This week it was announced (to the public) that several high profile films were leaving production in Vancouver to go somewhere with more tax benefits.
One of the films: "Man of Steel 2" was expected to generate 100 million dollars in economic benefit for the province.
You can read more on the story from CBC.
Could you imagine if one of your clients that brings in 100 million dollars left to go somewhere else? It would probably be catastrophic for a business, but in this case it's the government, so life goes on.
I want to explain how this relates to your business, why you need to be prepared for these types of situations, and how you can benefit.
Having a major client leave could be a life threatening blow to many companies. Conversely, if you are able to lure a major client away from one of your competitors, it will not only give you greater market share, but it could also push your competitor out of the market, creating more opportunities for your firm.
Why would something like this happen?
There are many reasons that you could potentially lose a client, but barring unusual events it comes down to understanding your competitive advantage as part of your business strategy.
Are you aware of unique value proposition (UVP) in marketing? We'll its just like that: "Why should I do business with you instead of someone else?"
You, your business, can't be the best at everything. You can't have the best price, the best quality, the best service, etc. There comes a point in your business where you need to focus on your unique strengths, whatever you do best, and be known for that. That's your competitive advantage.
You look at the market place, you look at your business, and you derive your strategy from wherever you think that you can be the most successful.
In this case study, the government had a choice to extend their tax credit program to these productions, or not, and possibly suffer the consequences. They knew that there were other cities out there that had advantages over them in regards to tax, and those cities ended up taking the BC clients.
Sometimes you can't compete. No matter how much you try, there will be someone better than you in a particular area. Your job as a business owner or leader is to understand what areas your company is going to be the best in and develop your strategy around those strengths.
In order to do this, you will also need to carefully analyze your competitors and the environment that you operate in. This type of analysis will help you to understand your organization's strengths and weaknesses, as well as the opportunities and threats in the marketplace, as well as external trends that can impact your business and sector. Check out our favourite business strategy frameworks to get started with your internal and external analyses.
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