I’ve been researching what others (including ChatGPT) think are the top value drivers for a small business and have come up with a list of 12 drivers that seem to be the most common. I’ll be writing about them over the next few months, in alphabetical order.
And it just so happens the first one is the one that’s all encompassing, it’s Competitive Advantage. It’s actually a summation of all other value drivers because when enough of them are there you have a competitive advantage.
According to Investopedia a Competitive Advantage is, “The factors or characteristics that permit one company to compete more effectively than its industry peers.”
So what are these factors or characteristics? They’re the people, the product or service, efficiencies, IP, and more.
What it shouldn’t be is having the lowest price. When you have great quality and fantastic service you don’t need to be the cheapest. In fact, firms offering cheaper alternatives often don’t last because they have quality or service issues, low costs can’t be sustained, or others improve operations to get their better product more cost effective.
“The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage.” Warren Buffett
“If you don’t have a competitive advantage, don’t compete.” Jack Welch