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Recently in this column, I鈥檝e delved into some of the most common challenges many small businesses face. Today, I鈥檇 like to share another pervasive business hurdle 鈥� one best exemplified by Makino鈥檚 effect on the manufacturing industry.

What is Makino, and why should I care?

Makino is a CNC machine tool manufacturer 鈥� and years ago, was one of the first to combine precision technology with software, engineering and automation. A Makino machine was (and is) an amazing piece of equipment, capable of manufacturing parts faster and more accurately than previously thought possible.

It represented a substantial capital investment for small manufacturing businesses, but it paid for itself over and over again by bringing a degree of productivity and quality never before seen on most shop floors. Manufacturers that purchased these machines when they were first developed were massively more successful than others using manual machines or older equipment. (Some, in fact, were Kinesis clients.)

For a little while, any company that had invested in this equipment had an obvious and immediate advantage in the marketplace. They were the best, by every measurable Key Performance Indicator. Customers flocked. Revenue skyrocketed. Business was good.

But then, as with all good things, word got out.

Over time, more and more companies started buying this magic-making equipment. Within just a few short years, what was once a unique and remarkable competitive advantage became commonplace 鈥� a baseline expectation, a table stake.

And if every company touts the same equipment and technical capabilities, how do customers make their decision?

You guessed it 鈥� price.

Beyond Makino: questions to ask yourself

If you鈥檙e a professional service business operator, or a contractor in the built space, you may think this problem doesn鈥檛 apply to you. Unfortunately, this is far from the truth.

For example, you might believe that your delivery times are remarkable 鈥� but what happens when your competition can offer the same project timelines? You may believe your customer service sets you apart 鈥� but what if your peers are touting the same thing?

The truth is, no one is immune 鈥� any product or service can be commoditized. But that doesn鈥檛 mean you have to compete on price.

If your industry is driven by commoditization, there are still steps you can take to differentiate your company. Here are some questions you can ask yourself to begin preparing for this journey:

• Is your business protected by an unbreachable moat?

When Warren Buffett was asked his philosophy for selecting companies to invest in, he reportedly responded, 鈥淚n business, I look for economic castles protected by unbreachable moats.鈥� In other words, he values a business by the competitive advantage that protects it. Does your organization have such a protective barrier?

• What makes your company remarkable?

A good start to this exercise is to determine where you鈥檙e currently hanging your hat when it comes to remarkable differentiation. If a customer were on the fence about choosing you or a competitor, what would you say to sway them? (Hint: It can鈥檛 be price 鈥� and probably shouldn鈥檛 be equipment or lead times either.)

• Do you have a proprietary way of doing business?

Put simply, this is where purpose, people and process overlap to solve a real challenge in a remarkable way. If you operate in a commoditized market, provide your customers with a meaningful choice between you and your competition by confidently telling them that 鈥渨e do things this way.鈥�

• Who are your best-fit clients?

As mentioned above, one path toward differentiation is specialization 鈥� and identifying the core customer base for whom you can do your best work. One way to start is to determine who these customers are, so you can carve out a niche to serve them the best.

• Do you have a strong company culture?

Differentiation doesn鈥檛 just apply to your external customer. The way you recruit, hire, retain, engage, grow and support your internal team is just as important in creating something remarkable in your organization. How much attention are you currently devoting to this?

The takeaway

While finding ways to differentiate in a commoditized market can be challenging, it鈥檚 far from impossible. If your business has made it this far, it鈥檚 probably a result of remarkable people and processes 鈥� now it鈥檚 just a matter of defining that remarkability, and telling your story in a way that differentiates you from the rest of your industry. With the right preparation and resources, you, too, can move beyond the 鈥淢akino鈥� in your business 鈥� and rise head and shoulders above the rest of your commoditized market.

Shawn Busse is founder and CEO of Kinesis. Contact him at 503-922-2289 or [email protected].