How to De-Risk Your Business when a Competitor Arrives

In my post yesterday on how you can survive the arrival of a tough competitor, the book "The Upside: The 7 Strategies for Turning Big Threats into Growth Breakthroughs" by Adrian Slywotzky offers some questions you need to ask to help you fend off this competitor:

1. Do you have an early warning system to help you find out if a competitor is coming in to your space? You can gather information from your own customers, suppliers, employees (if any), distribution people.

2. If the competitor is already operating in your space, have you taken the time to analyze your own operations with that of the competitor? What are the advantages of this competitor?

3. How can you now differentiate your business from that of the competitor? What assets do you have -- whether tangible such as products or intangible such as customer loyalty -- that this competitor would find hard to match?

4. The most difficult question is how can you change your business to outcompete this competitor?

How Small Businesses can Survive in a World of Giant Retailers

One of the greatest fears of many small business owners is the arrival of Wal-Mart in their areas. In fact, in many areas, communities are even protesting the arrival of this giant chain to demonstrate support to the communities' mom and pop stores whose existence may be threatened or jeopardized.

We have previously written about ways small businesses can compete with the big boys

• Small Business Survival in the Midst of Giants
• 10 Ways Small Businesses Can Compete With the Big Boys
• You're Small -- Use It to Your Advantage!
• Competing with the Retail Giants

The new book "The Upside: The 7 Strategies for Turning Big Threats into Growth Breakthroughs" by Adrian Slywotzky looks at the various threats affecting businesses (big and small). We've published an article of the author based on the book entitled "How Precarious is My Business Model?" that talks of the seven risks that every business needs to anticipate.

In one chapter, the author discussed how businesses are competing against Wal-Mart. He specifically discussed the strategies employed by Target that have enabled it to thrive in a world dominated by Wal-Mart. Well, Target may not be a small business, but the strategies it employs to compete with Wal-Mart can serve as important lessons for small businesses. These strategies are:

• Play a different game: define a different customer base, product mix, brand image, and business model from that of the competitor
• Streamline the system: minimize fixed cost and maximize efficiences to reduce financial risk
• Pursue non-overlap: look constantly for ways to differentiate your product and service offerings fron those of the competitor
• Get stylish on a budget: partner with high fashion brands that are temporarily available at reasonable prices
• Build buzz to get customer attention out of proportion to your company's scale
• Use technology and rigorous employee training to hone unbeatable service

The only way another business, particularly a small business, can fight Wal-Mart or other big competitors is making sure that it creates its own area of non-overlap. Find its niche, focus on that area and really serve that segment well. Invent a different game.

If you think you are facing a seemingly unbeatable competition, the author advices to simply take a look at how others in your situation are doing what you think is impossible -- thriving against the heavyweight.