In 1971, Tom Golisano had just $3,000 to his name and a credit card. With his limited resources, Golisano launched a payroll processing company and called it Paychex. Today, that Rochester, New York-based company is a public company and Golisano, the son of a macaroni salesman and a seamstress, is worth several billion.

In his new book, Built, Not Born, Golisano offers no-nonsense lessons on what it takes to start and grow a company from scratch. One effective sales tactic that he says all entrepreneurs should follow is to never disparage the competition and to embrace them instead. 

"Some entrepreneurs take an almost insane delight in dragging their competition through the mud," writes Golisano. "I think only losers take that approach."

In my personal experience as a CEO communication adviser, I've found that many of the most admired global leaders take Golisano's approach. In fact, some CEOs tell me they ask job candidates a question about the company's competition to see how they handle it. If they dismiss or dispatch the competition completely, they're not leadership material. 

In contrast, here are three reasons why Golisano says you should avoid trashing your competition.

1. Complimenting competitors shows integrity.

Golisano's strategy was always to compliment the competition, since people don't expect that. Your prospects are weighing a number of reasons to do business with your startup. Maybe you offer a better price than your competitors, or unique features or better service.

But customers also want to have faith in you and your company. They want to do business with people they trust. Demean your competition and you erode trust.

"Most potential customers will take a dim view of your company if your salespeople openly criticize the competition," Golisano writes. If you set a high standard of integrity, "your employees will respect you and be even stronger team players--they will be proud to work for your company."

2. Competitors provide a wealth of information.

One advantage that entrepreneurs have against existing competitors is that you know what you're up against and it's harder for competitors to change quickly. That means you can position your product or service favorably in terms of features, advantages, or benefits.

For example, when Golisano launched Paychex, the prices his competitors charged were very well-known in the industry. Armed with that knowledge, Golisano could structure his company to set the price a little lower and still make a healthy profit margin. It took a while for his competitors to adjust, giving Golisano time to gain traction in the market.

3. Competition forces you to be different.

Back when Golisano hit the road to sell his product, prospects almost always brought up the biggest company in the market at that time--ADP. How was he different?

Golisano used the question as an opportunity to differentiate his startup. He would tell the prospect that ADP is "the leader in large-company payroll processing and we are the leader in small-business payroll processing." He added that without ADP's "pioneering work," Paychex wouldn't exist. All true.

Once Golisano had established trust, he would highlight the specific differences between the two companies and how Paychex might be a better fit for the prospect. In his book, he wrote that this approach sits well with both potential customers and salespeople.

Paychex has come a long way since Golisano was knocking on doors as a one-person sales team. Today, the company says it signs up 2,000 new customers a week. As company chairman, Golisano still makes it a policy that no Paychex employee should ever disparage the competition.

"Competition is good," he says. "Good competition is better."

Golisano also points out that any aspiring entrepreneur had better learn to sell an idea, product, or service.

"Nothing happens in a company until someone sells something," he writes. "The act of selling and the art of negotiation are imperative to every business on the planet."

Published on: Mar 10, 2020
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