Know Your Competition to Grow Your Business

Perhaps one of the leading factors that affects how well your business does is your competition. Regardless of the size, location, or industry, all businesses will eventually face competition. With the increased use of the internet to purchase and receive products or services from anywhere in the world, competition has only become more complex and fierce. Your business is no longer only competing with brick-and-mortar businesses on the same street. In fact, your competitors may very well be businesses from other countries or a popular social media influencer who promotes certain online products. 

Who Are Your Competitors?

It is also important to remember that your competition goes beyond your specific industry. All business owners must understand there are two types of competition: direct and indirect. 

If you own a restaurant, it is certainly true that the other restaurants in your area are competitors, and this would be called “direct competition”. 

However, it would be a costly mistake to think that other restaurants are your only competitors. The fact is that you also will face “indirect competition”, which includes other businesses or opportunities that could attract people who will spend their money with them, instead of with your business. With the restaurant example, indirect competitors may include the option of cooking at home, shopping at grocery stores, heating frozen foods, or any other business that is competing for the consumer’s money. 

Identifying your competition is not a one-time task to check off at the beginning of your entrepreneurial journey. You must factor in for new competitors that will continue to enter the market as well as take note of the businesses who exit the market. Additionally, there may be indirect competitors that suddenly become direct competitors and vice versa. For example, the grocery store down the street from your restaurant may decide to expand their business by launching a new restaurant inside their grocery store. What used to be an indirect competitor has now become a direct competitor with the potential of becoming your biggest threat. 

Why Knowing Your Competition is Important

Some of the benefits that come from knowing your competition include having a benchmark of comparison, knowing what specific products appeal to the shared target market, helping you set your price points, identifying your competitive advantage, and recognizing the areas that you need to improve on. Without knowing your competition, you are less likely to leverage the strengths of your business and therefore more likely to miss out on additional revenue. 

The biggest reason that knowing your competition is important is that it allows you to identify your competitive advantage. When you understand your competitive advantage, it will be easier to set business goals and pursue a strategy that best fits your company. Not only that, but this information can help you clarify your message to potential customers and drive your brand strategy with the goal of  increased demand, sales, and customer loyalty. 

By understanding and studying  your competitor’s business strategy, you can also assess what works well and what could be done better, and then implement those findings in the way you run your business. Knowing what you do well relative to your competitors builds confidence and can be the supporting information behind your business strategy and business decisions. 

Finally, it is crucial to know your competition prior to launching your business so you can know what to expect and what you are up against before investing your energy, time, and capital. When assessing your competition, you must be brutally honest with yourself and objectively decide whether or not your business has a strong enough potential to be profitable when pinned against its competitors. 

What To Know About Your Competitors…

Here is a list of important things to research about your direct competitors…

• Prices
• Product variety
• Customer service
• Number of employees
• Pay rate and pay structure of employees
• Delivery and distribution methods
• Marketing strategy
• Location
• Signage
• Discounts, coupons offered, or customer loyalty program
• Use of technology (Do they have a website? How do they run their social media?)
• Ways to contact them
• Financial information if available
• Customer demographics
• Strengths 
• Weaknesses
• Trends in sales (are there influxes or dips in revenue certain months of the year?)
• Any information of their business strategy

How to Collect Information

Knowing your competition is imperative to your business success. Conducting a competitor analysis may seem daunting at first, but it is a lot easier than most people think. Even though it is a lot of information to collect and organize, the actual process of collecting the information is not a very complicated process. In fact, it is quite simple! 

The most common way to collect information is through internet research where you will find most of your answers through a quick internet and social media search. However, for more in-depth research and valuable information that could help your business succeed, you could also collect information by physically visiting your competitors’ locations! Additionally, knowing what people’s opinions are of your competitors through word-of-mouth and even a survey can actually result in some of the most helpful and honest information for your business. 

If you need help starting or growing your business, check out our Business StartUp course! Through this self-paced, online course, you will identify your personal values, strengths and assets, and learn what makes a good business idea, how to conduct market research by using our simple and clear step by step market research guide, and even how to write a strong business plan by using our business planning master tool and templates. But that’s not all,  you will also learn how to create a purpose-driven company, how to maintain a healthy life/work balance, time management, goal setting, leadership skills and vital financial management tools. Don’t miss this opportunity!  Start today!