Competitive Strategy First! Bank Financing Second!
In my email signature block I state my company’s mission/purpose statement, “Helping CEO’s reach their targeted business goals through cutting edge loan acquisition strategies.” I was happy with this statement 6 months ago, but I have come to realize that as I deal with more and more clients my purpose statement needs to be broadened.
Here is why …. In order for a CEO to accomplish their business goals they need a lot of things, but two of the most important are: a written competitive strategy and financing. I am an expert in the latter and well versed in the former.
My ability to raise the financing my clients are seeking is a direct function of the quality of their competitive strategy. Lenders want to know how CEOs are going to wrestle business from their competitors and maintain or increase their market share. This is important because much of my loan acquisition strategies are based on projections which require a sustainable competitive advantage.
About 50% of my clients have well thought competitive strategies before they hire me, but 50% do not! So with the “not group” I have to put on my strategic planner hat first before I put on my loan acquisition expert hat. I really enjoy doing this.
When I discuss competitive strategies with my clients I focus on the following four factors:
Be knowledgeable of your strengths and weaknessesEmploy your strengths against competitor’s weaknessesStrengthen and neutralize your weaknessesDevelop strategies that will be hard for competitors to imitate or copy
Be knowledgeable of your strengths and weaknesses
Strengths are the resources (human, physical, monetary etc.) and expertise/systems that allow you to deliver a unique value to your target market. A company must work hard at gaining strengths, they take time to develop, as for your weaknesses don’t let your ego get in the way. Be honest with yourself. You might lie to yourself but your marketplace will expose the lies.
Employ your strengths against competitor’s weaknesses
Lock horns with your competitors by matching up your strengths against their weakness. To do this as was stated, you must first identify your company’s strengths and weaknesses and do the same with your competitors. If you line up your strengths with your competitors strengths you might get “out strength” and lose the battle. Don’t go there. Attack their weaknesses with your core competencies. Caution, you must make certain however that the competitor’s weaknesses that you identify are real and legitimate.
Strengthen and neutralize your weaknesses
Strengthen and neutralize your weaknesses. Remember just as your strategy is to line up your strengths versus your competitors weaknesses they are doing the same to you as part of their strategy. Thus once you have clearly identified your weaknesses you must figure out a way to make them stronger over time or neutralize them, otherwise you competitors will continue to “hit you” in that “weak area of your body” and knock you out.
Develop strategies that will be hard for competitors to imitate or copy
Of the four factors this is the hardest. Is it possible to create a business model that cannot be easily imitated or copied? If you have developed intellectual property that can be protected by patents, trademarks, copyrights etc. that is great, but most companies don’t have that edge.
An exclusive licensing agreement or protected distribution territory are other possibilities. Other strategies could be to pursue an extremely narrow market niche, enter special geographic areas or change the standard value chain for your product or service to gain a cost advantage.
A compelling competitive strategy is absolutely essential in today’s ever-changing marketplace. Once you have the strategy in place, attracting growth financing is a piece of cake!