April Day, MBA
In the small business landscape, Houston is prime real estate for the budding entrepreneur or small business owner. According to the Greater Houston Partnership, Houston is home to over 200,000 small businesses and listed third in job creation and sustainability. With Houston small businesses serving as an economic powerhouse, we must navigate the marketplace strategically in an effort to remain relevant and sustain profitability. Profitability is closely linked to ones competitive edge or structure. As a small business owner, regular assessment of our competitive strategy is critical to staying in the game. With a goal to remain relevant and sustainable, we look at three key elements:
New Entrants or Competitors
While we welcome new businesses, saturation in ones territory can quickly dry up profit margins. Understanding your part of the pie or marketplace is integral to maintaining or increasing your market share. Develop a knowledge base of possible barriers of entry in terms of start-up costs, branding, governmental oversight, technology, and specialization. Enhance your relevancy by being known as the “thought leader” or expert in your industry. Candace Waterman, Chief of Staff for Women’s Business Enterprise National Council (WBENC), stated that they, too, are looking on a national level to assist the small business community by “enhancing a model where WBENC is a women business resource in industry providing not only certification but executive leadership training, networking, matchmaking and access to market place.”
In working with over 800 businesses, I have seen a high need for owners to solidify their standing within the industry and connect with community organizations, media representatives, and small business resources centers. Adopt a strategy that helps ward off new competitors within your marketplace by strengthening your brand recognition and adopting logos, patents, and trademarks for your business services and products. A strong marketing strategy, branding, and consumer reputation can help deter new competitors, increase profits, and encourage strategic alliances.
Buyer Switching
With an elastic economy and so many choices for consumers of small business products and services, the threat of substitution is one of real concern. Many times consumers are looking for the same or similar product/service at a lower cost. At WBEA, we often send out a Request for Proposal (RFP) to garner the best bid at the right price for the service desired. Buyer switching is a common theme in the consumer market, thus small business owners must look at their products and services in comparison to their competitors.
Working up a strong value statement in your marketing collateral, in addition to how your products and services differ, will help distinguish you from competitors. In supporting our start-ups, we suggest secret shopping, or “sneaky peak,” at their competitors for consumer perspective. Another key element in deterring buyer switching is to develop a strategic pricing model that includes tangibles such as extended warranties, additional features, rebates, or higher level of customer service for your products and services thereby adding value to the overall purchase. One suggestion to facilitate this process is to complete a Features and Benefits Analysis on company products and services where you outline the unique features as well as how it will benefit the consumer. Knowing thyself and thy customer can become your best allies in developing consumer loyalty.
Financial Portrait
While maintaining a strong brand and consumer base may consume much of our energy as small business owners, we must find a source of reserve in monitoring the financial health of the company. Careful review of the cash flow, balance sheet, and profit and loss statements on a monthly basis, as well looking at comparisons from the same time or “snap shots” in years past, will help to organize financial direction and streamline priorities. Accurately tracking sales trends and attending to accounts payables and receivables can enhance sustainability strategies and increase fiscal health. Reviewing financial statements on a regular basis affords stronger operational decisions and quick response time to evolving financial trends and patterns within your business and industry.
While starting your business can seem to just take flight, maintaining a profitable and sustaining entity takes vision, strategy, and implementation. With so many business resources available for entrepreneurs there is no reason to go it alone. Visit your local Small Business Administration resource centers or the WBEA for support in becoming part of Houston’s economic powerhouse and top source in job creation.
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April Day is President Women’s Business Enterprise Alliance. You can reach her at
713.681.9232 or by fax at 713.681.9242 or email her at [email protected] * www.wbea-texas.org
