How to Pick Your Business Strategy.

Got a strategy for your business?

Ultimately, you’ve got a choice of Option A, B or C.

The big question you have to ask yourself to make this your best year ever is a simple one: “How do I want to position myself against my competition?

Option A: I want to be the cheapest.

Option B: I want to be the best.

Option C: I want to dominate a niche market.

Ultimately, you’ve got to choose one of these strategies and build your business from that point.

Now a lot of businesses -particularly right now -will go with Option A -to be the cheapest -in the mistaken belief that it’s the only way to survive.

Problem is, there’s ALWAYS going to be someone doing what you do, and doing it cheaper than you’re doing it.

A price leadership strategy is good only for big businesses (think WalMart here). They deal with substantial economies of scale because they can spread their overheads over huge volumes, and charge low prices.

If you’re running a one- or two- or four-person business, this strategy won’t work for you for very long.

Build a reputation on being the cheapest resource in your trade area and you’re operating from a point of real weakness. Even if you can survive with low prices, can you hold up against a price war with someone who’s going to underprice you? (And it’ll happen eventually.)

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Option B -being the best -is something you can use to build a pretty impressive competitive advantage. Of course, it also means that you need to develop a unique package of products or services -and an attitude of customer service and self-promotion that will stand head and shoulders above everyone elses’ offerings.

You’ve got to look and act like the leader you are, and clearly, your products and your services have to be the best available.

While being the best can be a great strategy for your business, it’s sometimes hard to sustain. It takes some dollars and an ongoing commitment to remain at the top of the heap.

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The third option -dominating a particular market niche -is the one I think that’s the most suitable strategy for most small businesses.

If you add value in ways that attract particular types of customers, you can steadily build your business and your profits.

You can charge a premium for your goods and services.

And you don’t have to necessarily be the best resource available.

The key here is to clearly identify your options, and convince your target market that you are the person with the best-available solution to their problems and needs.

For most businesses, finding a niche (or two) and dominating them gives you a solid foundation for your efforts.

So. What’s your strategy for growth: Option A, B or C?

I know what you might be thinking and sorry -you can’t really pick more than one. If you’re not clear about your overall direction, and you end up using conflicting strategies -such as telling customers about your low low prices as you simultaneously introduce your best-ever services -your profitability will suffer and you’ll certainly not attract the high-paying customers that you want for your business.

Choosing one of these strategies, then sticking to it, will help you create a more successful business in 2009 and beyond.

It’ll also start helping you think about the ways you’re going to target your market and the services you’re going to provide them!

Any questions?

Tags: building relationships