Often, business owners will say a variation of, “Well, at least there is no one who is doing exactly the same thing I am. That’s what competition is, right?” Not necessarily.
It’s impossible to run your business successfully in a vacuum; someone out there is going to attempt to one-up your idea. That’s the philosophy this country was founded on: free enterprise. And, that is why your business adviser will prompt you to find your niche and stick to it. Build on your strengths.
You cannot, however, stick your head in the sand and ignore your direct and indirect competitors. In the world of small business, we refer to these folks as “your new best friends.” You must keep them in your sights constantly to provide your business the edge it needs to survive and flourish.
Your direct competitors will be the most obvious to identify — they are offering the exact product or service you are, in the same manner. These competitors are targeting the identical customers that your business is seeking.
Meanwhile, your indirect competitors will be providing the same product/service in a slightly different way, or related products in the same way, or products complementing yours that could lead to eventually marketing the same products as your business. In my opinion, the latter indirect competitors present the biggest threat.
This premise may cause some raised eyebrows, but think about it. When you least expect it, the store with the complementary items will introduce your product as the next, and necessary, step in serving its customer base. While you were busy focusing on what your direct competitors were doing (hosting sales events, handing out tchotchkes, offering coupons) and directing your energies to thwart their efforts, your indirect competitors are sneaking into the forefront to become direct rivals.
Here are some recommendations to handle this threat:
1. Keep all possible competitors as close as you would good friends. In fact, think of them that way — know their locations, phone numbers, advertising techniques, promotional trends. Above all, know their customers. Where are these customers coming from, why do they shop with this competitor, and what are these customers seeking that you could be offering? Believe it, your competition is studying you in equal proportions;
2. Maintain records of your competition’s particulars and performance. Purchase that $1.49 binder and enlist the help of an employee or family member to gather all pertinent data on each competitor as well as local ads and promotions. Establish a page for each separate business or create a grid including all of them. Have the employee or relative visit the competitor’s business or call for service information in an effort to gain valuable insight into their next steps. You can position yourself to gain customer share by making your next move a step ahead of the competition. It just makes good business sense.
Nancy Ansteth is a New York State certified business advisor with the Small Business Development Center at Onondaga Community College. Contact her at anstethn@sunyocc.edu or (315) 498-6072.