6 ways to protect your competitive advantage
If you’ve spent time and money developing products, services, prices, channels or a way of doing business that gives you an advantage over your competitors, it makes sense to keep these unique and exclusive to your business for as long as possible.
Sometimes you can get a permanent advantage such as legal protection on intellectual property, but for most small businesses staying relevant against competitors is something you will need to continually work on.
1. Protect your intellectual property (IP)
Having the law on your side is handy when it comes to stopping any imitators. Your ‘IP’ includes the parts of your business that you can legally protect and take action if anyone breaches your rights.
- Trade secrets
- Company and domain names.
To help decide what to do, make a list of the essential elements of your business you can’t do without, identify if they can be protected and then weigh up the cost of legal protection versus the possible loss.
Visit the United States Patent and Trademark Office to get an overview of what is covered under IP and seek advice from a professional adviser or lawyer before you take action.
2. Protect your intellectual assets (IA)
An intellectual asset is a competitive advantage that usually can’t be legally protected, such as your business contacts, networks, your business know-how, and knowledge of what customers want.
In these cases, you can still build a barrier by:
- Keep your information secret.
- Have staff sign confidentiality agreements.
- Document internal processes with key employees only.
- Share information (like prices) only to qualified leads.
- Limit what you place online and in the public arena.
List what intellectual assets are mission-critical to your business and outline how you’ll keep these elements confidential.
3. Maintain your price advantage
If one of your key advantages is being able to source inventory or materials cheaper than competitors (allowing you a higher than average margin or to price lower while still making a decent profit), protect it by:
- Lock in exclusivity of supply with a legal contract.
- Build cash reserves to buy in bulk for volume discounts.
- Document your systems or processes that give you a cost advantage.
- Keep fixed costs low (own your location, contract out when busy etc.).
4 . Make it harder for other businesses to compete in your market
Look to deter new entrants by emphasizing the barriers to enter your market, or anything that makes another business owner think it’s ‘too hard’ to compete directly. An established brand in the minds of customers is one way. If you asked ten people to name an online marketplace, an accounting software provider and fast food, nine of them will probably say Amazon, QuickBooks and McDonalds. These businesses have invested in their brands to be top of mind.
To prevent new businesses entering your market, try:
- Be first to market with unique products or services.
- Set up an exclusive service area you can defend legally.
- Have a supplier agree to only supply your business.
- Be the only approved vendor.
- Develop partnerships within your industry.
- Build an online following in social media.
- Establish top search rankings.
Anything which makes someone think twice before setting up outside your business is useful.
5. Be better than your competitors.
Having an amazing business with happy customers that refer business is the ultimate way to protect your competitive advantage, but even then, don’t take anything for granted.
Audit the quality of your products or services to check you are better than the competition. Do your products last longer than your competition. Do you have superior after-sales service? Are you the most reliable? Find out what makes you unique and put steps in place to make sure the customer experience is consistent every time.
6. Be the industry expert
If you can prove you know more than anyone about your industry, it’s a great advantage and hard to copy. Post your thoughts in social media, speak at well-known events, run webinars or podcasts with other industry experts, emphasize your qualifications and publicize any testimonials from high profile people or businesses.
At the end of the day, if you’re successful and making a profit then you’re doing something right. Find out what that ‘something’ is and plan to protect it for as long as you can.