Photo by Štefan Štefančík on Unsplash
Whether you are starting a new business, or you have been in business for years, it is important to know your competition. Sure, you need to know what you want your business to be, and how you want to run it, but taking a look at your competition can help you make better decisions. If you’re still skeptical, let’s take a closer look at why it is important to know your competition.
Helps you learn your market
One of the best things that develops when you know your competition is a deeper understanding of your market. If you are just starting a business, taking a look at your competition can help you determine what your target customer might look like. If you have the ability, it might even help to approach customers to see what they like about your competition’s business, or why they choose to do business there. You might even be able to send someone on your team to scope out the competition and see for yourself who the target customer is. This can be helpful for your own business when you are determining how to market your product or service. When you know, from your competition, what your customer wants, you can not only appeal to their desires with your marketing campaign, but offer a product that will better suit their needs. For example, you might think your target market is women from age 32 to 65. The advertising and marketing strategy for a 32-year old is going to be different from a campaign for a 65-year old. When you get to know your competition, you might notice that your target market can be narrowed down to 40- to 50-year old women. This narrowed group helps you make better, more precise decisions regarding your marketing strategy, and allows you to set yourself apart from the pack.
Helps you avoid mistakes
If you have ever started something new, whether that’s a business or a DIY project, you know that there is a learning curve. Often times, there is a period of trial and error involved that can lead you to do things less efficiently, or sometimes, incorrectly. These errors may not be a big deal when you are building a farmhouse table, but when you are starting a business, mistakes may mean the difference between success and failure. This is another great reason you should know your competition. If you can take an in depth look at your competition, including their mistakes, you can hopefully avoid making the same mistakes. Let’s take a look at an example. Let’s say your business makes fun, crazy printed socks. Your competition can include companies that make similarly printed socks, as well as business socks. Perhaps, an in depth look at these companies might show that there isn’t much room for crossover, meaning that business socks makers don’t do well when they try to sell fun socks and vice versa. If you know this up front, you won’t make the mistake of trying to sell business socks down the road when you want to expand your business. That seemingly small mistake would be time consuming, expensive, and would potentially leave you with an excess of inventory that is difficult to move. If you do your research and commit to reality of the findings, there are numerous mistakes you can avoid by getting to know your competition.
Helps you hire the best talent
A less thought about reason you should get to know your competition is talent acquisition. If you want your business to do well and run smoothly, your employee selection is incredibly important. You not only need to make sure that they are the best at what they do, but that they buy in to your company goals as if the business is their own. One way to look at how your competition can affect your employee selection is to take a look at Silicone Valley. If you are an up and coming tech company in Silicone Valley, you have some major competition for talent. Companies like Google, Facebook, and Dropbox offer their employees a great company culture full of meal plans, massage breaks, dry cleaning services, great sign-in bonuses, and great company benefits. There’s no question why top computer science talent want to work there. If your technology start up wants to compete, you need to know your competition so you know what you will have to offer in order to entice top talent to work for your business instead of the technology giants.
Your competition can offer you great insights on your industry, potential customers, and how to acquire the best talent. In order to stay competitive and get the edge up on your competition, you can’t ignore what your competition is doing. Get to know your competition and make your company better.