How to Start a Business in a Crowded Market

by | How To...

When people consider starting a business, one of the common worries they have is a fear about being able to compete in a market that has a lot of competitors.

It’s one thing to enter a new or underserved industry where simply being there is enough. But to start a venture in a saturated market? How can you compete against dozens — or hundreds — of businesses that basically do the same thing?

The answer to that one is easy. It all comes down to differentiation. Nail that, and you won’t really be “competing” against anyone.

To succeed, you have to be a special kind of different.

Where a lot of business shoot themselves in the foot is being too much like all the other businesses in their market. There’s nothing particularly unique, memorable or interesting about them that will leave a lasting impression or create loyalty — even after money changes hands.

We can call these business same-same. Like the bagel shop that sells the same kinds of bagels as everyone else, with the same generic signage and non-descript atmosphere that’s no more memorable than one of those newsstands at an airport.

Same-same businesses are the equivalent of those forgettable people you meet in a group gathering. You may have talked to them for 15 minutes, but you immediately forget who they are afterwards. And you couldn’t pick them out of a lineup if you tried.

Same-same will sink your venture. You have to be same-different.

If you’re a same-same business, you’ll have a difficult (if not impossible) time trying to succeed in a market filled with competitors because there’s no clear reason to pick you.

In that case, you’re competing in a crowded market where there’s no incentive, no particular reason for potential customers to come to you. There’s truly nothing in it for them — you’re just as good as any other place.

One of the biggest reasons traditional department stores are going the way of the dinosaur is that they all sell the same products from the same brands… there’s nothing unique, no personality.

But if you have some differentiating factor (perhaps what you’re selling, or how you’re selling it) that your customers can see, experience and then express to other people when talking about you — that’s a game-changer. Now you’re same-different. You’ll have an unmistakable appeal that resonates with a particular slice of your target market.

There are infinite ways to differentiate your business.

The good news is that it doesn’t have to cost a lot stand out and capture the attention of potential customers or clients. The key is to look at the various elements of your business and think about how you can make any of those components more meaningful, appealing or helpful to your buyers.

You can differentiate with personality and ethos.

If you’re fortunate enough to still have local, independent booksellers in your area, you’ll see that they’ve embraced this principle. They’re selling the ultimate commodity, and they’re up against Amazon, so consumers don’t have to buy from them on price or selection. They need same-different to survive.

These booksellers infuse their stores with a unique personality and ethos that creates a more intimate, more enjoyable customer experience when buying from them.

A Capella Books in Atlanta does a great job with this. Owner Frank Reiss has grown his business by infusing his store’s book selections and author events to reflect his personal interests, and by encouraging employees to build customer relationships through conversation.

You can differentiate with your offerings.

Another way to create a same-different experience is by offering products and services that aren’t typically available elsewhere.

You can do this at a more structural level, like Baskin-Robbins did in the 1940s when they introduced their 31 flavors. Was the ice cream inherently better? Who knows — but the fact that they had different flavors than everywhere else gave them a crucial advantage. Snack bar company RXBAR tapped into same-different in 2013 when they began offering protein bars with 4 ingredients or less — all clearly listed on the front label.

You can also do this on a small level, by offering a selection of things that aren’t sold everywhere else. There’s a small town I visit in Maine that has 2 lobster roll places across the street from each other — talk about a crowded market! One has a line two blocks long, and the other never has a line.

The one with the line offers more lobster on their rolls and more goodies, so they’re nailing same-different admirably. There’s a reason to choose them instead of the other place.

(Incidentally, the people who work there are much friendlier and have more — wait for it — personality. So they’re hitting the differentiation trifecta.)

You can differentiate with customer knowledge.

Personality and offerings aside, perhaps the most powerful way to differentiate from your competitors is to have a deeper understanding of your target market.

When you know what your customers really want you can give them a vastly different, vastly better experience than anyone else they do business with. You know what they really want, what they really need and what will really make their lives easier. So you can tailor your offerings to be just-right for them.

From the customer side, yes, they receive a better experience with you. But more importantly, they feel at a visceral level that you “get” them. That you’re thinking about their happiness as much as you think about the success of your own business.

And that’s a unique experience for a customer. In a same-same world, a business that breaks their expectations of sameness and surprises them with a superior experience doesn’t just win their business — it wins their enthusiastic loyalty and referrals. So getting to know your customers better can be the most profitable activity you engage in.

When you’re same-different, you don’t compete — you thrive.

In certain arenas like sports, competition is a win-lose scenario. Only one team can claim victory in any particular game. You’re competing for something that only one team gets to have.

In business there’s room for everyone… as long as everyone is different. So rather than worrying about the other guy, all you really need to do is differentiate yourself enough to attract people who want your version of what you’re selling. Then your customers will have a clear reason to choose you, because you’re not same-same. You’ve got a difference that they can appreciate, remember and tell other people about.

P.S. – If you need some help developing the “same-different” approach for your business, get in touch today and I can help advise you.

Want to work with me one-on-one? Click here.

Tight budget? Check out my DIY Business Plan Kit.

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