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5.1 Competitive Edge Analysis Questionnaire

What is competitive edge? How can it be useful to a business like A Touch of Tuscany?

This part of the business plan is where a small business owner like Jack Gordon has to describe what makes a business like A Touch of Tuscany better than its competitors and why he or she thinks that they will be able to do better than their competitors. This is where the reader of the business plan like a lender or a potential partner will be looking to see what strategic vision a business owner like Jack Gordon has come up with to ensure the survival of a small business like A Touch of Tuscany in a tough and competitive target market like Westchester County, New York.

Competition is an integral part of any business - big or small. The only business that can claim to have no competition is of course a monopoly and in our free market system there is only one true monopoly and that is of course the United States Government itself. Since we know that every business in virtually every industry will face competition, we have to determine just how our own business will be able to deal with this competition and carve out a niche for itself. Competitive edge is a combination of all those elements that combine to give a small business like A Touch of Tuscany the ability to edge itself out over everybody else.

What are the elements that gives a business like A Touch of Tuscany of Westchester County, New York a competitive edge?

There are many factors that can give a small business like A Touch of Tuscany a competitive edge over its competitors and these factors vary vastly from industry to industry. For example if you own a gas station and there are three other gas stations in the vicinity, you may have an edge over them due to the fact your location is better than the locations of your competitors. Anybody who has ever filled up a tank of gas knows that traffic patterns are key to determining just how much traffic will come into your gas station and to the extent your gas station is strategically placed you stand to benefit from increased business simply due to the correct positioning of your gas station on a major traffic thoroughfare - how often have you made a U-turn to get gas?

Other general elements of a business that can give it a competitive edge are of course the element of cost - if you are the lowest or low cost provider of services to the target market, you will stand to benefit from the increased market share. You have to keep in mind of course that because of the lowered cost, you will have more pressure on your margins when running a small business like A Touch of Tuscany. You may also have to compromise on quality and may lose some core clientele because of that.

Timeliness is a great element that can give a small business a great competitive edge - for example if you are involved in an business that involves the physical delivery of a product and you are able to deliver that product in a timely manner ahead of schedule, you will most certainly gain the repeat business of many satisfied customers.

As a general rule we tell all our small business owners that there are three elements of your product or service that you will have to deal with on a day to day basis - cost, quality & time - you will be able to offer your customers any two of these three elements but never all three and this is where you need to choose very carefully and decide what you and your business will be known for:

  1. If if a business like A Touch of Tuscany were to offer low cost and timeliness, its quality will have to suffer.
  2. If a business like A Touch of Tuscany were to offer high quality and timeliness, then it would come at a higher cost.
  3. If A Touch of Tuscany were to offer low cost and high quality, then the timeliness of the product or service being delivered would have to be compromised.

Another element that can generally give a small business like A Touch of Tuscany is a unique product quality - thus if you are able to offer a special service along with your core product or service and your competitor is not able to do so - you may benefit tremendously. If you are in the automobile repair business and you offer a free car wash from the car wash next door for all customers who spend more than $200 with you - you have just gained a a competitive edge due to the product differentiation.

Yet another element of your business that can give a small business like A Touch of Tuscany a competitive edge is a special market niche or segment. Thus if you happen to specialize in a local target market like the Vietnamese community because you happen to know their language and your competitors don't - you most certainly stand to benefit from having a lock on that local market segment.

Having an excellent management team or employees that are motivated, well rewarded and respected can often give a small business a unique edge over its competitors. Small businesses owners like Jack Gordon often struggle with trying to find employees that will treat a small business like A Touch of Tuscany as their own - if you can motivate employees to feel that they have a say in the business and may be able to contribute to its success, you will find that they will treat your customers just as you would - that sure beats the heck out of the shop next door who may may simply be looking to use their employees as disposable personnel.

Every little thing counts in the competitive world of small business and we have seen that even simple things like having a large neon sign can give one motel a competitive edge over another. Make a list of everything that you can conceive of and then use it to give you the edge you need.

How can a service business get a competitive edge?

A service business get its edge primarily from the quality of service it provides. Thus when you are writing out a business plan you must be able to to articulate just what is your platform of delivery of service to your clients? We suggest that our service oriented small business clients put together a strategic platform of services that defines clearly every aspect of their business and also defines what they want the client experience to be like at every point during the delivery of the service. How you handle your clients in a service business is what sets you apart from the competition.

For example if you are in the food business - location can be very important and is most certainly a key strategic edge - many successful restraurant business owners will tell you that getting the right location and negotiating the right lease is half the battle. Another element that gives a food business a competitive edge is its adherence to cleanliness and consistent quality and quantity of food. Great franchises like McDonalds were built on these very simple foundations years ago and to this day, these principles are strictly followed in all its franchises.

Being competitive in the world of manufacturing has a lot to do with the quality of the product, the pricing and terms that you are able to offer it to wholesalers and end customers. Thus for a manufacturing small business, great effort has to be taken to describe just how they go about quality control in their establishment and how they strive to maintain high quality and consistency through out their entire production process resulting in a great finished product.

How a business gets adequate financing and what terms it gets this financing can make the difference between success and failure of many small businesses like A Touch of Tuscany Take two identical businesses who are competing in the same industry like the Full Service Restaurant - the business that has the ability to raise capital in a timely and cost efficient manner will always be able to edge out its competitor. Many business owners fail to see the need for having excellent sources of funding ready to go and when they finally need it, they are not able to procure it in a timely and cost effective manner.

We highly recommend that every business have a line of credit ready through its bankers for any uncertainty or opportunity that may present itself. Systematic shocks and unforeseen events can force even the best of businesses into perilous financial challenges. A classic example of this is a recession. Businesses that have the financing to survive through the tough times will survive - those that do not - will perish or will require the small business owner to contribute more of his or her capital and / or let go of employees to sustain the business - of course the leaner a small business operation gets, the less it is able to compete effectively with other businesses that are fully staffed.

Quick Links:

  1. Go to the Corresponding Business Plan section for this industry.

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