Small Business for Dummies. Veechi Curtis
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per hour is probably pointless if you’re providing an identical service to a close competitor.
You can identify your point of difference: Unless you know exactly what your competitors provide, you won’t know how to sell your differences.
Grouping competitors
One of the purposes of identifying competitors is so you can develop a competitive strategy to deal with each one. However, when you create a list of head-to-head competitors, this can sometimes be a long list. For example, if you’re starting up a business as an electrician, you may find 50 other electricians are working in your local area. You don’t want to have to come up with 50 different competitive strategies, so your best tactic is to try to group these competitors in some way.
Try this process:
1 List your competitors in a small number of groups based on similarities.For example, the electrician may split their list of 50 other electricians according to size of the business, focus of the business (maybe some focus more on repairs, others on hot water, others on new buildings), or by locality or suburb.
2 Think about how you’ve organised these groups. Will a customer looking for your kind of business use these same criteria?For example, if a customer is searching online for an electrician, are they going to search by suburb, by specialty, or by services provided (such as 24-hour call outs)?
3 Have a think about where you belong in the scheme of things.For example, the electrician may decide they want to focus on solar systems but within a 50-kilometre radius only.
4 Think to the future. Do you want to be in this same group in five years’ time?For example, maybe the electrician has a vision to offer not just solar installations, but home-energy consultations also.
Profiling your competitors
When investigating your competitors, don’t limit yourself to visiting your competitor’s website but, instead, try to dig a little deeper. The time has come for you to don your dark sunglasses, felt hat and fake moustache. Talk to your competitors’ suppliers or distributors, or quiz customers who have defected to your side of the fence. You may even have to go undercover and pose as a customer (or ask a family member to do so) — I know that such clandestine activity can feel a bit weird, but the results are usually worth it.
Table 2-2 shows a detailed competitive analysis where the owner of a copywriting business does a comparison with three other copywriting businesses also offering services online, rating competitors according to what they do better (or worse).
TABLE 2-2 Rating Head-to-Head Competitors
| Does this competitor … | ABC | CopytoGo | WriteNow |
|---|---|---|---|
| Have cheaper pricing than me? | Yes | No | No |
| Offer a faster turnaround time? | No | No | Yes |
| Offer specific services that I don’t? | No | Yes | No |
| Offer onsite services, not just online? | No | No | No |
| Offer a larger variety of pricing packages? | No | No | Yes |
| Have more expertise/a higher level of skill? | No | No | No |
| Service different niches? | No | No | No |
| Have more testimonials than me? | Yes | No | No |
| Have a more active social media presence? | No | No | Yes |
| Have a stronger online marketing strategy? | No | No | Yes |
| Have more capital and power to expand? | No | No | Yes |
Thinking about future competitors
In Chapter 5, I talk about your vision for the future, and how important it is to keep your eyes open to trends in the economy, the environment and in your industry. This macro way of thinking is also useful at the early planning stages of your business, particularly if you spend a while thinking not just who your competitors are right now, but also who your competitors could be in one, two or five years’ time.
Ask yourself questions relating to the following areas:
Automation potential: Could any existing competitors automate their processes using advanced technology and, therefore, become more of a threat than they already are?
Big players coming to town: Could a franchise chain or large company move into your village, suburb or town and take lots of your customers? (In my village, the longstanding boutique wine store struggled when two big liquor chains moved within 3 kilometres.)
Buyout of minor competitors by a larger competitor with more capital and muscle: Could one of your existing competitors be bought out by someone with more capital and better distribution and, in the process, become a very formidable competitor? (Think about how some smaller gourmet food brands have been purchased by supermarket chains and suddenly appear in every store.)
Changes in technology: Could changes in technology mean your product or service becomes obsolete? (Think of the long-lost corner video store, the appliance repair technician or the 24-hour photo lab.)
Cheaper imports: Could the goods you provide be substituted by imported goods if the exchange rate changes?
Customers doing it themselves: Could your main customer or customers decide creating your product or providing your service in-house makes more sense? (Think of the big supermarket chains that now manufacture their own generic food lines.)
Life cycle of business idea: Is the life cycle of your business reaching maturity or beyond, meaning numerous competitors and fewer profits to go around? (Think of the mobile coffee vans that were once a clever niche business but are now a dime a dozen.)
Offshoring