Why differentiation is the key to small business success
Read time: 4 minutes
Toronto entrepreneur Paul Jansen remembers two words of advice that have helped him turn his small construction company into a growing enterprise with annual sales of $6 million.
“My father-in-law was an insurance broker who decided 15 years ago to focus on motor homes,” Jansen says. “At that time, such specialized coverage was unheard of. But he did very well and he taught me not to compete with the herd.”
Jansen, a BDC Advisory Services client, started Jancon as a general contracting company in 2000, but found a different approach was needed when times got tough.
Find your niche
“The firms that took on every kind of project were much bigger than me and it was hard to compete,” he says. “We decided to focus on our strengths: Smaller buildings (500 to 2,000 square metres) and renovations. There weren’t many people building the small stuff and we became known for that.”
As well, Jansen notes that many companies promise to provide “good customer service”—a term he finds vague and meaningless. His company has adopted a more specific slogan: On budget and on time.
“The first thing I did was to get everybody’s 100% commitment to the mission statement and structured company operations to ensure we deliver.”
Jancon’s market niche in small buildings also includes a specialization in the construction of daycare centres. Here, the company has built its reputation on providing more than just bricks and mortar. Its service extends to dealing with the bureaucratic requirements for obtaining a daycare licence.
“As our website says, Jancon not only provides construction services, we make your life as easy as possible,” Jansen says.
Avoid competing on price alone
BDC consultant Beth Parker describes Jancon’s approach as an excellent example of how a firm can successfully stand out in the marketplace.
“If you don’t differentiate your enterprise from the many potential competitors, it’s like playing roulette and hoping your number will come up,” says Parker, who advised Jancon on its marketing strategy.
“In addition, you’re often left to compete on price alone. That lowers profits and can give your company a cheap, flea market image.”
Learn what your customers want
Instead, Parker encourages companies to define their ideal customer in as much detail as possible, determining what they think, feel and want. The next step is to analyze the company’s offerings and marketing approach in light of that customer’s needs.
“Rather than focusing on the qualities of your product or service, describe the experience customers will get from it,” she says. “What benefits, solutions, or happiness are you offering?”
It’s all too common for companies to confuse their own opinion of what’s good with what the customer actually wants, Parker adds.
“You can have the greatest product in the world, but if you don’t find out who wants it and show why it’s special, you’ll go out of business.”
Be different or be dead
Canadian author Roy Osing expresses the idea in graphic terms in the title of his book, Be different or be dead.
“There is a proliferation of sameness out there,” he writes.
“If you’re an indistinguishable member of the competitive herd you go unnoticed. And the end is near.”
Osing urges entrepreneurs to figure out “a compelling reason why customers should do business with your company and none other.” That should include coming up with an “an only statement” as in: “We are the only business in the city/the country/the world that does X.”