Competition defines any business venture, and one of the most overwhelming experiences any business owner is likely to meet head-on is running into cash flow headwinds as a result of stiff competition. A typical part of the average entrepreneur’s journey has to do with the balancing act of staying afloat amidst shrinking revenues, but with ballooning business demands.
Picture this. You have done your rounds in your neighbourhood, seen the need for a convenience store, perhaps just next to the local bus stop. A simple market survey, even to a casual observer points to a promising venture. There is rental space available for your venture and all you need for now is to marshal up your savings and you are in business. A few weeks of research and you are in business. It doesn’t take long and business is booming, you wake up early and stay up late to keep with the demand. In six months’ time you have broken even and the business is now on its course to autonomy. The queues are long as customers stream in and your space is no longer enough. You are already thinking of opening another branch in an area with similar demographic characteristics. Another store opens its doors not far from yours, but this does little to dampen your sales and business is booming. Your banker has already taken note of your transactions and has already sent emissaries with the news that you are ripe for a bank loan for expansion. You choose to open two branches which are slow to pick up, but you remain unbothered since the mother branch is doing well to support the other branches at foundational level. Two years into the business, and due to lack of personalized attention, the branches seem untenable, so you have to close down. Meanwhile, a leading supermarkets chain is eyeing an opportunity around your area and they do not hesitate to open doors not far from where you ply your trade. Suddenly there is this huge store stocking a wider variety of items, with parking space to boot, and not as crowded as your mini-supermarket. Within a month of the new supermarket opening doors in the area, you realize that your sales revenues have plummeted by as much as 80% and this once bustling and promising store has, in a flash, turned to a pale shadow of its former self. Let’s face it, your store was the shopper’s paradise in the area for the time it exclusively served the market, but not any longer. There is a threat, a consuming threat.
You have just tasted the real definition of competition, perhaps when you least expected it. You probably didn’t anticipate this threat, even as the infrastructure to house the giant supermarket was underway. But, in all sense, the truth is, if you had looked at this development from strategic lens, you most likely would have started customer retention plans way earlier. This, however does not mean you wouldn’t lose some customers any way, but you would have had better foresight, perhaps a sustained effort to develop the branches. Strategic thinking would mean you exploit other available opportunities and capitalize on your key strengths. Your passion to solve customers’ problems, coupled with a sound strategy will keep you afloat in the face of turbulence and uncertainty.
A key element of your business survival is a competitive advantage strategy. You might have to define your competitive advantage strategy and capitalize on it. A small enterprise for instance can build a customer lock-in mechanism as part of their competitive advantage strategy through exemplary customer service. Building a personal relationship with your clients can easily work towards warding off competition from established entities. While this may not cure the attrition related to incentives by your competitors such as promotions, it will certainly build some level of loyalty from your customers. Knowing your customer’s preferences and attending to them also goes a long way towards building loyalty. Leading stores for instance may not have considered local needs like customers preferring to buy in smaller quantities (kadogo economy) and so, your competitive advantage is likely to lie with being a store that cares for customers’ preferences.
When all is said and done, business requires that one constantly has their ear on the ground if one is to effectively meet the customers’ needs.
The need for innovation as a strategy to stay ahead of the competition cannot be gainsaid. An entrepreneur should always be on their toes, challenging long held assumptions and devising new ways of staying ahead of the pack.