Sun Tzu on how a small business actually competes
Imagine you’re the proud owner of a small-town bakery. Twinkling string lights. Freshly baked cinnamon rolls. Holiday sugar cookies in the shape of snowflakes flying off the shelves. Life is good. Business is steady.
Then you hear the news. A well-known chain bakery is opening two blocks away. Lower prices. Glossy ads. A loyalty program you can’t match. Suddenly you’re competing for the same customers and you can feel your confidence waver as you wonder how to go up against their budget and reach.
Sun Tzu has advice for this, from The Art of War:
“Where he is strong, avoid him.”
Instead of trying to beat the chain at what they do best — pricing, marketing scale — focus on what makes your business unique. Lean into your strengths. Position yourself strategically. That’s how you not only survive but thrive.
Understand the competitive landscape
Before you can differentiate, you need to know what you’re up against. SWOT analysis. Porter’s Five Forces. Whatever framework you use, the questions are the same.
Market share. Are they dominating foot traffic because of brand recognition? Resources. Are they using economies of scale or a big advertising budget? Brand recognition. Does their reputation pull people in automatically?
Chain bakeries usually excel at affordability, consistency, and visibility. Understanding where they shine helps you identify where to avoid direct competition.
Then take a good look at your own bakery. What makes it special? Are you using locally sourced ingredients or unique recipes? Is your bakery a place where regulars feel at home? Can you pivot quickly to seasonal trends or customer preferences?
Understanding both your competition and your own strengths is the foundation of the strategy.
Where to differentiate (and what each one costs you)
Niche expertise. Specialize in something the chain doesn’t offer. Artisanal sourdough. Gluten-free pastries. Elaborate custom cakes. Handcrafted French macarons in seasonal flavors. Pick a lane the chain isn’t paying attention to. Become the go-to spot for customers who want something they can’t get from the chain.
Community engagement. Chains lack the local touch that comes naturally to a small business. Host a holiday cookie-decorating class where families learn to make their own. Sponsor a school fundraiser. Show up at the farmers market. Loyalty builds where the chain can’t follow.
Personalized customer experience. Chains can’t replicate the personal touch of remembering a regular’s name or her favorite treat. Surprise loyal customers with a handwritten thank-you note or a small freebie tailored to their preferences. Customers feel valued when you go the extra mile, and that loyalty often outweighs a cheaper price tag.
Values-driven business. Customers increasingly care about the values behind the businesses they support. Highlight your use of organic, locally sourced ingredients. Tell the stories about the farmers and suppliers you work with. Customers are drawn to businesses that line up with their own values.
Digital savviness. Investing in technology expands your reach. An online ordering system. Delivery. A social presence that shows what makes you different. An Instagram series of behind-the-scenes moments. Decorating cookies. Testing new recipes. Daily specials. A strong online presence helps you reach customers who otherwise wouldn’t find you.
Speed and agility. Your size lets you adapt quickly to trends. Roll out a limited-edition pumpkin spice croissant for fall, or a gingerbread loaf for winter. Larger competitors can’t pivot that quickly. Your speed is an edge they can’t match.
Avoiding the trap of zero competition
A market without competition can look like an open door. It can also signal low demand. Before committing to a new product or service, validate the idea.
Survey your regulars to see if a new product line would interest them. Launch a small batch and monitor customer response. Use demographic data to confirm there’s actually demand.
Before investing in a full vegan pastry line, test a few items at the local farmers market. Gauge demand without taking on unnecessary risk.
Where to start this week
Spend thirty minutes listing what your bakery does best and where you have room to improve. Look for areas your competitors are neglecting. Test one new idea — a product, a service, a campaign — and refine from customer feedback. Host an event, run a promotion, or partner with a local business to strengthen community ties.
Sun Tzu’s advice — where he is strong, avoid him — applies to small business as cleanly as it applies to the battlefield. Trying to beat larger competitors at their own game is a recipe for frustration. Lean into what makes you unique. Niche offerings. Deep community connections. Personalized experiences.
This week, review your strengths and weaknesses. What can you offer that your competitors can’t, or won’t? With a clear plan and a focus on what you do best, you can thrive in the face of any competition.
Also, if a highly competent stranger wanders into town and offers to help, take her up on it. The Hallmark gods don’t send strangers for no reason.
About the Author
Ron Tester is a physical therapist with thirty years in the field. He built, grew, and operated a multidisciplinary home health company employing PTs, OTs, and SLPs through a successful exit. He now coaches outpatient PT, OT, and SLP clinic owners on operating at the owner level. Certified Executive Coach and Book Yourself® Solid Coach. Learn more at https://rontestercoaching.com/about.