Strategy isn't optional—it's your business's lifeline. While it's tempting to get lost in numbers, margins, and growth rates, these metrics alone won't ensure your success. You need a comprehensive plan that goes beyond the numbers—aligning with your company's core strengths and the competitive landscape.

Perhaps the most critical part of this process is identification of niche verticals in which your business can do things no one else can. The goal may not be as fantastic as it seems whether you follow a process. Different businesses approach it in different ways, but the most successful ones usually follow five crucial steps.

Connected: How specialization leads to better pay and less competition

Step 1: Identify the competitive factors

Begin to identify the universe of competitive factors in your industry. Don't limit your analysis to what your business is doing; broadly define your competition. For example, if you own a coffee shop, your competitors aren't just Starbucks and Dutch Bros. Anyone who offers a coffee fix is ​​your rival, from the gas station to McDonald's.

Think about what sets your business apart and your competition separately. Is it the cost of the coffee, the atmosphere of the cafe, the speed of service, the use of eco-friendly products or the commitment to the community? List them all now; we will prioritize it later.

Connected: Is focusing on a specific location really that important?

Step 2: Brutally honest self-assessment

Time for some tough love. It's easy—and frankly, natural—for you to believe you're the best in every category. But let's face it: you probably aren't. Collect feedback from your customers and your competitors' customers through surveys. You can also use tools like strategic canvas.

The first step in a strategy canvas is to rate yourself and your competitors on a Likert scale of 1-5. There are many ways to build on your self-esteem. Consider hiring an outside consultant for an impartial person ASSESSMENT. Encourage your team to give honest feedback and create an environment where they feel safe to be vulnerable and honest. Analyze online comments and social media reactions. These platforms can provide a wealth of information about how your customers perceive your business.

To ensure an accurate assessment, it should also understand your competition. Visit their stores, review their website, read their reviews, try their products and objectively evaluate how they fit you. This is not about copying them, but about understanding where you stand in the competitive landscape and identifying areas for improvement. A strategy canvas or other self-assessment tool isn't about patting yourself on the back—it's about identifying where you really shine and where you don't.

Step 3: Identify your superstar factor

Now, use this intel on him define your competitive advantage. Focus on cost leadership, differentiation or targeting a specific industry segment. What is your magic?

Consider the less obvious strengths your business may have. These can range from specialized knowledge, unique customer service practices, innovative production methods or even a distinct corporate culture that resonates well with your target audience. In a crowded market, finding your uncontested and underserved market space allows you to build a loyal customer base and protect your position against larger competitors.

Sticking with the coffee shop example, maybe your superstar power is ENDURANCE. As a smaller, more nimble operation, you can source your coffee beans directly from local, organic farms, ensuring the highest quality and freshness while supporting local agriculture. Starbucks, serving millions of customers around the globe, simply cannot compete in the same way as it does regionally.

Connected: Here's how you can choose and own your space

Step 4: Distribute your competitive advantage

Now that you've identified the vertical point where you can dominate, don't waste resources strengthening weak areas where you'll never lead. The best case scenario may see you only gain minimal ground on your competitors or fall slightly behind. Alternatively, you might consider improving areas where you're on par with competitors, such as pouring money into your brick-and-mortar locations to gain an edge. But this is also a risky proposition, and your competitors may do the same – without gaining much ground from the other.

Instead, double down on your strengths. This is not just about retention; it's about setting the pace. Find the gaps your competitors overlook and claim them as your own. By amplifying what you already do well, you can create a distinct competitive advantage that sets you apart in the marketplace.

As a sustainable coffee shop, target college campuses and make sustainability and community engagement your flagship. Your unique selling proposition can resonate deeply with the student demographic, creating loyal customers who appreciate your coffee and your values.

Connected: How to break free from the cycle of overthinking and master your mind

Step 5: Address the “business ego”

Confront your business ego. Love your brand, of course, but be realistic. Competing with giants like Peet's Coffee, whose parent company has a market capitalization of roughly $10 billion, may not be realistic. You won't leave Peet Peet's coffee overnight, and you may never do so. Instead, find a place where you can dominate. In this case, aim to be the sustainable coffee shop on college campuses.

Other businesses face similar ambition challenges. A wealth manager may dream of serving only the ultra-rich, but taking on Goldman Sachs and Morgan Stanley may not be realistic in the early stages. Instead, focusing on a niche like managing finances for educators can be a smart move.

Embrace the process

Building a solid strategy requires hard work, reflection and a willingness to adapt. Forget being a small fish in a big pond and consider a new pond altogether. Remember, it's better to dominate the open water than to be stuck in a bloody, red sea of ​​competitors.