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How Your Small Business Can Compete With a Larger Competitor

Competition is a
natural part of life as a small business. But it can be daunting when you go
head to head with a much larger competitor.

Big companies have so
many advantages, after all. They have a more recognizable brand, and they can
easily outspend you on marketing and advertising to keep that advantage. They
can use economies of scale to undercut you on pricing, they can use their
resources to buy bigger, better stores or fancier equipment, and much more.

So how can you
compete? Well, small firms do have their own advantages too, such as speed,
relationships with customers, and trust, among others. In North America, 80% of people trust
family-owned businesses, compared with just 52% for public companies, according
to the 2016 Edelman Trust Barometer

So in this tutorial, you’ll learn some strategies you can use to compete with the big players in your industry. Even if you’re a solo entrepreneur or have just a few employees, you can carve out a successful niche for yourself and, over time, you can grow and start to take business away from the corporate Goliath in your field.

We’ll look at how you can analyse your competitor and find areas where you can differentiate yourself, how you can choose where and where not to compete, special tools you have at your disposal, and more.

How to Successfully Compete With Large Competitors
Successfully compete with larger competitors. (graphic)

1. Look for Gaps in the Armour

The first step is to analyse
your competitor. Although large companies can be daunting competitors, they
have weaknesses too. Analysing your competitor carefully will help you identify
these weaknesses, as well as figuring out their strengths and how you may
respond to those.

There are many different
ways of doing a competitive analysis, with lots of different frameworks and
templates you can use. Celine Roque recently wrote an excellent guide that
covers all the main areas, and she recommends doing the following:

  • Know their target
  • List their pricing.
  • Itemize their
    marketing strategy.
  • Identify their
    competitive advantage.
  • Find their strengths
    and weaknesses.

You can find much more
detail on each area and how to find the information you need by reading the
full tutorial (it even comes with a worksheet for you to download and complete
the analysis):

When you’ve done this
exercise for the large company you’re competing with, you should have a much
clearer picture of its strengths and weaknesses. The next step is to form a
strategy for exploiting those weaknesses and playing to your own strengths.

2. Plan Your Attack

Now it’s time to look
at each area of your competitor’s activities and see what you could do either
better or completely differently.

In the popular book Blue
Ocean Strategy
, Renee Mauborgne and W. Chan Kim argue that instead of
joining the frenzy of firms ripping each other apart in the same blood-red
section of water, companies should find a section of calm blue water in which
nobody else is swimming.

So look at the
competitive analysis you created in the last section, and compare that with how
you do business in your own company. Instead of going head to head against your competitor’s
strengths, look for opportunities to sidestep them and create your own clear
space in the market.

For example, fitness
company Curves did exactly that when it first started out in the 1990s. Today
it’s a multi-million-dollar company, but back then it was just a small business
founded by Gary and Diane Heavin in Harlingen, Texas, and they were going up
against some very large, established companies in the fitness industry.

According to the Blue Ocean Strategy

At its inception,
Curves was seen as entering an oversaturated market gearing its offering to
customers that would not want it, and making its offering significantly blander
than the competition’s. In reality, however, Curves exploded demand in the U.S.
fitness industry, unlocking a huge untapped market, a veritable blue ocean of
women struggling and failing to keep in shape through sound fitness. 

They achieved this by
doing things differently from both traditional health clubs and home exercise
programs. They targeted women, and they kept things simple and friendly, with a
few easy-to-use machines arranged in a circle, instead of masses of complicated
equipment and fancy add-ons like saunas and juice bars. Because things were
simpler, they were able to offer lower pricing than many of their competitors,
and they also chose out-of-town locations, which were not only cheaper than the
traditional city-centre fitness club spots, but were also more convenient for
their customers to reach.

By doing things
differently, Curves was able to create its own space in the market. It was so
successful that now it has outstripped many of its original large competitors,
boasting millions of members in thousands of locations worldwide.

So to implement this
kind of blue ocean strategy yourself, take all of your insights from the
competitive analysis and brainstorm ways in which you can do things not just
better, but completely differently. Maybe your competitor has an unbeatably
broad range of products, but you can offer depth in a particular area. Maybe
you can offer a personal touch that your competitor can’t. There are lots of
possibilities here, depending on the exact nature of your business and your

Blue Ocean Strategy Tools
Blue Ocean Strategy tools.

If you need extra
help, there are some useful
 (shown above) on the Blue Ocean Strategy website, although you need to sign up with
your email address to access them.

3. Act Quickly

One area where small
businesses often enjoy an advantage is around flexibility. Generally, the
larger a company gets, the harder it is to change direction quickly. Small
firms can often respond much faster to current events or new trends.

For example, some
small businesses have profited
from the Pokémon Go phenomenon
this summer. One pizzeria owner decided to
buy some “lures”, which temporarily increase the rate of Pokémon generation in
the area. Here’s what happened:

We did this last night
(college town), and within minutes of dropping the lure, 30 people walked in.
Hoooly s#&@. I own a pizzeria
that’s a Pokestop and I literally did this all day. I had a ton of kids and
adults (mostly adults) come in for a slice of pizza and a drink until the lure
ran out.

Small businesses can
also run special promotions or create new products based on all kinds of
unexpected events, like a sudden heat wave or a big local news story. Or
perhaps you could respond to a fashion trend, one of those overnight internet
sensations, or a sudden change in consumer preferences. On the other hand, it could
take a large firm months or years to make the decision and redirect all its
operations to something new. They’re probably still having committee meetings and running feasibility studies about the possibility of buying Pokémon lures.

Again, it’s about
playing to your own strengths, not those of your competitor. Large firms can
profit from things like the Olympics, where they have four years to prepare and
millions of dollars to spend on promotion. You can profit by being nimble and
responding quickly to more immediate events, before a Goliath has a chance to react.

As Carol Ostrow of the
Flea Theater, a small theatre in New York City, told
the Wall Street Journal

Large can be
unwieldy. Larger staff, larger budget, larger audience base, larger loss means
that decisions take longer and are likely to be risk averse. Smaller
institutions can take risks because our agility means that we can circumvent
obstacles, change direction, reboot plans and respond quickly to adversity and

4. Don’t Compete Where You’re at a

Don’t engage in fights
you can’t win. David didn’t beat Goliath by engaging in an arm-wrestling match.

So if a
mega-corporation can afford to undercut you on pricing, for example, don’t be
tempted to compete there. Instead, emphasise your other competitive advantages.

Small local bookshops,
for example, have been struggling to compete against giants like Amazon for
years. It’s hopeless to compete on price, because Amazon’s size allows it to
negotiate big discounts with publishers (and also because it keeps costs so low
thanks to warehouse operations and employment
and tax
practices that small firms can’t mimic). And Amazon will always have a bigger
range than any small shop can stock.

But, although many
small bookshops have fallen by the wayside, many have also flourished by doing
things Amazon and other big firms can’t. If you look at some
, you’ll see that many of them specialise in a particular area,
like art books, Latino literature and poetry, or comics and graphic novels.
Others create gorgeous physical spaces that are a joy to shop in. Others focus
on building community by holding frequent events and allowing readers to
connect with writers.

These small businesses
don’t compete with larger companies by trying to sell cheaper books. They allow
Amazon to dominate that space, and they move into different territory, providing
other kinds of value that customers are willing to pay a little extra for. So
find your own value, and have the courage to keep your pricing at a level where
you can make the profit you need. Keep the fight on your own territory, where
you’re strong, and don’t compete where you’re weak. In a price war, the company
with deeper pockets will almost always win.

5. Use All the Tools at Your Disposal

In many ways, it’s
easier now than it ever has been before for very small companies to compete
with behemoths.

For previous
generations of small business owners, it would have cost a fortune to reach mass
audiences via advertisements in the dominant media of the day: newspapers and
television. Even local advertising campaigns cost money that many small firms
could ill afford.

But today, smart use
of social media and content marketing can put you in front of huge numbers of
potential customers, with little monetary investment.

For example, consider
the amazing story of a dental hygiene product called the Orabrush. Former biochemist and
nutritionist Robert Wagstaff invented it to help cure bad breath, but for a
decade, his business failed. Retailers refused to stock it, and a costly
infomercial sold only 100 orders.

Finally, at age 75, he
decided to pay a student $500 to create a promotional YouTube video. The video went
viral, with more than 26
million views to date
. More videos followed, and Orabrush is now sold in
more than 30,000 stores in 25 countries.

Of course, this is an
extreme example. Few small businesses achieve such spectacular success with
social media, and for many firms, it can be a huge time suck. But success is certainly possible. To find out how
to do it right and maximise your chances of success, check out the following content
marketing tutorials
on Envato Tuts+:

Another key component
of success, of course, is a good website. But that, too, is so much easier
these days. Acquiring and equipping a professional-looking store or office
space requires a major investment. But now, you can build an impressive online
with minimal investment. There are thousands of professionally
designed website themes and templates
for WordPress and other popular frameworks on sites like Envato Market.

You can also use
online tools to simplify a lot of business tasks like accounting, productivity, planning,
communication, customer relationship management, and so on. So embrace these
tools to help you level the playing field with your larger competitor in ways
that would not have been possible until recently.


Do you have your
slingshot ready? Good, because you’re now ready to defeat Goliath.

You’ve learned how to
analyse your larger competitor to find out possible weak points. You’ve seen a
strategy you can use to compete successfully by creating your own unique space
in a crowded marketplace. You’ve seen some examples of small businesses
competing successfully with larger companies, using strategies like speed,
differentiation, and clever use of social media. And I’ve also given you links
to some resources you can use to learn more.

Coming up against a
large competitor can be very intimidating, but with the strategies you’ve
learned today, you’re equipped to put up a strong fight. And if you are still
feeling intimidated, remind yourself that in the original David and Goliath story, there
was only one winner, and it wasn’t the giant.