Where does competitive advantage fit into local business? - Josh Loe

Where does competitive advantage fit into local business?

Hi all, this may sound like a silly question but it’s something I’ve been pondering and don’t fully understand.

I had a discussion with my finance professor today about entrepreneurship. I was telling him about another conversation I had with a local roofing salesman about how in our area there’s 5 “big boy” roofing companies (as in they have a team of 5-10 salesmen) and several one or two men shops around. The way the salesman explained it, the barrier to entry in the roofing industry is pretty low because they’re ultimately serving as middlemen that guide homeowners through the insurance process and then sub out labor.

My professor asked me what my competitive advantage would be if I were to start my own firm like this. I didn’t have a great answer – I said the usual stronger online presence and top customer service. But it’s got me thinking – how do these common businesses distinguish themselves from each other? The 5 roofing companies all sub out with the same crews so quality of work is the same. Everybody says they have the best customer service. What about gas stations – what advantage can one gas station have over every other gas station still in business in a town?

Of course, I guess it’s this nature that makes contracting, freight, etc such cutthroat businesses anyway. But as far as the local businesses go, how much is having a distinct competitive advantage vs hitting the pavement and sales harder?



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