Competitors and how to win the race

Analysis

The starting point is deciding which competitors matter. Analyse and get to grips with the market that you are in. What key characteristics define that market? Work out by what criteria your customers judge you, and then draw a map showing which companies might be on their radar at the same time as you.

What differentiates your business from countless others? Put yourself in the shoes of your customers and use the search engines to look for what you are providing. Is it clear that you are providing the customer with something that meets their needs, is innovative and is constantly being improved? Ask the customers why they give business to you rather than your competitors. Understand your business from their point of view. Rate your business against the competition on a number of key benefits including pricing and service levels.

“We have no competition.”

It is such an absurd concept that I wonder how intelligent entrepreneurs can write such a thing. Competition comes in so many flavours. Direct competition is often the easiest to ward off, although 'We compete because our services are cheaper' is another business plan trap.

Such a statement might be valid if it was altered to read: 'We compete by being the lowest cost producer', but be wary of any undifferentiated commodity market. Price wars are rarely of benefit to anyone except the consumer and the last business left standing.

Innovate constantly and demonstrate in the plan how this process is built into your business culture. Be one step ahead of the competition and avoid the price sqeeze and margin erosion that are the natural territory of undifferentiated businesses. Consider indirect competition and substitute competition – how else could your customers achieve what they are aiming for? Could they just do without what you are offering? After all, they have lived without it for years.

Bear in mind that there is very little that is new under the sun. Innovation can be very subtle and can take many forms. Development is most likely to come from constant questioning about the benefits of your offering.

That’s just what you (and everyone else) can see…

If the world stood still, analysis of the competition would be easy, but just by entering a market in the first place you are altering its landscape. So bear in mind that competition is dynamic. You need to set out in your plan not just this generation of products but a roadmap of future innovation. As each product/service is overtaken by circumstances, you will already be launching the next version. Give a feel for the robustness of your business when the existing competitors retaliate.

How will you retain your customers and build a loyal following? How will you prevent others from capturing that value? Above all, how will you deal with technological change when you don’t even know what is around the corner?

If you feel that this is something of a challenge, then you have already identified the value of a business plan. Take time out to understand the nature of your market, your service and the competition, and agree with your management team  how you will be the 'best in breed'. Most of your day will be spent fighting fires and reacting to events. Discussing and creating the business plan will give you a chance to ask yourself some hard questions and think more strategically.