You can’t ignore competition. It has the power to destroy or boost your business, depending on how well you understand its position in your market. The way to start understanding it, regardless if you are a startup or a seasoned entrepreneur, is through an audit.
The competition audit is one of the best tools to help you assess your business and the environment in which you operate. Whether you do it yourself or bring in an expert, here is what you should learn from it.
Firstly, how many competitors do you have? Knowing that there are many or just a few is not enough. You need a number. Make it as precise as possible.
If for no other reason, this is a precise way of learning how your niche evolves in time. If your niche is a goldmine, you might find, upon repeated auditing, that the numbers are flying up. Is that a concern? Sure, if it doubled in a year.
Or, on the other extreme, you dominate the market, so that half of your competitors give up. I’d sure want to see the numbers if that was the case.
Knowing the extent of your competition will also help classify the feasibility of your niche and how efficient your positioning is.
Too many competitors, might indicate that others see the business potential too. That’s good, it’s not just your wishful thinking.
It also shows that you are targeting a large pool of customers. Once you know this, you can simply narrow your focus by targeting a more specific audience. This balancing act is a great way to thin out your competition, to specialize and to become the expert in your market.
If the number is very low, you might ask yourself if the niche you are in, is viable. Is the business idea any good? Are you being to specific in defining your ideal customer? Fine-tuning your focus is a great way to go from survival to success. You want to get this right!
David C. Baker has a must-read article on this. He even came up with a formula.
Knowing your niche and your business environment is great, but you get even more value out of your competition audit by using it to evaluate yourself. Think of your competition as if it was your own free of charge team. A team that already tested the target audience for you. It already made decisions and reacted to their needs. How did they do?
Speaking of team, are you considering how their advertising is also helping you? Think about it.
Learning the good stuff your competitors do, is a great way to learn what your own customers prefer. You might need to implement the findings in your own business or find ways to improve on those points.
Learning the mistakes your competitors do or did is even better and can help you avoid failure. To better illustrate that, let’s say you find out that the support your competitors offer is terrible. There is your opportunity: offer flawless support and make it your competitive advantage. Your customers will repay you with fidelity.
By deeply evaluating a thorough competition audit, you instantly recognize the strong players. Who is really serious about their future? Who are the ones that truly care about their customers? Which are the ones that invest in brand? Those are your worthy rivals. Know them well. They will be around for a while.
So you see, just by reframing how you look at competition changes everything. Don’t waste time and resources trying to beat the competition. They are your team. They are there to help you get better.
And getting better every day is what this is all about.