Steps to Growth Capital Self-Study GuideStep 4

4.7 Determine Your Competitive Advantage

What Makes Your Business Different?

So far in this Step you've looked at several views of how well your company is managed. It's time to bring your thinking together and assess your overall competitive strength. Assessing your competitive strength shows investors that you have thought about whether you have the management and business skills to exploit your long-term competitive position.

In today's business world, you need to focus on how your products or services will be different and better than the competition, and on how you can maintain and increase this advantage. In many industries, for example, consistent high quality is no longer a differentiator; it's simply the norm.

Investors Will Want to Know

• How strongly is your firm holding its present competitive position?
  
• Can your firm's position be expected to improve or deteriorate if the present strategy is continued?
  
• Where does your firm rank relative to major rivals in terms of key success factors?
  
• Does your firm have a net competitive advantage or disadvantage?
  
• Does your firm have the ability to defend its position in light of industry driving forces, competitive pressures and the anticipated moves of rivals?

List and Examine Success Factors

To help answer these types of questions and assess your competitive strength in key areas, use a form like the one below. Rate your key rivals (1=low; 10=high). Add up the ratings and draw your own conclusion about your company's and your competitors' positions.

Rating Scale: 1 = weak; 10 = strong

You can adapt the competitive strength assessment for your own business. List six to ten of your industry's key success factors (product performance, distribution efficiencies, price competitiveness, etc.) in the left-hand column. Examine each success factor honestly and ask, are you weak or strong in this area?

Act on Your Findings

The analysis will show you how to improve your standing in relation to each of your rivals. Low scores in one area will mean putting more attention on how it's managed. Your weak areas point out aspects of your business that could be managed more effectively to improve your competitive position.

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