Your Growth Plan Means Nothing Without a Way to Protect It

When entrepreneurs come up with an idea, they usually start with the exciting questions: How big is the market? How fast can we grow? How much money can we make? I ask those questions too, but years of starting, scaling and exiting companies have taught me to add another one very early: Can I defend this thing?

Think about building a castle. You can spend years making it bigger and more impressive, but once people see there’s something valuable inside, they’re coming for it. Business works the same way. Success attracts competitors, and some will have deeper pockets than you.

That’s why defensibility should start at the idea stage. Your moat might be a brand, intellectual property, distribution, a niche you dominate or operating systems that took years to perfect. The strongest businesses often combine several.

When evaluating an idea, ask two questions together: Can this scale, and can I defend it long enough to scale?

Identify what competitors can’t easily copy

There’s a strange thing that happens when your startup begins working: success can make life harder. You prove customers want what you’re selling, and suddenly everyone else can see the opportunity.

Being first can give you a head start, but what matters is what you do with it. If a well-funded competitor launched against you tomorrow, what would they have the hardest time copying?

If you struggle to answer, you’ve identified an important weakness.

Treat your brand as a strategic asset

One company I’ve been involved with started as Treat-a-Dog. In 2018, we acquired Paw.com and reinvented the company around that brand. Buying the domain was expensive and time-consuming, but in the year after the rebrand, the business more than doubled in sales and profitability.

Competitors could make another dog bed, buy digital ads and build attractive websites. They couldn’t own Paw.com.

Before choosing a name, consider whether customers will remember it, whether you can control the important assets around it and whether it will still work if the company becomes 100 times larger.

You don’t need an expensive premium domain in every case. You do need to think of your brand as an asset competitors might someday wish they owned.

Protect the assets worth copying

Brand was one layer of our moat at Paw.com. Intellectual property became another. Once you create products customers love, copycats tend to appear, and patents, trademarks, copyrights and other protections can make copying more difficult.

Take inventory of what your company owns: its name, product names, inventions, designs, software, content and other proprietary assets. Then ask which would become strategically important if the company grew 10 times larger.

Imagine your biggest competitor looking through your business for something worth copying. Whatever makes you most nervous deserves closer attention.

Turn competitors into customers

Hostopia taught me one of my biggest lessons about defensibility. When we launched in 1999, we sold web hosting directly to small businesses. Competition was intense, customer acquisition was expensive, and we were fighting companies with more money.

So we changed the model. Instead of battling telecom companies, cable companies, internet service providers and hosting companies for individual customers, we sold our platform to those businesses as a private-label service.

We turned potential competitors into customers, and that became our distribution moat.

As we expanded internationally, every new relationship strengthened the business. A competitor would have to recreate years of sales relationships, integrations, trust and distribution to catch us. Technology could be rebuilt. The distribution network was much harder to reproduce.

Before spending another dollar fighting a competitor, consider if they could become a customer, distributor or partner instead.

Dominate a narrow market first

Founders love huge markets, but there’s another side to a huge opportunity: everyone else can see it too.

A narrow market can allow a smaller company to develop expertise, products, relationships and brand recognition that require significant effort to reproduce. I saw one version of this with .club domains, where exclusive rights to the .club domain extension created an inherent defensive advantage. Even a technology giant couldn’t offer the exact same extension.

Ask the question: what is the smallest market we could dominate that could still become a meaningful business? Become the company customers associate with one category, problem or type of customer. Once you own that position, you can decide where to expand.

Build systems competitors can’t see

Competitors can study your products, website, pricing and advertising. What they have a much harder time seeing is the machine underneath.

How do you generate leads? How does your sales team convert them? Which suppliers give you an advantage? How do you retain customers? Hundreds of small improvements can eventually create an organization that executes faster and more profitably than someone copying it from the outside.

Document important processes, give each an owner, measure performance and keep improving. A competitor may copy what you sell much faster than it can copy how your company works.

Score your moat

I use a simple one-to-five scale for defensibility. A one means you have no clear moat strategy. A two means you have ideas but little action. At three, you’ve taken a tangible step. At four, several defenses work together. A five means multiple meaningful advantages reinforce one another.

Score your company today and be tough about it. What can you do during the next 90 days to move up one point?

Secure a brand asset. Pursue intellectual property protection. Sign a distribution agreement. Deepen your niche. Document your sales system. Formalize a strategic partnership. Pick an action, assign an owner and give it a deadline.

Build a company that is harder to beat than buy

For entrepreneurs who eventually want to sell, the advantages protecting your company today may eventually become the reasons another company wants to acquire it.

A buyer may be capable of developing a similar product, but recreating your brand, customer relationships, intellectual property, distribution, niche leadership and operating systems could take years. At some point, buying the company becomes more attractive than trying to reproduce it.

That’s why I see starting, scaling and exiting as connected. The defenses you begin building during Start can become stronger during Scale and more valuable at Exit.

Before you fall in love with your next idea, here are some questions to mull over: What brand can we own? What intellectual property can we protect? What distribution advantage can we build? What niche can we dominate? What systems will grow stronger as we scale?

Here’s the question that brings everything together: If we become wildly successful, what will we have built that makes it easier for a competitor to buy us than to beat us?

Build your company with that answer in mind, and start digging the moat early.

When entrepreneurs come up with an idea, they usually start with the exciting questions: How big is the market? How fast can we grow? How much money can we make? I ask those questions too, but years of starting, scaling and exiting companies have taught me to add another one very early: Can I defend this thing?

Think about building a castle. You can spend years making it bigger and more impressive, but once people see there’s something valuable inside, they’re coming for it. Business works the same way. Success attracts competitors, and some will have deeper pockets than you.

That’s why defensibility should start at the idea stage. Your moat might be a brand, intellectual property, distribution, a niche you dominate or operating systems that took years to perfect. The strongest businesses often combine several.