Understanding Competitive Advantage

As an entrepreneur you also want to keep abreast of your company’s worth. Determining this in itself is a complex process made up of many different attributes. So in this installment, the focus will be: Competitive Advantage.

Competitive advantage is the attribute that allows as organization to outperform their industry competition. Having a clearly defined competitive advantage helps pave the road towards a strong market position, creating a sustainable business model, enabling strong margins, proving the ability to scale up or down, and more.

Before you can start to work on creating an Competitive Advantage, there are 3 key points that you need to know.

  • Who your target customers are.
  • What is the true benefit that your customers get from your product or service.
  • Who are your competitors and what are they doing.

You need to know these things in order to demonstrate to the market how your product or service creates more value to your customers than your competitors do.

Porter highlighted 3 main ways companies can achieve a strategic competitive advantage.

  • Cost Leadership: Offering a valuable product or service at a lower price than the competition. Being able to apply this strategy when your business is still new can be difficult. Part of the reason that larger companies can keep their cost low is because their sales can already justify buying product in bulk and taking advantage of the bulk pricing. Something that can be applied to a business that is still in it’s growing stages is to keep a tight rein on overhead costs. Make sure that you can keep your operational costs and low and consistent as possible. This will help reflect a lower cost to your customers, and help them be more willing to come to your over the competitor. That said, don’t be tempted to let the quality drop for the sake of less expensive costs. This will damage any advantage you are trying to build.
  • Differentiation: Providing different and better benefits than anyone else on the market.  This specialty can be associated with design, brand image, technology, features, dealers, network, or customer service. Some of these avenues are achievable with very little extra investment. For instance, design will be something you have to consider regardless. This can apply to visual design and operational design. If you are smart and diligent about the decisions you make regarding this process, you are spending practically no more money in the end. Another area to point out is customer service and experience. Training your employees is a system that will need to be put in place regardless, so why know provide the best training available, to ensure that your customers are not only satisfied, but impressed with the level of service they receive?
  • Focus: Your company truly understands the target market and services them better than anyone else in the industry. Think of a car dealership, besides the selling of vehicles, most modern dealerships have a service center. Many of them are filled with the same amenities, seating (comfortable or not), reading material, and a television. 20 years ago, that would be sufficient, but in today’s market, is that really meeting the needs of your client? Be smarter, don’t waste your budget on so many expensive magazine subscriptions, invest in having a WiFi service. Instead of potential uncomfortable seating, make sure you have a combination of seating and workstations for those clients that may need to wait around for their service appointment.


Within your business, do you understand what your competitive advantage is? Are you Effectively using this to get ahead of your competition? If so, buyers are ready to pay a higher price to buy your business. If not, it may be worth it to take some extra time to determine what it is before proceeding with the sale.

If you need help determining your competitive advantage and valuing your company, call Nick at 1-866-850-8440 to start an evaluation. We look forward to all that we can build together.

About Your Legacy Partners

About Your Legacy Partners

Nick Arellano started his company, Your Legacy Partners, with a client-centered approach.  His vision is to help you realize the full value of the business you’ve created and ultimately reach your goals. As true partners in this process , Nick and his team see themselves as sitting on the same side of the table, instead of across, to truly understand their clients and their businesses. The “Legacy” is all about the business owner-- you’ve built your company from the ground up, grown and given it life, fought through the bad years, and celebrated the good years. For many of you, your business helped you grow a life for your family, and a life for your employees. In the end, Your Legacy Partners will have helped business owners like you enhance the value of their company,  attract the best buyer, and leave behind a strong legacy for the future.

There are a variety of differences between hiring a business broker or an investment bank, and Your Legacy Partners seeks to give businesses like yours the best of both worlds. They are highly educated, experienced advisors who draw on the successes of the past, bringing a buyer’s perspective, with an eye on the future using their expertise to propel your business forward.

A Legacy in Experience

Nick Arellano is knowledgeable and motivated, with a strong work ethic. He has a passion for helping others succeed, and this carries over into his business. With his  experienced partners and drive for success, Nick is able to attain results for his clients. He has been working with and advising business owners for 15 years. His career began at Morgan Stanley, advising  small business owners who were looking to sell their company within the next couple of years. It was in this position that Nick realized his true passion for helping business owners succeed. Nick has knowledge and passion for the private sector, in addition to providing valuations and consulting services, he has analyzed  hundreds of companies for acquisition. He brings his insight and knowledge from past experiences and perspectives to Your Legacy Partners.

During his time working directly within the industry on both the buy-side and sell-side , Nick noticed several key things which currently drive his business model. For one, he noticed that owners  often leave money on the table by bypassing important steps in the pre-sale process. When firms fail to make necessary value-enhancing improvements and modifications (as you might) during the process of selling a home, they limit the attractiveness in the eyes of a buyer, resulting in a lower overall price.

Nick also noted that many business owners do not fully understand the true value of their firm given today’s market environment  and the types of buyers they are seeking. Having a professional valuation performed by a certified expert leads to more confidence during negotiations and results in a faster, smoother process with a higher likelihood to close.

The third major thing that Nick noticed is that business owners often do not connect with enough of the right buyers, nor do they know where to begin. Simply posting the business to a website and waiting for the right buyer to come along, is outdated practice. Proactiveness, and focusing on both quality and quantity, is what is going to attract the right leads from the right places.

Nick -- and the Your Legacy Partners team -- has the experience, background and education to back up their claims of being the best firm for the job in helping you sell your company. They have the drive and the know-how to help you achieve the best outcome  and, in the end, ensure you leave behind a strong legacy. That is what Your Legacy Partners is all about.

A Look Inward

Your Legacy Partners seeks to form relationships built on trust, confidence, and professionalism. Selling your business is a significant decision for owners, and Your Legacy Partners will help guide you through the process, whether you are a lifetime CEO or a young professional.  

Nick Arellano, Managing Partner  of Your Legacy Partners, grew up just outside Minneapolis,  Minnesota, and considers this his lifetime home. He is very active in a variety of sports and outdoor activities. Some of his favorites include playing in a baseball league, a football league, and spending time on the lake.   He received an Undergraduate degree from Minnesota State University, Mankato, where he was the President of multiple groups and received the Distinguished Student Leader award in his senior year.. He also received his MBA from the University of Chicago - Booth School of Business. While studying there, Nick helped launch an entrepreneurship program, and was Chair of the Private Equity Group. He currently resides in St. Louis Park, MN with his black lab Kona,  and has a personal goal to buy a boat and spend more time sport fishing in the caribbean.

Nick and his team are happy to help you develop your Legacy.

For more information, contact Your Legacy Partners at 866-850-8440  or Nick@YourLegacyPartners.com