Margit is the Danish owner of a public relations business. She was frustrated that it was difficult for her small company to win work with large corporations. Although she tendered for contracts and made other approaches, she always seemed to lose out to larger rivals. The relatively small size of her company was a weakness in bidding for work from these clients and so she asked me about how she could address this weakness by growing her company.
We started with an analysis of her company and its markets. Being a relatively small company, it had low fixed costs and was more agile than its larger rivals, with a very good portfolio of smaller clients. Working with these clients on small projects was profitable for Margit’s company, whereas larger rivals with higher fixed costs could not service these jobs profitably. In other words, the small size of her company was a strength in terms of delivering smaller projects profitably. We concluded that the most effective strategy was not to win the business of large clients at all, but instead to focus on an area in which her company had competitive advantage – smaller contracts from smaller clients.
Margit could deliver services to small clients profitably – her company didn’t need to tender formally, because of the low value of these projects, and she was able to win projects through personal contacts. It was actually more profitable for her small PR company to undertake a large number of smaller contracts, which were easier to win and deliver, than to go through the laborious process of competing with larger rivals in tendering for contracts, and failing more often than not. She decided not to grow the size of the business, but to use the small size of her company where it was a strength. What she did grow were the profits.
The classic ‘SWOT’ analysis business technique invites you as an entrepreneur to examine the internal Strengths and Weaknesses of your business, then evaluate the external Opportunities and Threats relevant to it.
My experience of using SWOT analysis is that working groups report back with lists of features that are both strengths and weaknesses (depending on circumstances).
The problem with this approach is that strengths and weaknesses only have meaning within any particular context. A business characteristic can be a strength in one situation, yet the same characteristic could be a weakness in a different arena. For example, an aggressive negotiating style could be a strength in the USA but a weakness in China. A large business might achieve economies of scale but be perceived as impersonal by some customers. A business run by young people might be better able to achieve a rapport with younger customers than with older clients. A company may be regarded as ‘exotic’ overseas yet quite ordinary in its own country.
So, instead of labelling various facts about a business as either a strength or a weakness, I prefer the more neutral term ‘characteristic’. Then, the objective of business strategy is to manoeuvre those characteristics into places within the market where they become strengths.
Business strategy is about making our characteristics become strengths by choosing the right customers and projects. A fact about our business is only a weakness when it’s a bad fit with particular clients and projects. Avoid these bad fits and weaknesses disappear. Choose good fits instead and characteristics become strengths.
Be clear about what you are, your values and passions, and in what circumstances you are ‘in your element’. Apply the characteristics of yourself and your business in circumstances where they become strengths. Be your authentic self and allow your business to be authentic. Be proud of what you are; be distinctive. Don’t try to be like everyone else. As an artist friend of mine says, ‘your difference is your strength’. Tell your story: in this way you’ll alienate some people, but attract others. Being upfront and open about what you are and what you believe in will polarise the market, from your point of view, into good and bad customers.
Be prepared to say NO to customers that don’t fit with your strengths, values and objectives.
Connecting your authentic business with the right kind of customers – that’s what marketing is really about. Strategic marketing. Successful marketing. This is how to be successful in business.
Key Points
A business’s strengths or weaknesses can only be evaluated in the context of any particular situation – don’t change your business, change your situation. Connect the realities of your business to customers and projects where they become strengths.
What to do next