How Small Businesses Beat Bigger Competitors | Jay Abraham

Business growth strategist Jay Abraham explains how small businesses can outperform larger competitors by focusing on differentiation, partnerships, and strategic positioning rather than trying to match big-brand spending. In this episode of Strategic Edge, he outlines practical ways entrepreneurs can leverage existing assets, communicate value more effectively, and create sustainable competitive advantages without massive budgets.

Abraham challenges the idea that digital platforms alone can level the playing field, emphasizing instead the importance of buyer psychology, niche focus, and disciplined execution. He also shares how partnerships, incentive structures, and diversified growth channels can accelerate results while reducing risk.

Key discussion points:

• Why competing head-to-head with large companies often leads to stalled growth
• How strategic partnerships can expand reach, credibility, and revenue
• The role of preemptive marketing in defining your value before competitors
• Why owning a niche leads to stronger positioning and higher margins
• Leveraging relationships and referral networks for consistent opportunities
• Aligning incentives and diversifying channels to scale more effectively

Transcript

Welcome And The Differentiation Challenge

Jim Fitzpatrick 0:32

Jay Abraham, thank you so much again for joining us here at Strategic Edge at asbn.com. We very much appreciate it. I can't tell you all the positive response we've gotten from our viewers and our subscribers about you being here on the show with us. And uh can't thank you enough because I know that you're traveling the world helping corporations and and entrepreneurs all over. So thanks so much.

Jay Abraham 0:54

You're very welcome, and it's a pleasure. I love contributing.

Jim Fitzpatrick 0:57

Great, great. So uh we're gonna uh today's topic is differentiation uh strategies that led or that let small businesses compete with giants. And uh I know there's a lot of people out there that want to hear about this because as you know, there's some big businesses out there that entrepreneurs and small businesses do have to compete with every day, whether it be online or or for the you know the big box retailer down the road, right? Yes. So let's kind of jump right in

Why Copying Giants Burns Cash

Jim Fitzpatrick 1:24

there. What uh uh one of the questions here was the danger of trying to outspend or out-copy large brands. Talk to us about that.

Jay Abraham 1:32

Yeah, well, I mean, a lot of smaller businesses uh they delude themselves thinking they can go and they can they can spend money on whether Facebook or TikTok or whatever, and they're gonna be great. It's a rarity when they're gonna be great, and their budgets aren't enough to even move the needle. And what most people don't realize is a portion of your budget gets absorbed in the whatever they call it, the testing or the the learning they charge you for the learning. Right. You're burning money learning. Sure. And uh most of the small business people don't really understand the psychology and the construction of motivating somebody to see your advantage. So you've got to start by saying if you're gonna compete the same way, but they have much more resources, much more distribution, an existing brand, how would you expect to win? It makes no sense. Right. So you've got to say, okay, I need to zig if they're

Win Through Strategic Partnerships

Jay Abraham 2:30

gonna zag. Yeah. And what does zigging mean? Well, it can mean many things. The first thing is the easiest way, the safest way, the most infallible way to really compete is to align yourself with somebody else who has a significant brand in the market you are trying to reach, not a competitive one, and make them your distribution partner. They already have buyers, they have salespeople, they have brand stature, they have distributors, whatever. You make your product something that they partner with and put through their distribution, not just because they're gonna get you access, but they're gonna put their moniker on it, which has credibility. Right. And you're basically leveraging off of the years they've taken to build it and the tens or hundreds of millions of dollars. So if you have something that people buy before, during, after somebody else's product, then you just have to figure out who those somebody else's are, whether it's a national, local, whatever you're doing, and partner with them. That's the easiest, the safest. And people go, oh, we'll have to share. Well, yes, but I always say if you have a product or service that is not necessarily infinite, but but creating more of it is not a big deal. Right, right. And you have an incremental cost which goes down with volume.

Jim Fitzpatrick 3:54

Yeah, it's true. Yeah.

Jay Abraham 3:55

And somebody can basically double or redouble or redouble your sales while elevating your stature.

Jim Fitzpatrick 4:01

Right.

Jay Abraham 4:02

And you don't look at what you give away, you look at what you receive you never would have had. And that's a hard discipline for people. That's the first thing you can do.

Preemptive Marketing And Schlitz Beer

Jay Abraham 4:11

The second thing you do is what's called preemptive marketing.

Jim Fitzpatrick 4:14

Okay.

Jay Abraham 4:15

And I think probably on one of our uh earlier interviews, I talked about the Schlitzbier story, but I'll talk about it again. Okay. True story, and it has defined a lot of what I do for clients, not necessarily little ones, but even larger ones. So, right after Prohibition ended, I think it was the 30s, all of a sudden there were dozens or or dozens and dozens of alcohol companies, hard liquor, but also beer. There are like 20 beer companies. And this is an era when no one understood the science and and the psychology of advertising, so they all basically lamented the same thing. Or not lamented, but stated, our beer is pure. That's all they said. Pure beer, pure beer. But your beer's pure, my beer's pure. Chris's beer is pure. Sure. So there's no diff no distinction. So a person that I modeled who was long uh deceased before I ever was introduced to him was the number one marketing genius of the era, and he could transform businesses, but he would never transform a business until he first visited the facility, saw how they did it, met the people, learned their attributes, because he used all of those mechanisms in developing a superior and what he called a preemptive position.

Jim Fitzpatrick 5:40

Right.

Jay Abraham 5:40

So that's story. So okay. Now there's 20 beer companies all saying the same thing, and there's this company in Milwaukee called Schlitz. And Schlitz at the time was number 9, 10, 11. They were down about midway.

Jim Fitzpatrick 5:52

Okay.

Jay Abraham 5:52

And they wanted to be higher up the totem pole, if not thee. And they wanted a breakthrough. So they they engaged this man. He said, I will take you if I can find a positioning worthy of really focusing on. So he he he he goes to Milwaukee, and their brewery is right on the uh the base of whatever it is, Lake Michigan, I think is Milwaukee. And back in the 30s, the water would have been very clean, clear, and he was a little incredulous because 500 feet away from the shore, Schlitz had dug two 5,000 foot deep artesian wells where they were drawing the water for their beer. And he he hadn't even gone inside. He said, Well, I don't understand it. Why don't you just draw it from you know you got this big huge lake? And they said, Because we need a certain mineral component that is only available after it's gone through all these different layers of rock and minerals, etc. That's cool. Then they took him inside and they showed him the mother yeast cell that was the result of testing 1428 different combinations to get the perfect embodiment of sweet, tart, bitter, foam, color, all those things. He thought that was pretty interesting. Then they took him in the distillation room, which was really fascinating because they took this artesian water and they vaporized it and liquefied it something like ten times. Vaporized liquid fiber. And he goes, Why are you doing that? You said this was the perfect mineral. They said, Yeah, it is, but it has some impurities that have to be purged or it will compromise the integrity of the beer. Then they showed him the sanitation bottling process where they took bottles, pardon me, and they would sanitize them nine times, twice with 2,000 degree steam, twice with a chemical drip. I don't even remember the other things, but very remarkable. Finally, they took him to the bottling room where with all those processes, they still rejected one out of every nine or ten batches. He's done with the tour and he goes, My God, why don't you tell the story of how you make your beer? And the owner said, Because that's how all beer is made. And he said very astutely, yes, but the consumer doesn't know that. The first person that tells the story is going to own the market. He told it, they did. They went from number nine or ten to number one and they stayed there for about ten years. Wow. So when you want to be a preemptive marketer, you tell your story that everyone takes for granted.

Jim Fitzpatrick 8:33

Yeah.

Jay Abraham 8:34

Because you do it all the time. You tell about how you make it, you tell about the components, you tell about the sources, you tell about the education of the people required to do it, you tell them about its capability, maybe it's designed to withstand whatever, you know, 800,000 pounds of pressure. Right. You don't care that it's no different than anybody else. You're giving it a proprietary position. So that's another way to do it.

Jim Fitzpatrick 9:01

Right. And everybody's got a special story.

Jay Abraham 9:04

Yes, right. Absolutely.

Owning A Niche Others Ignore

Jay Abraham 9:06

Another way to do it is not compete for everybody, but start finding niches that no one is concentrated on. I have a friend that talks about growing rich in your niche. And he said, if you're trying to sell, he gives a funny example. He said, if you're trying to sell uh anti-um uh biotics for pigs, there's a lot of big companies selling antibiotic for pigs. But he said, if you concentrate on potbelly pigs, there probably aren't a lot of people that are the specialist in potbelly pigs. So ask yourself, is there a niche specialty that you could own that is not going to be price sensitive, it's going to be application sensitive. Right. It's going to be attention and service. That's another way to do

Borrow Big-Company Relationships

Jay Abraham 9:54

it. Another way is to basically, and I think I talked to you about this, is to find people that used to work for the bigger companies selling to the accounts but are no longer working there. Either they went to another career, they retired, but they're no longer there, and they no longer have any kind of a prohibition from uh from a confidentiality or from uh a non-compete. Find them, you can find them all on LinkedIn. You just have to do a and it's very easy to do. That's right. And then you have to sell them philosophically on your product service company being worthy, and then make a deal with them where if they can make introductions to their past clients who still probably trust them and they have goodwill with it, they don't use it. Yeah, good point. You will give them your choice of a big front end, meaning a big amount for getting the deal, or you'll give them an override. And if you do that, you can end up with tons of introductions, assuming your company, your product, your service, your people worthy. Right. That's another thing you can do.

Jim Fitzpatrick 11:00

Right.

Jay Abraham 11:01

Those are a few.

Jim Fitzpatrick 11:02

Yeah. Those are all very good. And they work. And they work. And I've done for lots of people. Yeah, there's no question about it. Again, it's just kind of thinking outside that box that entrepreneurs have a tendency to stay in and just say, okay, it's uh I haven't done that before and um I haven't thought about that. Yeah. But they're all easy to do, and that you're not even talking about spending spending any real money doing it.

Jay Abraham 11:22

There's a couple other ones that I just uh uh remembered and forgotten.

Amazon Style Cross-Sells Strategy

Jay Abraham 11:27

So you know how you go on Amazon, it says people who buy this, buy that. So you ask yourself again, what do people buy before they buy my product? And if it's a product that is not terribly expensive, you either go into that business or you buy one and you sell your product under market because you'll get first access to the buyer before they buy your competitors. That's another way to do it. I like that. That's good. And these all have worked. I've done this for clients. All these work for clients. Right.

Jim Fitzpatrick 11:56

Yeah. Yeah.

Trade Show Collaboration Hacks

Jay Abraham 11:58

Another approach is you go to trade shows, and uh there's certain people who have booths at trade shows, and little companies don't have big booths. They usually get the back of the back of the bus. And and there's a fallacy. If you had a trade show, I always find this fascinating. Two things. If you know who all the attendees are, you create an invitation to something in your suite, and you go to every hotel that they would be staying at, and you give the hotel the same invitation for everybody. Because if you if there's a thousand people and you give them a thousand invitations to the at the Weston and a thousand invitations at uh the four seasons, the odds are you're going to cover about 80% of the people. So that's something no one else does. The next thing is the real opportunity if you have a booth, and you don't have to have a booth, is when you have a booth, you spend all this time talking to a finite number of people who may or may not be buyers.

Jim Fitzpatrick 12:54

That's right.

Jay Abraham 12:55

While people who could be buyers are sitting there, sort of, you know, they're they're frustrated and they go buy.

Jim Fitzpatrick 13:00

Yeah.

Jay Abraham 13:01

And then the people you're talking to who could be buyers leave your booth and they go to your competitors. That's right. So it's very inefficient if you think about it. Yeah. The real opportunity is to go to all the other smaller exhibitors who are not competitive, but have relationships with the same audience and secure their collaboration.

Jim Fitzpatrick 13:22

And that's another way to be. What do you mean, secure their collaboration?

Jay Abraham 13:25

So let's say that I am selling, okay, you you you have entrepreneurial, but you have automotive. Let's say I am selling um uh warranty packages, okay? And you are selling something totally different to automotive, but you're not a big company. You're an entrepreneurial company, you're making money, but you would love to make an extra million dollars a year. Sure. So but you've already got you know 500 dealers that I don't have.

Jim Fitzpatrick 13:51

Trevor Burrus, Jr. Right. I'm selling uh carpet mats or something too.

Jay Abraham 13:55

But you already have the buy the same buying influence that would buy my warranties or whatever I'm selling.

Jim Fitzpatrick 14:00

Right.

Jay Abraham 14:01

So at the break, when everyone's in the main room and all the exhibitors are just standing around doing nothing, you go to all the smaller independent exhibitors who are very, very receptive to qualitative ancillary income.

Jim Fitzpatrick 14:14

That's right.

Jay Abraham 14:15

And you propose to them that they take your product to their 500 or their 800.

Jim Fitzpatrick 14:19

Right. So those are a few that are pretty powerful. There's no question about it. And they all work. Uh yeah, they all work. And with a little bit of uh uh you know uh uh perseverance in all the areas of those things, then it's gonna pan out. You're good you're it could be that you hit pay dirt in all of them.

Jay Abraham 14:35

But I want to make a very fascinating point, and I'll use a fascinating illustration. It's entrepreneurialism, but it's a different one. So most people, if you give them any of these ideas and they go, then they get committed enough to do it, they'll do one or two and stop.

Jim Fitzpatrick 14:54

Yeah.

Jay Abraham 14:55

I would, I mean, if I were doing that example, I would go to everybody I could and I'd find all the non-duplicative dealers, and I might have 30 people doing it for me. But there's a funny reason. I have a partnership in Israel with a large group of people who are Israelis living in in Israel, Tel Aviv, most of them, and they invest in a single family property in the United States, half of them for flips, half of them for uh I'm sorry, my hand, half of them for flips, half of them just to manage and rent or lease. And I interviewed the most successful. They make about a million dollars a year and they go into secondary cities, Indianapolis, Cleveland, things like that.

Jim Fitzpatrick 15:38

Sure.

Jay Abraham 15:38

And I said, Okay, how many sources do you have of deals? And the top one has four. And I said, Why don't you have forty-four? Why don't you have 144? I did uh I was telling you I did a YPO group the other day.

Jim Fitzpatrick 15:54

Right.

Jay Abraham 15:55

And a guy uh asked a question, and I won't mention his name, but he was in a very specialized form of um of finance. He would finance uh receivables and other things for for entrepreneurs. Okay. And he wanted to grow. And he said, I said to him, Well, do you have a lot of partners? He goes, Yeah, I gotta have like a thousand I've recruited, but only thirty percent perform. And the guy's doing like three hundred million dollars. I said, Okay, well, why don't you have three thousand? Because if you had three thousand and thirty percent reform, you'd have nine hundred performers. And I said, that was the first thing I would do. Just triple my number. And then the second thing I do is make the ones that don't perform well teach them to perform better.

Jim Fitzpatrick 16:36

Yeah.

Jay Abraham 16:36

Like the three ways to grow a business.

Jim Fitzpatrick 16:38

That's right.

Jay Abraham 16:38

But we've

Super Logic And Real Execution

Jay Abraham 16:39

talked about this. I've been working on this thesis, pardon me, of super logic, because most people don't they they've never been exposed to seeing correlations, seeing implications, seeing extrapolations, quantification, anomalies, and connecting the dots. I call that making the money connection.

Jim Fitzpatrick 17:01

Right. Right.

Jay Abraham 17:01

And that's all I'm talking about.

Jim Fitzpatrick 17:03

Yeah. Yeah. Do you think that in some cases um when you're talking to an entrepreneur like that, uh, or a small business owner or SMBs, where they say, Yeah, I've tried that. But in reality, they tried it maybe once. So they gave it that. Do you know what I mean? I think more than you can imagine. This this uh you know, excuse the French, but kind of a half-assed approach to it, and then and then they throw it away. Only to only almost convince themselves that that's why that I'm not doing that.

Jay Abraham 17:29

So I have to be very judicious and diplomatic in what I'm about to say. I mean, and when I do this. So whenever I do a keynote, or whenever I used to do the seminars, and people would do that, and they do it all the time. I've I tried it, it didn't work. I'll say, okay, tell me exactly how you tried it. Tell me first of all what you heard me say. Exactly. Right. And then first of all, I'll say, Stop. And I'd say to the audience, is that what I said? And they'd go, No.

Jim Fitzpatrick 17:55

No.

Jay Abraham 17:55

Then I'd say, Okay, tell me how you deployed, employed, applied what you said. And it's totally different. And then I'd have to be judicious without saying Of course, yeah.

Jim Fitzpatrick 18:06

Yeah.

Jay Abraham 18:07

I would go, okay, let me tell you what you didn't hear in a very constructive and respectful way. Let me tell you why what you did was totally tangential to what I am talking about. Right. Let me tell you why it's apples and oranges, and let me tell you what you can do to do it right.

Jim Fitzpatrick 18:24

Yeah.

Jay Abraham 18:24

But it's a lot of work.

Jim Fitzpatrick 18:26

Yeah.

Jay Abraham 18:26

I mean, what here's one of the things that I think entrepreneurs are very guilty of. They don't want to invest the time to really understand the method to a madness. They just get excited about the superficiality.

Jim Fitzpatrick 18:41

Right.

Jay Abraham 18:41

They jump in without really understanding it. And when you do that, you don't really understand the drivers or the power or the source and force of achievement. You're going to aberrate it, you're going to mismanage it, and the statistical probability is you are going to fail. And we talked earlier that even if you do it right, the first time you do something you've never done before, the statistical probability of doing it masterfully and successfully, it's like a little kid learning how to walk, talk. You're going to fail. So it's just part of the evolution of mastering it. But you have to have that kind of that kind of perseverance, tenacity, and conviction that it's only a matter of time before it's going to be huge. Trevor Burrus, Jr.

Jim Fitzpatrick 19:25

That's right.

Jay Abraham 19:26

But most people give up first time.

Jim Fitzpatrick 19:27

Right, right. If they even do it. If they even do it. Yeah, I was just going to say. They run it through their mind, they they decide, you know what, that's probably not going to work if I do it, right? And they've convinced themselves of that. Which is a terrible thing to have happen. Absolutely.

First 30 Days Credibility Flywheel

Jim Fitzpatrick 19:42

If you were starting a business today in a saturated industry that's out there, as many people do, you know, with limited capital, and and capital is is uh hard to come by these days, what will you do in the first 30 days to gain traction and become unforgettable? Uh well it's a loaded question.

Jay Abraham 20:01

No, no, it isn't. I have uh I'm gonna give you an answer that's pretty sophisticated, but it's pretty interesting to and I just did it for a client and they tried it and it worked. I would create I would figure out who all the people who would have influence on the market I wanted to reach. I would go to them. I would do one of two things. I would either make them uh uh a board of advisor for me, and I'd have maybe 20 of them, and I would basically uh put their names and their and their their bios or their uh or their business um uh details on my website and my brochures so that I had a combined aggregate geometric credibility. Or I would go to them and I would give them a phantom equity that was uh that was dynamic in the revenue uh in the revenue that they brought in. By that I mean I would work with them and and incentivize them to offer my products or service to their audience, their market, and they would get a a immediate profit share on the transaction. But I would take the total profit that I was gonna get in in a course of time, whether it's three months, six months, a year, and I would allocate a percentage of that to a profit fund that would be allocated to them prorata, meaning if this if in the first year you really did a lot, you sold a million dollars for me, and you you got a third of it in your in your initial compensation, but that million was a third of the total profit of my business, you would get a pro rata on that side too, and it would be dynamic. It would change every year as long as you were performing. Sure. This year you might get a third of the profit I allocate. Next year you might get, and I'd make you vested. You wouldn't be a real equity owner, but you would have such an interest. Not just in your sales, but in your sales relative to the profit of the business. Now, most people, well, I wouldn't do that. I'd go, why?

Jim Fitzpatrick 22:07

Yeah.

Jay Abraham 22:07

I mean, but people don't realize is you're not giving anything away. So let me tell you that this I think I have told you on one of our interviews about the uh the fluid transmission company, didn't I? And that they basically didn't want to give their salespeople all of the first sale.

Jim Fitzpatrick 22:27

Yeah.

Jay Abraham 22:27

Because they go, well, we would be losing $180. And I said, no. It's too long of a story to explain without going tangential. But the bottom line is every time they gave $180, they're making about $2,800 they never would have had. And you've got to be able to understand the game of not what you what you not give away, what you everything you do, by the way, this is an ADD moment, but it's profound.

Business Decisions As Investments

Jay Abraham 22:52

Whether you like it or not, every decision an entrepreneur makes, every action they take is an investment. Now, they're getting a yield, could be a negative yield, they're taking a risk, just like anything else. I always say a business is like a hedge fund. You've got a whole spectrum of asset classes, and each one has risk and it has reward. And if you don't know what it is, you're ri you're probably more often than not misallocating. But you have to look at everything you do as an investment that you're intended to get a yield on. And if that yield is far and away above the cost and it strategically adds to the long-term success, but you have to be very enlightened and evolved to appreciate why it's so powerful.

Jim Fitzpatrick 23:37

Right.

Jay Abraham 23:37

And most people aren't.

Jim Fitzpatrick 23:38

That's right. That's right. Which is very, very unfortunate.

Jay Abraham 23:42

Because it's not that hard to grasp. No. I mean, it's I mean, almost everything I will ever share with you, if we have if we do a thousand of these types of interview episodes, there's not going to be ten percent that's really esoteric. It's all very simple, it makes sense, it's not smoke and mirrors. I have billions of dollars cumulatively to affirm it works when you work it.

Jim Fitzpatrick 24:05

Yep.

Jay Abraham 24:05

But most people go, well, I don't understand it. I'm going, what don't you understand? You know, you're basically, if you have a company that sells lots of things on the time all over, you want to start a relationship. You don't care what you make on the first sale, you want to get that sale so they'll buy the second and the third and the fourth and other things. That's right. If you only have one thing to sell, you want to find partners who can deliver it to you, and you don't care what it costs, you only care that you get aggregate revenue that is far and above what you would normally do on your own, and you get it instantly. You have to wait five years to build your credibility. But it's hard for people to transcend the rigors of I don't want to share. Right.

Jim Fitzpatrick 24:47

Isn't that amazing?

Jay Abraham 24:47

It's really amazing. I tried to do all these deals in Israel when I was there twice because they have brilliant technological people.

Jim Fitzpatrick 24:55

Yeah, they do.

Jay Abraham 24:56

But they're they're control freaks and they can't understand sharing. But I come back to what I said. 2,000 U.S. corporations right now in the United States get 20% of their revenue, but forty percent of their profit from partnerships that they share. Wow. Now, why would that be? Because it's all newfound, it's all incremental, it's all business that above and beyond a certain fixed cost is many times more profitable. That's right. And and other people do all the heavy lifting. They pay for the salespeople, they pay for the for the travel, they pay for the materials, and people

Partnership Mindset And Closing

Jay Abraham 25:34

don't understand. If you can get lots of other people, I call it the Tom Sawyer School of Business. Remember Tom Sawyer getting all the kids to whitewash the fence? That's right. And people go, I can't do that. And I go, okay, then don't.

Jim Fitzpatrick 25:47

Right, right. Yeah, I know. But it separates the very successful entrepreneurs out there from the ones that are struggling each day.

unknown 25:53

Trevor Burrus, Jr.

Jay Abraham 25:53

Well, I mean, and the genesis of this particular session was how do you compete with larger established companies who have much more resources, much more embedded uh you know, uh brand credibility. And I'm just trying to tell you that there is a myriad. I'm only giving you a few. I'd have to sit down and remember the next 10 or the next 10, but I probably have 50. But most people, you don't even need to do 50, you need one or two.

Jim Fitzpatrick 26:21

That's right. Just do it. It's all about the execution. Absolutely. Wow. Jay Abraham, once again, thank you so much for all the time you've given us here at the show. I know that our viewers, as I said before, get so much out of your visit with us. And it's just such great content for small business owners and medium sized business owners. And uh we very much appreciate it. I appreciate it very much. Thank you.

Announcer 26:44

Thanks for watching Strategic Edge with Jay Abraham, exclusively on ASBN.