10 Things you can learn by watching your competitors

Customers get first dibs on your attention. But who else should be on your radar? If you don’t know your competition very well, you’ll be blindsided when your clients and revenue suddenly disappear to the competitor down the block.

Every business has competitors. It’s vital to know who your competition is, what their strengths and weaknesses are, and what their objectives are. HINT: They want YOUR customers and YOUR revenue. 

What is a competitive analysis?

A competitive analysis identifies your competitors and evaluates their abilities and strategies. You can begin determining their strengths and weaknesses by understanding what strategies they use. Keeping a keen eye on the competition can give small- and medium-sized businesses an edge since they’re the most vulnerable to new entrants in the market.

The danger of thinking, "We have no competition."

 “No competition is a red flag for investors. If you say, ‘there is no competition,’ then there’s either no market or you just don’t understand the competition.”

- Lauren Flanagan, Cofounder and Managing Director, BELLE Capital USA  

One of the biggest mistakes a new business can make is assuming they don’t have competitors. All business owners—from franchisees to a doggy daycare—who are serious about running an enduring business should have a competitive analysis in their arsenal. If you’re looking for funding from an investor, you can be certain they’ll be interested in learning about the health and performance of your competitors.

It’s natural for new business owners to be ecstatic about their new product or service ready to take over an untapped market, but danger lies in improperly assessing and underestimating the impact a competitor can have on your business. 

 10 insights you’ll gain by doing a Competitive Analysis

Now that we’ve established that you DO have competitors, here are 10 ways a little research can give your business the upper hand:

1. Find out WHY customers buy. Every competitive analysis starts with a clear understanding for why customers buy and is followed up by looking at the whole market.
2. Ensure you’re not leaving money on the table by learning what products and/or services your rivals offer and how much they charge for them.
3. Better understand their strategies and tactics. Many business strategies are dictated by their resources. Is there a resource you have that they don’t? If so, use it! 
4. Gain a better understanding of your target market. Is your business adversary capturing a portion of your customers? If so, why? What value are they creating that you’re not? (or vice versa)
5. Identify your competitors strategic advantages as well as your own. Sometimes, you may not recognize one of your strengths because it’s only a strength relative to your competitor. Understanding their strengths and weaknesses may open your eyes to advantages you didn’t even know you had! Surprise!
6. Develop new strategies to help your business thrive and acquire new patrons. Doing a competitive analysis can be a little time consuming, however, the return is huge when you can identify key opportunities.
7. Gain insight to estimate your competitor’s revenue and costs. If they’re making huge profit margins, it could be time to reevaluate your costs and how they’re structured to save you some dough. 
8. Identify potential key partnerships. Partnerships with suppliers and companies that offer products and/or services that compliment yours can add significant value to your customers! 
9. Determine your competitive position in the marketspace. Are you the leader in your market? Once you know where you stand in your market, you can set goals and begin planning for next steps.  
10. Get more funding! Need some more cash flow for growing your business? Great, you’re on the right track! An investor will most likely need to see a competitive analysis before funding you. 

Most importantly, while it’s important to pay attention to your competitors, don’t lose sight of number 1: your customers! If you’re only focused on reacting to what your competitors are doing, that means you’re not focused on your customers, which is the only reason you’re in business. 

Want to dig deeper? Download your free copy of our eBook, "Creating your Competitive Analysis" for a step-by-step guide to conducting your analysis on the competition and understainding where you fit in the market. 

Do you have a story about how you creatively one-upped the competition? We want to hear all about it! Tell us about it in the comments section below!