Forget generic marketing advice.
Most marketing books, consultants, or even AI-based agents (hello ChatGPT!) will repeat the same guidance regarding competition:
Do you think a six-person IT firm can't earn well? Here's the news for you: They can do seven-figure profits, even if there are 300 larger IT firms that deliver similar services to the same market.
To illustrate why this is possible, we can turn to the good old study of microeconomics. There are different kinds of market structures. Chances are you've heard of the following ones:
Much of the advice given to boutique consultancies assumes you are in an oligopoly. MBAs and HBR articles will talk about competition as if you were in charge of American Airlines vs Delta. Coca-Cola vs Pepsi. GM vs Tesla.
That's exactly why it's poor advice for you.
Now I want to introduce you to another, less famous market structure. It's called monopolistic competition. I'll let ChatGPT explain it to you:
Monopolistic competition is a market structure in which there are many firms selling differentiated products, meaning that the products are similar but not identical. In this type of market, each firm has some degree of market power and can set its own price and output level, but they face competition from other firms producing similar goods.Monopolistic competition is characterized by the following features:1. Large number of firms: There are many firms in the market, but not as many as in perfect competition.2. Differentiated products: Each firm produces a product that is slightly different from the products of other firms, such as variations in quality, design, or branding.3. Easy entry and exit: Firms can enter and exit the market easily, which means that profits are limited in the long run.4. Non-price competition: Firms compete on factors other than price, such as advertising, product design, and customer service.
Do these characteristics ring similar to you?
Most boutique consultancies are under a monopolistic competition market. A crowded market means there's a lot of demand for your services, and a good chance your firm can thrive. Even if you're charging more than competitors and were not the first to do what you do.
It's important to understand what other firms in your space are doing. But the goal is to be informed, not obsessed with competition. Your greatest competitor is client inaction and indifference, after all.
"Competition is your friend.Think about how competitive the fast food industry is. Now think about where fast food enterprises put their restaurant locations. When Mario's Pizza is scouting for a new location, do they seek out a deserted back road where there's no competition? No! Just the opposite. They plant themselves at an intersection where there's already a McDonalds, or a KFC, or a Taco Bell, or all three. Why? Because that's where hungry people are!"
Source: David A. Fields, "The Irresistible Consultant's Guide To Winning Clients"
For micro, lifestyle, and scale-up boutique consultancies, the biggest competition is client inaction and indifference. However...
You have to convince the buyer of the value your services will generate, no matter how your competitors work. So worry less about who your competitors are, and more about the value you offer to clients.
Source: How Clients Buy - Benchmark Report on Professional Services Marketing and Selling from the Client Perspective
Can you calculate a client's cost of inaction?
Most of the time you will be competing against inaction. The client didn't hire anyone and chose to ignore the initiative. The decision was to do nothing and maintain the status quo.
The reason for this is simple: They don't see it as a priority. It is neither important nor urgent. They are unaware of the risks and opportunities you can help them with.
That's why the most effective way to beat inaction is to demonstrate how important and urgent change is. Highlight the opportunity costs - or the so-called RONI - the return on not investing.
As the saying goes, "money talks, bullshit walks":
Put a number into those, and see people start paying attention.