How to create a unique selling proposition (USP) for your small business

With so much competition, what’s the unique selling point (USP) that ensures your business stands out from the crowd?

Learning how to create a USP for your business can give your brand leverage in a saturated market. With automation, digital marketing, and online payment methods making entrepreneurship more accessible, your USP gives your customers a reason to choose your brand over competitors.

If you’re stuck wondering how to find a USP for your business, this guide will help. Take a look at what a USP is and where it fits into the plan of how to start a business, as well as some key examples to inspire your ideas.

How to create a USP for your business

Almost all small business ideas have competitors. To stand out in your niche or a highly competitive industry it’s important to create a clear USP.

The task of how to find a USP for your business isn’t always as easy as it sounds. It involves a number of steps that we’ll cover in this guide, including:

• Learning what a USP is.

• Understanding your target market.

• Analysing industry trends and competitors.

• Identifying your competitive edge.

• Learning what makes a strong USP.

What is a unique selling proposition (USP)?

If you’re wondering ‘what is a USP in business?’, think of it as your small business’ defining feature. It’s the one thing your business offers that no other merchant does.

There are plenty of online businesses and brick-and-mortar shops that your customers can choose from but it’s your USP that’ll help you stand out from the competition, carving out a space in the market just for you.

For example, if you’re a local business in the food and drink industry - let’s say a burger restaurant - look for what you offer that your competitors don’t.

Perhaps you have a self-service kiosk, enabling quicker checkouts for your customers while competing restaurants only offer face-to-face orders. This would give customers a clear reason to choose you over other local businesses, boosting your chances of customer acquisition.

Small businesses can benefit from a USP that’ll help separate them from more established, recognisable brands. Larger chains have the advantage of credibility, but your USP will help your small business communicate a standout feature that drives customers to your shop or online store.

USP vs value proposition: what’s the difference?

What are unique selling propositions compared to value propositions (VPs)? When researching how to write a business plan you’ll see both appear as essential to your strategy.

To understand more about the differences, we’ve included a quick definition of both:

• Your business USP refers to features or characteristics that differentiate it from others on the market. It can refer to individual products or services as well as the business as a whole.

• Your VP looks at the overall benefits you’re offering (including, but not limited to, your USP). It typically offers solutions to customer pain points.

Your VP shows clearly what your products or services bring to your customers’ lives. When your audience is asking ‘How will I benefit from interacting with your business?’, you’ll talk about your VP.

Your USP talks about specific features of your business. When your audience asks ‘Why should I choose your business over a competitor?’, you’ll talk about your USP.

There is some overlap between USP and VP as both can discuss value. But, when looking at your USP, you should focus solely on what you’re doing that other businesses aren’t.

What are the benefits of a USP?

Whether you’re one of many local merchants in a saturated market or you’ve tapped into a niche side hustle idea, every small business can benefit from differentiating themselves from the competition.

But why is a USP important in business? We’ve taken a look at some of the key advantages.

Become a competitor in your industry

A strong USP creates a space for your small business in the marketplace, defining exactly where you sit alongside competitors. It brings your business strengths to the forefront, showing potential customers what you’ll offer them over other businesses.

Boost customer loyalty

Your USP plays a role in keeping existing customers returning and boosting your customer loyalty.

By offering a unique element, you give your audience a reason to choose you repeatedly. Even with other merchants trying to get their attention, they’ll return because of your differentiating feature.

For example, your USP might revolve around how to improve customer experience.

Small businesses are often better able to provide personalised customer service. You can highlight how this enables more one-on-one attention than bigger competitors, creating a competitive advantage.

For example, a local bakery could offer free door-to-door deliveries and get to know their customers by name. When a larger bakery moves into town, loyal customers might be less tempted to switch.

The idea here is that a bigger chain is less likely able to offer the service provided by a smaller independent bakery. Having identified that the local bakery’s audience values personalised services, this could be a USP that wins loyalty.

Gain a deeper understanding of your audience

Developing a USP involves detailed customer research. This helps your business better understand your target audience, learning more about their needs and how you can meet them.

From core values to hobbies, the process of finding a USP can unlock a wide variety of important customer insights. These will help you create a USP that resonates with your market and develop a more customer-centric business.

Part of your research could involve learning how to get clients based on why they choose one business over another.

Knowing what features, benefits and services your audience prefers is essential for USP development. It provides key insights that can be used for product innovation, pricing strategies, marketing and customer service improvements.

Create strong marketing campaigns

When working on business growth strategies, your USP will direct your marketing campaigns.

With a clear picture of your identity, a USP brings clarity and cohesion to marketing. It guides your branding choices, including your colour palette, tone of voice and messaging to build a strong image for your small business.

A USP can make the challenge of how to advertise your business easier, too. If you know, for example, that your eco-friendly values set your business apart, you can make this a key focus of your marketing.

Attract top talent to your business

Your USP doesn’t just attract customers. It’s also a valuable asset when developing workplace culture and attracting top talent.

Businesses in the same market can seem interchangeable to employees. A strong USP, though, can appeal to potential hires and become the deciding factor in who they choose to work for.

It also improves employee retention in the same way that it improves customer loyalty. When other merchants try to hire your top employees, they may be more inclined to stay with you because of the USP that attracted them in the first place.

What makes a strong USP?

Answering ‘what is a USP in business?’ is an essential first step when differentiating your small business. Now, it’s time to look closer at what makes a strong USP to draw customers to your business.

Focus on the customer

Your USP should hold value for the customer. It’s easy to focus on what’s important to your business (and this should always be considered) but your first priority must be to connect with your target customers.

Solve a problem

What problem does your target market have that your USP solves? This might be a feature of your product or services that competitor products lack.

If you own a wine bar, for example, you could serve alcohol-free wine alongside your normal bottles. With 21% of young adults in the UK not drinking alcohol, this would solve the problem of where to have an alcohol-free social night amongst a growing demographic of sober customers.

Your USP could also solve a problem through operations management. For example, you might be the first business in your market to offer same-day collection.

Values and lifestyle choices can also inspire strong USPs for small businesses. If you’re a food truck catering to a market that wants easier access to vegan products, your USP could be budget-friendly meat alternatives that are served quickly.

Turn your words into actions

Your USP needs to be backed up with evidence. It’s not enough to say that your business brings a new benefit to your audience, you need to show them that it’s true.

Luckily, there are plenty of ways you can present evidence of your USP in action to your audience including with:

Your products and services

Ensure your USP is clear in the products or services you bring to the market. If you market yourself as a personal trainer for post-partum mums, for example, you should be able to provide tailored exercise plans that are safe after having a baby. 

Customer reviews

Customer testimonials should back up your USP claims. Add these to your website and social media platforms to boost your marketing credibility.

Learn more about how to ask customers for reviews and highlight your USP. 

Relevant certifications

Some USPs can be strengthened through certifications.

If you sell ethical make-up at local markets, a Leaping Bunny certification provides evidence that your products are cruelty-free. This is a global accreditation that’s widely recognised in the UK.

Eco-friendly merchants, on the other hand, could look into B-Corp, Rainforest Alliance and 1% for the Planet to solidify their sustainability.

Don’t be generic

A USP showcases what’s different about your business. It should be memorable and bold, highlighting specifics that resonate with your audience. Avoid using generic statements that could be applied to other businesses.

Let’s take a quick look at an example of a copy-and-paste USP:

• High-quality food for hungry people. This can be used for any number of businesses, including restaurants, food trucks, and pubs, making it a weak USP.

A stronger USP for a food establishment could be:

• French-inspired cuisine made from 100% locally sourced ingredients, partnering with Sussex farms that champion regenerative farming. 

It’s specific and gives your target audience insight into what they can expect from your business. Most importantly, it can’t be copy-and-pasted across the restaurant industry. 

7 steps to create a USP for your small business

By following our step-by-step guide, learn how to define your unique selling position and effectively highlight what makes your merchant services unique to your market.

Market research

From how to price a product to whether you should take cashless payments, every business decision you make should be based on market research.

This involves analysing your business’ specific market, which includes looking at:

• The biggest brands and small businesses in your market.

• What challenges does your market face?

• Target audiences.

• Short-term trends.

• Long-term disruptors. 

• Cultural and economic shifts in your market.

When looking at how to find a USP for your business, focus your attention on gaps in your market. Where are customer demands currently not being met?

You can carry out market research in a number of ways. As a small business, conducting interviews with your target audience is an excellent place to start.

You can also find market information online – such as pay-to-access reports and publicly available papers – and use social media to track trends.

Define your target audience

Customer research is closely linked to market research. When analysing your audience, however, you’ll pay closer attention to customer-specific insights. These can include:

• Customer profile details such as age, gender, income and interests.

• Who your target customers currently shop with in your market. 

• What customers are willing to spend for different products or services within your industry.

• Important values that are driving purchasing decisions.

• Trends that your target customers are following.

There are many ways you can learn more about your customers, here are a few examples to get you started.

Customer surveys

The easiest way to get to know your target audience is to survey your existing customers. You can do this via polls on social media, online feedback forms or conversing with customers in-store.

Competitor customers

Find your target customers by looking at who’s following your competitors on social media. If they’re interested in a competitor, they’ll likely be interested in your business, too.

To help identify your competitors on social media try using the following methods.

• Keyword searches: Use keywords related to your industry on each platform’s search tool. You’ll find accounts that post related content or offer similar products and services.

• Industry hashtags: Explore the hashtags commonly used in your industry to find relevant posts from similar businesses.

• Social media suggestions: Platforms often suggest similar accounts to follow. Review these suggestions on your profile (or your competitors’ profiles) to quickly discover competing merchants.

Visiting competitor brick-and-mortar stores in-person is another effective way to learn more about your target audience. Pay attention to details of the average customer and the products or services they’re most interested in as they walk around their premises.

Customer reviews

Reviews for competitor businesses are a hive of useful insights. Many review sites add details of the customers, like their age or location, helping you understand who exactly your target audience is.

Depending on the industry your small business operates in, consider looking at popular UK review platforms such as: 

• Hospitality: TripAdvisor, Booking.com, Expedia and Yelp are all popular for reviews on restaurants, hotels, and other travel providers. 

• Freelancers: Trustpilot is a broad platform that includes reviews for service providers, including freelancers. PeoplePerHour and Bark also cater specifically to freelancers, offering a platform for clients to leave reviews and feedback.

• Independent creators: Etsy is commonly used for selling and reviewing products from independent creators and artisans. Not On The High Street offers a similar platform for UK-based craft makers.

Analyse what your target customer base likes and dislikes about your competitors. What seems to be working well and what could be improved? Dissatisfaction signifies a market gap that you could fill.

Look for decision-making cues, too. Gaining insight into what fuels purchasing decisions is useful for creating more enticing USPs for your small business. 

Customer segmentation

As a merchants you can choose more than one USP for your business. Multiple USPs are often a result of customer segmentation, which is when you split your target audience into smaller groups. This helps identify different demands within your target market to better inform your USPs.

Let’s take a cafe as an example. They might split their overall target audience into 3 segments:

• Customers looking to relax with a hot drink or food.

• Remote workers looking for a space to work from.

• Local businesses looking for event catering.

The USP that appeals to each of these segments will be different.

• The remote worker, for example, is more likely to respond to a facility-based USP like a co-working fee that allows them to stay and work all day. 

• The local business will be looking for a product-based USP like organic, locally sourced food. 

The customer may prioritise either a product-based or facility-based USP. So, while the cafe owner has one overarching USP, they might also have segmented USPs to appeal to different groups.

Analyse your competitors

Competitor analysis is a staple of how to run a business and will help you define your USP. It gives merchants insight into:

• Who their target audience is shopping with.

• What marketing strategies are working well for competitors.

• Different business models.

• Pricing strategies.

• Past errors that caused business problems.

In terms of how to define your unique selling position, look at the USPs of your competitors to avoid replicating an existing business model. Use this analysis to find gaps where there are no other businesses to compete with.

If you’re a water sports rental shop, for example, after visiting your competitors’ premises as part of your market research you might notice that they’re all cash-only businesses. This leaves a clear gap for cashless payments.

By adding a card reader to your premises you can appeal to customers who prefer paying by card or digital wallet. This helps you offer something unique to your audience, becoming a clear USP.

Identify what makes your business unique

After conducting market and customer research, you’ll have a clearer picture of what helps a business stand out. Now, you can use this to identify your business’ USP.

You should be looking for an approach that:

• Differentiates you from the competition.

• Has an existing demand from your audience.

• Your business can do well. 

Once you’ve found the strength that ticks all three boxes, you’ve found your USP.

Create a USP statement

A USP statement outlines the differentiating factor that sets your small business apart from others.

It’s useful for creating clear strategies around product innovation and marketing. It can also be used to focus your ideas and your team, creating clear goals and a feeling of cohesion.

Make writing your USP statement easier with this formula:

This isn’t the only outline for a clear USP statement. Another option would be:

The main goal here is to include the product or service you’re offering, who you’re appealing to and the USP.

To guide your development, here are a few fictional USP statement examples:

• We bring healthy food to an eco-conscious audience. Our vegan-friendly meals are made with 100% locally-grown produce using regenerative farming practices. 

• Our running shoes are designed for professional athletes looking for trainers that utilise innovative technology to help combat foot odours.

Carry out testing

Once you’ve finalised your USP statement, it’s time to test it on your target market.

Testing determines whether your USP aligns with your business goals and how your audience will respond to it.

If you see a positive response, this is a strong indication that your USP is ready to move on to the next stage. If the response leaves room for improvement, it’s time to go back over your work and tweak your statement.

There are plenty of low-cost business ideas for testing your USP. Let’s take a look at some top choices.

Carry out surveys

Surveys are the go-to option for USP testing. They can include focus groups, face-to-face interactions with customers, and online feedback.

Ask your customers whether your USP appeals to their pain points. Does it make them want to switch from a competitor? Are there any areas for improvement?

The more insights you gain directly from your audience, the more targeted you can make your USP. 

A/B ad testing

A/B testing involves two or more versions of the same marketing material. Both options go live and it’s your job to monitor the success of each to work out the better choice for long-term use.

In terms of USP testing, this is a great way to refine your strategy with real-world data. Here’s an example of A/B testing in action:

1. You create 3 sponsored social media posts, each showcasing a different version of your USP.

2. You publish each post to the same targeted audience (using social media targeting tools) and run them for a set time.

3. Once all 3 ads have run you check the results of each, looking at engagement, click-through rates and conversions.

This gives a clearer idea of which angle resonates with your target market, guiding your choice based on real data.

Email marketing

For small businesses that focus on email marketing and that have an existing email list, you have a goldmine of USP testing opportunities. You can send your USP-focused marketing messaging to your entire email list or send different versions to different customers based on their buyer persona.

A particularly useful approach for segmenting audiences is to either:

• Test your main USP with different segments of your target audience.

• Test different USPs with their intended segments of your target audience.

Continue testing, revisiting, and refining

Testing shouldn’t be a one-time-only task.

Audience demands, your market landscape and economic shifts can all cause your USP to become less successful over time, triggering a re-think of your branding.

Your positioning compared to competitors can shift, too. If a new merchant sets up shop in your local market with a similar business model your USP might no longer stand out. You’d then need to update your USP so that it puts more distance between you and your new competitor.

A successful business is never stagnant. Keep revisiting your USP for fresh, relevant marketing that appeals to an ever-changing audience.

How to communicate your USP with your target market

You’ve conducted research, developed a clear statement and tested it with your focus groups. Now’s the time to start communicating your USP with your target market.

To fuel your ideas, we’re going to take a look at two fictional businesses:

1. A local restaurant with a USP of a vegan menu and free home delivery.

2. A merchant who’s learnt how to start a business from home selling homemade jewellery. Their USP is using recycled and reclaimed materials. 

Both have a small business budget and a clear USP. Here are 12 ways they might communicate their differentiating benefits to their targeted audience.

In-store displays

As a brick-and-mortar business, the restaurant can use in-store marketing to communicate its USP.

They use wooden crates of vegetables in their windows to signify their plant-based ethos and highlight their vegan menu through a holder attached to their door. Inside, a painted mural depicts their vegan values.

Social media

Both businesses use social media as a budget-friendly marketing method.

• The restaurant adds images of its vegan dishes. They also add a weekly post to their story showing how much CO2 their free, bike-based deliveries saved compared to car alternatives.

• The jewellery maker adds behind-the-scenes timelapse videos of themselves handmaking the pieces. They also add links to blog posts that discuss the new reclaimed and recycled materials they’ll use for the upcoming collection. 

Webinars and live streams

The jewellery maker carries out paid-access webinars to teach the basics of handmade jewellery making.

This creates a second revenue stream to boost their small business finances and establishes them as an expert in the handmade jewellery market.

Trade shows and events

The vegan restaurant frequently caters for vegan-based events. This includes vegan food fairs and eco-friendly festivals, establishing their business as a key player in the market. 

Packaging

Both businesses communicate their USP through their packaging.

• The restaurant uses fully compostable packaging for their takeaway and home delivery orders. They also add ‘I’m Vegan’ stickers with their logo on each food item.

• The jewellery maker includes a branded card with each purchase that thanks the customer for choosing sustainable jewellery and details the reclaimed and recycled materials used in the piece.

Website

Both businesses have a website. The restaurant has a basic business site while the jewellery maker has an online store. Branding is clear on both sites.

• The restaurant has a green and white colour palette that customers associate with an eco-friendly ethos and plant-based foods. It also targets the phrase ‘vegan food’ in its headers.

• The jewellery maker uses phrases inducing ‘ethically made’ and ‘reclaimed materials’ in their headers. There are links on the homepage to more details about their sustainable materials.

Search engine optimisation (SEO)

Both businesses use SEO to target specific audiences. This is based on using keywords in their website content that they know their audience are searching for.

They frequently review which words and phrases were used to search for their website and update their keyword research to reflect any changes. This also gives them insight into shifting customer demands and emerging trends. 

In-store events and workshops

The restaurant hosts events in partnership with other vegan food and drinks retailers to communicate their USP.

This includes a monthly vegan wine night, in which they serve discounted food alongside vegan wines from a local supplier. They choose a typically slow business day to encourage customers through the door. 

Content marketing

Content marketing is crucial for both businesses. It helps them communicate their USP, dive deeper into their differentiating features and engage their audience.

Both businesses regularly update their blogs with topics their audience are interested in. They link to their blog posts via their social media pages, where they use short, snappy captions and images to shape their identities. 

Sponsorships

The restaurant sponsors a well-known local animal rescue shelter. They write about the partnership on their blog, share the shelter on their social channels and host in-person partnered events.

The sponsorship helps them tap into an animal-loving audience and is in line with their vegan ethos.

Print media

As a small business on a budget, the jewellery maker enjoys the cost-effectiveness of print media. They create posters and leaflets to display in local sustainable shops, highlighting their eco-friendly jewellery. They also have:

• Business cards with their USP statement.

• Thank you cards after a purchase.

All of their print media is printed on eco-friendly materials with visible certifications.

Customer loyalty schemes

The vegan restaurant has a customer loyalty scheme. Their loyalty cards include a message thanking the customer for making a kinder choice on behalf of the animals. This highlights their USP, makes the customer feel good and encourages repeat business.

The card also has a tagline at the bottom that lets customers know they offer free, zero-carbon delivery.

5 Pitfalls to avoid when creating your small business USP

We’ve covered how to find a USP for your business by following our step-by-step guide, but it’s important to keep the pitfalls in mind, too. Here are some of the most common mistakes to avoid when creating your small business USP.

Being too vague

USPs that are too vague or too broad are less likely to grab the attention of your audience, with a non-specific statement lacking the excitement you need to create a buzz around your offering.

Promising too much

Promising your audience the world will do more harm than good for your business. It fosters customer dissatisfaction and hurts your brand image, credibility, and customer loyalty.

Focus instead on outlining a USP that you can realistically achieve. This is far better for managing client expectations and delivering on your word.

A lack of consistency

Once you’ve outlined your USP, it’s important you stick to it. This is the central focus of your brand image and it should be clear across your marketing, your products and services, and internally in your business operations.

You can have more than one USP but to avoid inconsistency, highlight one main selling point that will be your focus for your entire audience.

Not staying customer-focused

As a merchant, you’ll have plenty of characteristics you love about your small business. It’s important that these avoid overshadowing the customer-centric approach when developing your USP.

Instead, look at your business from the customer’s perspective. Consider what they’d find engaging and what would entice them to convert, focusing on the benefits you bring to your audience.

Highlighting features over benefits

Your USP should be benefits-led. Rather than focusing on the features that make your business unique, focus on what problems you solve and how you enhance your customers' lives.

For example, a hairdresser might have a feature-based USP of ‘We use chemical-free hair products and less water’. This isn’t very emotive and doesn’t tell the customer anything about how that benefits them.

A benefits-based USP would be ‘We use eco-friendly treatments that are gentler on damaged hair and kinder to our planet’. This gives the customer more direction on what they can expect from the hairdresser, including sustainable values and a focus on treating hair with high-quality products.

5 examples of successful USPs

You can learn plenty of useful insight about what makes a good business idea from looking at successful USPs. To inspire your business plans, here are 10 unique selling proposition examples that set their businesses apart.

Jack & Beyond

Jack & Beyond is a cake shop with an online store and a cafe in Battersea, London. The team create beautiful cakes for delivery in the city and offers options for UK-wide shipping.

Where the cafe has effectively grabbed its audience's attention, though, is with its ‘Bottomless Cake’ USP.

Based on the premise of bottomless brunch, Jack & Beyond invites customers to book 90 minutes of unlimited slices of cake (the current record stands at 22 slices).

This transforms their cafe from a regular cake shop to a quirky, event-worthy outing. They also offer dog afternoon tea, appealing to the abundance of puppy owners in the local area. 

The Bottled Baking Co.

The Bottled Baking Co. is a cake mix company that hasn’t lost the homemade feel.

In essence, the business creates cake mixes not unlike those you’d find in the supermarket. Where they stand out, though, is in the homemade feel to their products that’s given a makeover to the industry.

The Bottle Baking Co. started in a family kitchen. The high-quality, kitchen cupboard ingredients are layered in beautiful glass bottles worthy of being put on display.

They’ve also partnered with other artisan businesses to bring food-themed gift boxes to family kitchens around the UK. This establishes them as a key player in luxury British foods. 

Wild Deodorant

Wild Deodorant has captured the sustainable hygiene market. Their USP? A natural, eco-friendly deodorant that works as well as chemical-filled alternatives.

Their uniquely refillable deodorant has been an eco-friendly revolution. Easy to use, vegan, chemical-free and with amazing scents, they turned a product in a saturated market into something entirely new.

As if the product itself weren’t enough, they also cater to the new subscription-loving market. Subscribe to receive compostable, chemical-free deodorant straight to your door

Dash

Dash is a sustainable soft drinks company with a standout USP. They turn wonky fruit into delicious, healthy drinks.

Dash’s clear USP helped them break into an over-saturated market that isn’t kind to newcomers. By overlapping the demand for healthier choices and sustainable options, they created a winning business idea.

Their cans contain no sugar or sweeteners, appealing to the health-conscious market. Instead, they use carbonated water along with fruit and veg that would otherwise be sent to the landfill to flavour their drinks. 

Barry’s (formerly Barry’s Bootcamp)

With plenty of gyms, fitness classes and personal trainers in the UK, it’s a hard world to break into. For Barry’s, though, a strong USP made it simple.

Barry’s focuses on high-intensity interval training (HIIT) but with a twist: it’s fun.

With ambient red lighting and club-worthy music, the team’s goal is to get you pumped up to work out. Their trainers are all focused on the ethos, too, and bring energy to every session.

Unlike other gyms, Barry’s feels less like a gruelling workout and more like a party. The hardcore sweat sessions ensure you see results while the vibe keeps you coming back.

Disclaimer: The contents of this page are intended for informational purposes only and should not be construed as professional advice. For matters requiring legal or financial expertise, it’s recommended to seek guidance from qualified professionals.