How Your Small Business Can Compete With a Larger Competitor


imageCompetition 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.

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 customers.

– 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 website :

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 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 competitor’s.

If you need extra help, there are some useful tools (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 profited from the Pokémon Go phenomenon a few years ago.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 opportunity.

4.Don’t Compete Where You’re at a Disadvantage

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.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, the Orabrush was widely sold around the world, and the company ended up being acquired by DenTek .

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 storefront 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.

Editorial Note: This content was originally published in 2016.We’re sharing it again because our editors have determined that this information is still accurate and relevant..

Leave a Reply

Your email address will not be published. Required fields are marked *

Next Post

Biotech firm wants to grow human embryos organ harvesting

A biotech firm wants to create “synthetic” human embryos that would be used to harvest organs in order to facilitate transplants and treat conditions such as infertility, genetic disease, and aging, according to researchers. The Israel-based company, Renewal Bio, claimed that it successfully used advanced stem cell technology and artificial […]
Biotech firm wants to grow human embryos organ harvesting

Subscribe US Now