In professional services, it’s not uncommon to hear founders proudly declare, “We are the only firm that does (insert blank).” While this statement may seem like a badge of honor, it could actually be a red flag. In this edition of Collective 54 Insights, we’ll dive into why having lots of competition is a good thing for boutique professional service firms, and why being the only firm that does what it does is a risky proposition.

There are three primary reasons that lots of competition is a good thing.

1. 1. Validation Through Competition

First and foremost, the presence of numerous competitors should be seen as a sign of validation for your niche in the professional service industry. When you see a crowded field of firms offering similar services, it’s evidence that there’s a market demand for what you’re offering. The fact that these firms are not only surviving but thriving by selling and delivering the same service is a clear indicator that clients are willing to invest in it.

Think about it this way: If you were the only player in town, how could you be sure that your service is genuinely valuable? The existence of competition provides reassurance that your expertise is in demand and that clients are willing to pay for it.

1. 2. Shorter Sales Cycles Through Choices

One of the significant advantages of having multiple competitors in your space is that it makes the decision-making process easier for potential clients. When prospects are faced with a new project or service they’ve never explored before, fear of making a mistake can be a significant hurdle. However, when there are numerous options available, clients can educate themselves and make a more informed decision.

Having a variety of firms to choose from allows prospects to compare and contrast their offerings, pricing, and track records. This leads to shorter sales cycles because clients are more confident in their choices, knowing they’ve thoroughly evaluated their options.

When I was in your shoes, running my boutique (SBI), I listed my competitors on my website. See here. People thought I was crazy but the brilliant David Meerman Scott saw the logic behind it, which was to help a prospect make a decision by educating her on what her options were. Instead of letting her waste weeks, or months, thrashing about trying to comparison shop, save her time by saying “here are the competitors in our niche. Go spend time with them and let’s talk about how we compare.” By my estimate, this cut our sales cycles in half. And I was confident that we were the best and would show well when compared to our competitors. In addition, my win rate went up because this demonstrated to the prospect, during the sales pursuit, that I cared about her and truly wanted her to make the best decision for her situation, even if that was not selecting my firm.

1. 3. Ample Opportunity for Differentiation

Competition also provides boutique service firms with ample opportunities to differentiate themselves from the pack. Standing out in a crowded market can be challenging, but it’s also where the real magic happens. You can showcase what sets your firm apart, whether it’s your unique approach, exceptional client service, or innovative solutions.

Imagine a 5-year-old trying to determine her favorite flavor of ice cream. Mom takes her to Baskin Robbins and presents the child with 32 flavors. The child choses strawberry after considering the alternatives. You have a chance to create your own unique flavor in the professional service industry’s Baskin Robbins. Your flavor might not be for everyone, but for those who resonate with it, you become the go-to choice.

Conclusion: Beware of Being the “Only” Firm

In conclusion, the mantra of “we are the only firm that does (insert blank)” should raise alarm bells. It’s not a badge of honor but a potential warning sign that there may not be enough prospects seeking your specific service. Instead, embrace the competition as a positive force that validates your market, streamlines decision-making for clients, and fuels your differentiation efforts.

Remember the wisdom from the members of Collective 54: “The reason you’re the only firm that does (fill in the blank) is because there are not enough prospects looking for (fill in the blank).” So, don’t be afraid to join the ranks of competitors, because in the world of boutique professional service firms, it’s often the crowded market that holds the greatest potential for success.

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