Why Core Competencies Matter Even for Small Businesses

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As a small business owner, you may have heard of core competencies but only in the context of industry leaders or major corporations. It can be easy to think that this concept doesn’t apply to your company at this stage, but here’s how you could be focusing on your company’s core competencies as early as possible to position yourself well for a competitive advantage.

Define your core competencies

Most people agree that for businesses, your core competencies are attributes specific to your company, which give you a competitive edge and are difficult to replace or replicate. In other words, they are special qualities that set you apart from the rest of the field.

Think about your company’s services and what you do better than the competition. Do you stand out in quality or value? Perhaps your customer experience is outstanding because of excellent customer service or marketing reach. And you might have a reputation as an industry innovator whose products offer something not found elsewhere on the market.

Find ways to create leverage

Identifying your current competency gives you an idea of where stepping up your efforts can bring in maximum rewards. To use a contract manufacturing company as an example, you could review the history of clients you’ve worked with. Do a significant number of them fall into a specific industry, such as food? Your processes might have evolved over the years to give you an edge in this field – perhaps you’ve come to invest in more advanced machinery that lets you process large batches of product packaging to high-quality standards, at a lower overall cost. This enables you to aggressively pursue the biggest contracts from clients looking for high volume orders.

Develop a portfolio

What if your business doesn’t have a clearly defined core competency yet? There’s no reason to panic. It simply means you need to focus on building one. And even if you’ve identified one or two core competencies, there’s always a need to develop more. Markets change, competitors catch up, and what was once a differentiating advantage for you might have become the new standard in your industry.

Just over two decades ago, Amazon became successful on the back of its business selling books online. It expanded this competency to engage in general e-commerce – selling everything from A to Z, as the company’s logo implies. They didn’t stop there, expanding into cloud computing and streaming media on its way to becoming arguably the world’s biggest internet company. Amazon is a high profile example, but your business can always benefit by expanding its core competencies to take advantage of any sudden changes in the industry.

Outsource the context


Everything else that your company does without being a core competency is simply context. It’s necessary to get business done, but it doesn’t set you apart. For example, delivery fulfillment in many areas is simply context; most companies can’t afford a private fleet to stand out with same-day delivery. Of course, you still need to guarantee a timely delivery – run late, and the customer complaints come in.

Context processes can be optimized by outsourcing. In the previous example, you could look for solutions ranging from full fleet outsourcing to temporary driver staffing. This lets you ensure a basic service guarantee is met while freeing up resources that can be funneled to your core competencies.

It’s never too early to start knowing your core competencies and how to leverage them – even for a small business, this can bring both immediate results and unforeseen opportunities.

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