How Significant is Your Competitive Advantage?

At what point does a competitive advantage become a “significant” competitive advantage? Easy, when it changes buyer behavior and leads to increased market share, it has become “significant”. Of course, I have yet to meet an entrepreneur who doesn't think their new product idea is significant.

Case in point...

Last week at the 6th Annual Energy “Venture Fair”, we gathered together entrepreneurs seeking funding and venture investors seeking investment opportunities. I listened to numerous presentations by entrepreneurs touting their latest innovations. I heard claims like, “33% energy savings over existing technology”, “reduce costs by 20%”, and “complies with latest federal environmental guidelines”.

From an investor's perspective, the most important questions were often left unanswered. For example, were these claims “significant” in the minds of customers or only in the mind of the inventor/entrepreneur? Will their new product displace existing products, and if it does, can it be easily duplicated by entrenched suppliers of older product designs?

There is only one test to verify the “significance” of a new product idea. Take it to market. When the customers pre-ordered over 2000 new very light jets from Eclipse Aviation, it proved their competitive advantage was “significant”. They sold these jets with brochures, mock-up demonstrators and promotional advertising years before production.

I encourage all entrepreneurs that are looking for funding to take their ideas to the market like Eclipse Aviation. Use low cost brochures, mock-ups, prototypes and advertising to see if customers will place pre-production orders. This will verify the “significance” of your competitive advantage in the mind of customers before you negotiate high cost financing for the production of your product.