Competitive advantage for your company business plan 2024

When you are starting a business, an important aspect to take into account is a competitive advantage. If you are a solopreneur, having a competitive advantage is essential to win over your competitors.

Whether you have a SaaS niche business, a course business, or a content creator business, you should think about your competitive advantage.

Competitive advantage (can be best described as moat, a term popularized by Warren Buffet) is the capacity or capabilities of the company that allows it to stand out and differentiate itself from the competition.

These capabilities come from the company’s resources, whether natural, legal, or human resources.

A competitive advantage is the basis of a business’s value proposition; the strategy chosen by management (just you in the one-person company case) to enter the market will be based on this.

Emergence of a comparative advantage

Competitive advantage can arise from:

  • Clear brand differentiation
  • Control of a key resource or input
  • Possession of patents or concessions that allow exclusive exploitation
  • Processes and internal organization more efficient than the competition

In the solopreneur case, is difficult to have control of a key resource or a patent. So, the competitive advantage you must have in your business plan as a solopreneur is your brand and the customer experience.

A Sustainable Comparative Advantage

The competitive advantage will be sustainable if we are sure that it will continue to exist in the long term.

When a company has a sustainable competitive advantage, this tells us that it will be tough to overcome its competitors.

According to the book Strategic Management, to be sustainable, a competitive advantage must be:

  • Valuable
  • Singular
  • Expensive to imitate
  • Irreplaceable

When you are making your solopreneur business plan, you should keep in mind that your brand must have these characteristics to be a sustainable comparative advantage.

Valuable capabilities

A valuable capability allows a company to use its resources to exploit an opportunity or neutralize a threat.

In a solopreneur case, it would be for example, having a niche Saas app that solves a really specific problem of your client.

Unique capabilities

The capacity of a company will be unique when very few (or none) of its competitors possess it.

As a one-person company, this is you. As a solopreneur, you are the only one who has to add value or solve problems for your audience or your users.

Expensive to imitate capabilities

A costly ability to imitate is related to the costs of time and money that it would imply for another company to acquire this advantage.

This aspect includes characteristics such as organizational culture or internal processes that make a business efficient.

In the solopreneurs business, this would be your personal brand. Is impossible to imitate someone or grow a loyal audience in a short amount of time.

Irreplaceable capabilities

The capabilities that are essential to the strategy of the business in question are irreplaceable. That is, they are important for the company or companies that own it; without them, it would not be able to correctly exploit the available resources.

The harder it is to replace, the more irreplaceable a capability will be. Because of this, the vast majority of capabilities have to do with intangibles such as internal company processes, brand power, and culture, among others.

Conclusions about competitive advantage in small business

A competitive advantage is what will allow you to differentiate yourself from the competition and gain greater market share.

When evaluating the investment or start of a business, the fact that it has a sustainable competitive advantage will give us greater security regarding the durability of the business in the long term.

As a solopreneur, you should adapt all these characteristics to your business. Depending of your business you should give more importance to one or another.

For example, if you are a content creator is more important to develop your personal brand, but, if you are offering some service is more important the user experience.

It’s all on you now. I hope this post has been useful.

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