t just compete on price, it’s a fast-tracked path to failure because a price war is not sustainable). Do you have something unique that will bring people to you over and over?
Understanding your point of difference will also make advertising easier because you’ll be able to cut through the noise, get attention and make an impact. Customers get bombarded with marketing and advertising every day. Unless you happen to have invented an entirely new product or service, you’re going to need to find a way to set yourself apart from the competitors already in your market.
Instead of trying to be different for the sake of being different, you have to ask yourself what kind of value are you bringing your customers that they can’t get anywhere else?
A unique selling proposition (USP) is what makes your business stand out from the crowd and tells your customers what is special about you and it’s vital to get it right.
When finding your USP, keep in mind what your ideal customer values in a business.
- List 5 attributes your ideal customer is looking for.
- Identify 3 of your top competitors.
- What are these competitors most known for?
- List 5 things that make YOUR business stand out. What gives you a competitive advantage?
- What needs aren’t being met in your market space? List any industry trends or gaps in the market. Can you extend your competitive advantage into these areas?
- Explain what makes your business different and better than your competition, and why potential customers would choose you.
Having a successful business isn’t an accident. It takes research, educated decisions, testing, tracking and measuring. Guesswork will leave you customer-less and broke. If you don’t know how you’re different from your competition, how are potential customers supposed to? Knowing your competition’s strengths and weaknesses will help you differentiate, which will make marketing and advertising that much easier. Marketing a dud business is a sure fire way to kill that business quickly.