4 Competitive Advantages SMEs Should Strive For
Just so we’re clear, most small to medium-sized businesses in Malaysia have zero competitive advantages over competitors and still do just fine.
Generally these are what we call ‘lifestyle businesses’ where the modest profits are used to sustain the owner’s lifestyle.
But to the entrepreneur who lives to grow their business, a competitive advantage is essential.
A business with no competitive advantage is a commodity provider in an ocean of identical competitors, where customers make purchases purely based on price and convenience.
Let’s begin!
How to escape the commodity trap
Say someone wants to buy a packet of salt.
Now, imagine there are five convenience stores, all located at the same distance from the customer, all selling the same packet of salt for the same price.
If none of these stores have a competitive advantage, the customer’s choice will be purely based on convenience factors like:
- which store they happen to be passing by
- which has the shortest queue
- which they see first
This makes the business interchangeable—a pure commodity provider.
How to stand out
Say one of the convenience stores is a savvy retailer who wants to stand out.
They do all of the following:
- offer a special bundle deal (e.g., salt with premium spices or cooking essentials).
- stock exclusive gourmet salts that aren’t available in regular stores
- provide online ordering and free home delivery
- implement a loyalty program, rewarding customers for repeat purchases
Each addition moves the store from ‘just another option’ to ‘top choice‘ to the right customer.
Now stack up all those competitive advantages and you can see this store capturing a huge percentage of the salt market share in their area.
Meanwhile, as the other retailers will be extra salty, our entrepreneur sends them screenshots of his bank account balance – just to rub salt in the wound!
Breaking down competitive advantages
Every competitive advantage ultimately falls into one of three categories:
- Cost leadership: Offering products or services at the lowest price.
- Differentiation: Providing superior quality, service, or unique features.
- Specialisation: Catering to a highly specific market segment.
For most SMEs, competing on price is impractical due to limited resources.
Instead, the key is to compete on value add—here’s how:
4 SME-focused competitive advantages
1. Go digital
Whether it’s automating tasks, setting up an e-commerce store, or using AI to handle customer support, the right digital tools can cut costs and boost efficiency.
And if your customers love convenience (spoiler: they do), a dedicated web or mobile app can lock in brand loyalty like nothing else.
Just make sure to get reliable app developers because a glitchy app is worse than no app at all.
2. Hire remote and outsourced talent
Hiring remote talent or outsourcing tasks lets SMEs tap into expert skills without the hefty overhead costs.
Want a killer website, social media presence, or top-notch customer service?
There’s a freelancer (or ten) for that.
Plus, a flexible workforce means you can scale up or down as needed.
3. Dominate an underserved niche
Carving out a specific niche where you’re the go-to brand is where SMEs shine.
Whether it’s hand-crafted batik or the only shop importing rare coffee beans from Lebanon, or even just having an adorable cat as your shop mascot, standing out is about giving customers a reason to pick you.
Once that happens, you enjoy stronger customer loyalty and less price-driven competition.
4. Make friends
Team up with complementary businesses to bundle offers, cross-promote products, and share resources.
Think: a bakery partnering with a café, or a local gym offering discounts with a health food store. More reach, more customers, less marketing spend.
Partnerships are a significant part of MISHU’s revenue as we partner with external professionals to deliver more value to our clients.
Win-win.
Choose your competitive advantage wisely
Although any competitive advantages helps, you don’t need every possible advantage.
Instead, focus on ones that align with your business goals, industry, and customer needs.
By choosing the right competitive advantages, you can differentiate your business, attract loyal customers, and create long-term success.
Grow and scale your business with MISHU
MISHU is partnered with numerous service providers to help us deliver a comprehensive suite of business solutions to SMEs in Malaysia. Let us connect you with the right experts to meet your needs!