The former CEO of General Electric, Jack Welch, once said, “if you don’t have a competitive advantage, don’t compete”. It essentially means that if you don’t have a strategy to beat the competition, you probably shouldn’t be in the business in the first place.

But how can your business out-compete competition when the business world is such a tough place to survive? Much of it is about understanding the competitive threats and overcoming them. This guide will look at the strategies your business can use to compete and to learn faster than your competition.

How to Out-Compete Your Competition

© | alphaspirit

In particular, you will 1) understand the key competitive threats, learn about 2) the best ways to stay ahead of the competition, and 3) how to speed up the learning curve.


The first step to take in your effort to out-compete competition has to do with analysing the threats. You cannot expect to create a sound strategy to out-compete, if you don’t know what you are competing against.

It is therefore essential to analyse who your competition is and what makes them hard to beat. This will allow you to draw the right strategies and tools for overcoming the challenge. Keep in mind the threats aren’t a reason your competitors are better than you, but more the obstacles you need to overcome or do differently with your business.

The competitive threats will depend slightly on the type of business you have, as well as the industry you operate in. If you are a small business or a start-up, then it is easy to feel helpless against the so-called big guys.

Let’s look at how the ‘big guys’ typically aim to win against smaller companies.

  • Better resources – The biggest advantage big companies have is the amount and accessibility of resources. An established business can have its finances in much stable order and it’s likely to have more connections for further financial support.
    Resources mean the bigger companies can have bigger inventories and thus respond faster to customer enquiries. But vast resources also make it easier to run the day-to-day operations, as bigger companies have an advantage in terms of pure manpower.
    This can have an effect on things such as customer service. Whereas smaller firms might not be able to respond to customers outside office hours, big corporations can often set up a 24/7-customer service without huge costs.
  • Better product and service – The enhanced access to resources can also improve the company product and service development. This can end up creating better products, as well as improving the standards of service.
    Better product and service is also a benefit established companies enjoy. Even smaller companies that have been in the business for a long time would have gained information on the market much more than a newly established company. Established connections and years of hands-on experience can be a big competitive advantage.
  • Lower prices – Product and service prices are one of the biggest influencers for consumer decisions. Therefore, getting the price right and typically to the lower end of the scale is better for business success.
    For the above reasons, big businesses are often able to keep prices lower and therefore, have a competitive advantage over new and small companies.
    The reason big companies can keep prices low is mainly down to scale. Because the companies have vast resources available, they can cut costs by holding on to bigger stock, for example. They also have more money available for marketing, which can help keep the product price low.

All of the above points out to the economy of scale and scope. Economies of scale for a company mean reductions in the average cost, which is possible by increasing the scale of production of this product. Economies of scope, on the other hand, can lower the average costs by producing more products in total. Achieving both of these economies is typically easier the bigger the business.


The above doesn’t mean small and new businesses can’t ever out-compete competition. Businesses in all industries and of all sizes can compete against other companies, if they have a clear strategy to do so.

Below are some of the best strategies companies can use to stay ahead of their competition.

Develop and promote your brand

Since no two businesses are the same, your business must define what it stands for to ensure customers see the difference clearly. Branding your business is essential for success because it outlines the vision and the values your company has.

In order to talk to your customers and to carve a market share for your business, you need to be distinctive. Not everyone in the world is going to love you, but you need to clearly define the reasons big parts of customers should. You need to brand your business well, so that customers have a reason to stop and think twice about opting for your competitor.

Big part of branding deals with promoting your unique selling point (USP). Clearly define what sets your company apart and continuously promote this USP to the world. Many companies seem to think their USP is something they only should know. But USP isn’t about tricking the customer to shop with you – it is about differentiating your business from the rest.

Overall, companies that are actively involved with their community will gain competitive advantage. Be part of local events, stay active on social media and share your expertise in the media, as well as the blogosphere.

Learn about your competition and your customer

You also need to do a lot of learning in order to out-compete. As mentioned above, it is vital to know and understand what the competition is. You need to know specific details of why some consumers choose your competitors and what they use as their USP. This information is not important so you could copy their business, but rather to see what improvements you could do in yours. It can also help you spot the areas your competitors are overlooking.

But you cannot only focus on studying your competition; you also need to learn about the customers. Customer expectations and needs are fluid and you must regularly keep an eye on them. For example, a change in economic conditions might mean customers are more interested in lower prices or quality products rather than flexibility.

Success stories within your industry and indeed from other industries can often teach you a lot about viable strategies. Furthermore, you should also study the failures of your competitors to learn from these mistakes and to avoid them in your business.

When you are researching competition and your customer, try to keep an open mind. There could be new markets available for your business elsewhere or there might be a gap, your company can fill.

Customer needs and preferences in different regions can provide valuable insights for your business. Perhaps you can expand your business to new markets either online or abroad. Diversifying into new areas can be a great way to compete with other businesses.

Compete with anything but the price

You can essentially focus on three key areas with your product or service and out-compete your competition. These are:

  • Price
  • Quality
  • Service

For many start-ups and small businesses competing against the price of a product or service can be quite difficult because of the lack of resources. Yet, most new companies often find the price the easiest way to compete.

While there’s no reason you can’t compete with the price, you must be careful with this approach. This is because most start-ups fail because the finances are just not there. Companies charge less and while customers might come in, the revenue is at an unsustainable level.

The best option is to compete with anything but the price. Focus on creating a higher quality product or service, create the best customer shopping experience or establish a proper customer service culture.

Saturated markets make competing on price harder and there are going to be ‘big guys’ that can absorb lower costs. But saturated markets don’t mean you can’t carve yourself a big chunk of the revenue by focusing on your own niche and the USP.

Focus on customer service

New and small businesses should definitely put customer service at the core of the business. The digital revolution has not meant that customer interactions aren’t essential, even though face-to-face communication has become more limited for many businesses. In fact, customer service is even more vital in today’s business world.

Furthermore, a smile doesn’t cost a thing, right? If you create a customer first-attitude with the aim of smoothening customer experience and going the extra mile, your business will quickly become trusted and loved.

You need to be in-tune with your local community and your customers. Listen to them and take their advice on board, as it can enhance the way you serve your community. If you can make customers feel special and welcomed, a higher price won’t stop customers from doing business with you.

Don’t stop with your customers and community either. You also want to ensure you are the best employer in the industry. Having motivated and skilled staff will provide benefits for your customers. Furthermore, your business will grow by attracting the right kind of people to work with you.

Reward people for doing business with you

You need to be able to reward and excite your customers. This often means being more innovative. Innovation can create a buzz around your company and regular rewards give customers a deeper sense of appreciation.

If you are launching a new product or opening a new store, make sure you make the event more special. It could have giveaways and other such competitions and you could team up with other local businesses.

Rewards are a big part of out-competing your competition, as they ensure your customers have extra incentive to continue shopping with you. Just look at all the big supermarket chains and coffee shops, for example. They run loyalty schemes that ensure the customers are incentivized to keep coming back. Small businesses should definitely aim for the same.

Loyalty schemes, when organized properly, don’t cost that much and can provide more gains to the business. It’s also a good idea to consider teaming up with local businesses for rewards and promotions. For example, you could offer customers in your bookshop the chance to get a pedicure at the local spa, while the spa could advertise and even stock some of your specialty books on relaxing and wellbeing.


The above strategies are all great for out-competing businesses in any industry. But anyone who has worked in the business world knows, implementing the winning strategies isn’t always straightforward. Each business in your industry will be looking over their shoulders, trying to find the magic ingredient for staying ahead.

The best way to guarantee you out-compete your competition is by learning faster than your competition. If you can master the above strategies and learn the winning tactics quicker than your competition, you’ll end up on top.

But how can you speed up the learning curve when it comes to business?

Create a database of your customers

Getting new customers makes learning harder and it costs more than attaining old ones. A clever business focuses on the customers they already have and learns from them, in order to grow the customer base.

Instead of focusing solely on sales, you want to focus on creating lasting relationships. If your customers keep coming back, the sales numbers will also follow.

If you want to learn about the things your business is doing right and the things it is failing in, listen to your customers. Create a proper customer database and measure different metrics of customer behavior. Which promotions make your customers shop more? What are the biggest complaints for customer service? What is the rate of return for shoppers?

By understanding your customers better through a strong customer database, you can innovate accordingly and focus on the strengths while improving your weak points.

Don’t get stuck with what others are doing

The only business you truly need to be concerned about is the one you are running. Getting your business to succeed has nothing to with the competition you are faced with.
As Steve Blank, tech entrepreneur from Silicon Valley, said in an Entrepreneur article, “The only people who can put startups out of business in the first 18 months are themselves”.
You must get your business to run smoothly and to ensure your business plan is viable. Your company needs to have its own business values, strategies and USP – being stuck with what others are doing won’t lead to business success. Each business will do things differently because no two businesses are alike.

It isn’t to say that understanding your competitors isn’t important. It is crucial, but you cannot create a business plan solely around what others are doing. Copying another strategy or approach will quickly get your business into trouble. On the other hand, learning from others won’t.

Furthermore, the point was wonderfully illustrated by Olivier Poirier-Leroy, former national level swimmer, who wrote that swimmers who focus on the process end up swimming faster than swimmers focused on results.
If you are looking over your shoulder and only thinking about beating your competition, the task can overwhelm you. If you look at your business only in comparison with the competition, success might seem like a far away dream.

On the other hand, if you focus on what you are doing, implement your strategy well, then the results will follow.

Collaborate and co-operate with other companies

Information can ease your learning process and one of the best ways to gain knowledge is by collaborating with other businesses. As mentioned above, it’s a good idea to seek companies within your community and team up against the ‘big guys’.

Collaborating isn’t only great for marketing your business; it can also help you understand your market potential better. If a specific collaboration works well, you can analyze what made it so fruitful. Perhaps there is a market out there you haven’t considered before and by co-operating with the community you end up finding it.

In addition, you also want to use your customers to your advantage. Loyal customers can have a huge impact in attracting more customers to your business. We’ve all heard about the power of social media and online reviews, but you must put this information to good use as well.

Learn about your competitors’ changes in strategy, product or service

As pointed out earlier, while you don’t want to copy your competition, you still need to learn from their strategy. By analyzing the product and service, you can find the company’s USP and compare how it differs from yours. It can help you to differentiate yourself further and point out to customers the benefits of choosing you over your competitors.

Learning from and scrutinizing competitors’ strategy, product or service becomes even more vital as you gain bigger market share. When you’ll become the top dog, so to speak, your competitors will want to out-compete you. At this moment, it can benefit you greatly, if you understand what the competitors are aiming to do better than you.

But it must be stressed here you still don’t want to focus solely on your competitors’ strategy. If your customers are convinced by your USP, then continue improving your product through in-house innovation and focus on customer needs rather than what other companies are doing.


The business world can be quite a dog-eat-dog world and competing against your competitors will be a part of business success. But the best way to gain competitive advantage is to stay ahead of your competition by focusing on fine-tuning your own business.

If you define your market well and find the right USP to attract customers, you can carve out a market presence even in the toughest of industries. Creating a solid business strategy to out-compete means you need to learn faster than your competition and turn their weaknesses into your strengths.

Comments are closed.