Good Sunday morning everyone!
Today’s post is about something I've been noticing for a while now which I thought would be interesting for you.
Every Saturday, I’m usually around Novena running errands. There aren't many typical coffee shops in that area, mostly cafes and shopping malls.. but tucked at a little corner is this humble open-air coffee shop called Rocovo Restaurant.
It’s a family owned business with just 2 main stalls: Drinks and roasted meat, at wallet-friendly prices. I usually just grab the $4 chicken rice for a quick meal.
Now, to be honest, I think the food is just… average. Nothing mind-blowing. But here's the interesting part: there’s always a long queue during lunch time!
But why? Am I the only one who think it’s average??
Then I started to observe carefully and I finally understood.
Prime Location: It’s at a corner lot where almost everyone walks past when they are moving to and fro the MRT. Great visibility.
Monopoly: No other stalls nearby selling similar food at that price. Zero competition.
Affordability: Most places around are restaurants or cafes, so Rocovo becomes the cheapest, no-frills option.
In short, Rocovo has what we call in investing: Competitive Advantages.
When you invest in companies, you want to look for those with strong advantages can attract more customers and hold off the competition, even if they’re not “the best” in every area.
Some common types of competitive advantages include:
High Switching Costs
This means it’s hard or expensive for customers to switch to a competitor. Just ask any iPhone users who has a MacBook, AirPods, iCloud.. The list goes on.
Low-Cost Advantage
Some companies can offer lower prices because of scale or efficiency.Think Costco who does bulk purchases for customers. Being cost effective is their edge and value.
But here’s the catch…
Just because a company has an edge today, doesn’t mean it’ll last forever.
Remember BlackBerry? They stuck to their keyboard phones and didn’t adapt fast enough when Apple introduced the touchscreen iPhone.
Or Blockbuster, which ignored the potential of online streaming platforms like Netflix and sticked to their brick-and-mortar stores.
If a company doesn’t innovate, it risks losing its edge.
So when we invest, we want to find companies that not only have multiple competitive advantages, but can also protect and grow it over time.
Now if you want to learn how to spot these high-quality companies easily and compound your money over time with proven strategies, we’re holding our 2-day investing workshop this coming weekend from 26-27 July.
This is the LAST TIME we’re offering it for FREE, so if you haven’t registered yet, now’s the time!
So now you know - whether it’s a chicken rice stall or a billion-dollar company, competitive advantages is what sets winners apart.
And of course, here’s my lunch yesterday 😄
Till the next post, ciao!
Patience builds wealth,Bjorn