Dealing with competitors is one of the most challenging obstacles startups face. Typically, we're going up against a company with more funding, a stronger team, and more market share. While this is an uphill battle, there are a couple of strategies that can help turn your weaknesses into strengths. Here are a few ways you can use a lack of resources as an advantage against competitors.

1. Play up your lack of resources

Everyone loves the underdog. Use this to your advantage. When you have the option, tell the press about how you've been able to compete with your No. 1 competitor. If you can, mention how you have few resources, like funding. Competitors love sharing when they raise millions of dollars, and that's a perfect way to use their funding against them.

Also, repeatedly comparing yourself to your No. 1 competitor will eventually raise your image. If your customers start seeing you on the same level as the market leader, they'll make sure they consider you before buying. And if you say you've been able to compete without much, investors will start wondering what would happen if they backed you. Don't worry about your competition retaliating. Instead, try to promote a counterattack as much as possible. Once the market leader calls you out, your reputation will just keep rising.

2. Dominate customer service

One of the best parts of the early stages of a startup is that you have more time to interact one on one with your customers. Eventually, when your company gets large enough, you won't be able to have the same interaction. When you're starting out, exploit this strength by going above and beyond for your customers. If you're the CEO, try getting in touch with all your early customers as much as possible. Send them a personalized email. Ask if they'd like to speak to you on the phone. Perhaps even take them to coffee or dinner. Over time, you'll build a loyal customer base with this strategy. By the time your competition sees you on the radar, you'll have too many dedicated purchasers for it to wipe you out.

After you've built up a solid group of customers, start spreading around what you did for your early adopters. Potential buyers who are on the fence will love to see that you do so much for your customers. Start incorporating these stories into your blog, social media, and the press. When people start questioning your competitor's customer service, they'll end up buying from you.

3. Rally your team

One of the best ways to motivate your team is with an "us vs. them" scenario. As the underdog, you'll find it's much easier to motivate your team against the largest competitor you face. It's much harder for your competition to be able to do the same with your team, because you won't look like a real threat in your early stages. Use this to your advantage by rewarding employees who steal business from your No. 1 competitor. Develop a culture that makes it seem as though you and your team are fighting for something bigger than yourselves. It's hard to stay motivated as a top company in a market, because usually big accomplishments start fizzling out.

When you're a startup, it's the opposite. Your first customer is huge. That first round of funding becomes a company party. And when you declare war on a top competitor, any successful strike against it will fuel your company forward.

Published on: Sep 27, 2014