As a business owner there are key factors you need to be aware of when you’re making decisions for your business. These high level principles interact and trickle down into specific issues that affect how you spend your money and other choices you make, but they’re best understood from the top down: your customers, your competitors and the economic conditions affecting both.
Today we’re taking a look at your competitors: who are they?
How Hard is It to Identify Competitors?
Identifying your competitors can be a difficult job, and one that differs depending on your precise circumstances. If you’re a business delivering a physical service in a specific location – hairdressing, cleaning, physiotherapy – then you don’t have to look far for your competition. They’re within reasonable travel of you, and your existing customers probably already know about them.
Digital services are more open to the global market – it’s equally easy to work with a marketing company in Brasilia as it is one in London. Nonetheless, many will opt for digital services operating in their home time zone and market, for that boost in convenience and baked in expertise with what they’ll be dealing with.
It’s retail where your list of competitors can get unmanageably long. As a retailer, especially a generalist rather than a highly specialised one, your list of competitors includes any other retail brand with an online presence and sufficient shipping capacity, not least giants like Amazon.
You might want to make it easier on yourself and get some help from competitive research consultants to identify your most meaningful competitors, while you concentrate on running your business.
Using that Information
Once you have a big list of your competitors there’s a lot you can do with the data, both to make it useful and to use it. Competitor benchmarking is a useful exercise (again, potentially best carried out by specialist consultants) which compares with you a list of your rivals on a series of set metrics, giving you a ranking of how you perform against each other in key areas and helping you identify opportunities and also businesses to worry about.
When you know your most important competitors you can also try out competitor wargaming – working out how they’ll respond to different hypothetical scenarios, so you can make sure your plans take account of what the competition will be doing and ensure you’re still coming out on top.
