What’s Your Right To Exist? (January 2011)

I believe every business must earn its “right to exist” in the marketplace – and, yes, I said, earn. No business has an inalienable right to exist. Rather, in a competitive marketplace, that right has to be earned day in and day out.

Every business must ask itself how it earns this right. More importantly, it should also ask its customers. What specific niche does it serve in the marketplace? What does it do better than any of its competitors? Does it compete solely on price (a valid strategy)? Ultimately, why do customers choose to spend their dollars with the company?

Another way of asking this question: What is the core competency of the business? What does it do better than anyone else?

Sometimes, a business is surrounded by competitors but delivers excellent service (they are among the best of the best). There may be room for many or few in the particular market but delivering outstanding service at a fair (not necessarily low) price is a proven strategy. Sometimes a business delivers such good service that they are able to dominate the marketplace.

Other times, price leadership may be the strategy. There is usually room for competitors that offer a good product or service (perhaps not the very best) but at a great price. Customers who are price sensitive or to whom “good enough” is satisfactory will frequent this business.

Another unique position in the marketplace might stem from geography. I frequent a drive through car wash and although they offer excellent service, they occupy a unique geographic advantage. Customers would only be willing to travel a certain distance to a competitor regardless of the price or service advantages they might offer.

When answering questions about market positions, right to exist and why competitors frequent a business, one should think broadly about the marketplace. Thinking broadly opens up a world of possibilities. Think about the differences between shopping at Nordstrom’s and Wal-Mart, for example. The differences are striking but both have a place in the market. Of course, you can make an argument that these two retailers are not competitors – clearly they are targeting very different segments of the marketplace. But at some level, they do compete – you can buy a pair of socks at both!

When a business asks itself tough, probing questions about its position in the marketplace, it can use the answers in the strategic planning process to help determine how it can and should profitably grow. Ultimately, this is the most important question business must answer and it is the primary responsibility of leadership.

If your business could benefit from fractional CFO services, I would welcome the chance to speak with you. Please give me a call at (314) 863-6637 or send an email to

your cash is flowing. know where.®

Ken Homza
Copyright @ 2011 Homza Consulting, Inc.

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