In other words… get to know your competition through market research so that you can beat the competition!
Market research on competitors reveals trends in the marketplace and gaps in your business plan. Don’t miss this critical component of starting a business.
Getting Down to the Nitty-Gritty
It’s important to take time to understand the industry and market from a competitor’s point of view. When getting to know your competitors, we’ve laid out some important information to learn before starting a business.
You have your business idea––check! The business name is confirmed––all done! You’ve already sorted through personal and financial aspects––finished! Now it’s time to do some market research. I know this sounds boring, and you’ve already worked so hard to come up with your business concept, leaving many entrepreneurs to wonder, why can’t I just jump in and start a business?
Whether you are the competitive type and played sports, participated in talent shows, or you prefer to just have a good time and cheer others on, competition is inevitable when starting a business. Most of us were raised to do our very best, make good grades, seek job promotions and climb the ladder in our work. Ultimately, we were taught to win which makes us all competitors.
Conducting market research on your competitors will help make life so much easier in the long run.
Know the Lay of the Land
You need to research the current market in your field to understand what details should go into starting a business of your own. This is not the same as taking your competitor’s ideas and using them for your own business. Instead, this means evaluating what works for your competitors and what could also work for your business, and this also means evaluating what is not working for them and what you might want to do differently.
The most important question to extensively answer is, who is the competition?
After researching and being able to fully answer that question, you might notice a shift in your business idea, or you may be more confident in your plan and keep it exactly the same. Either way, this market research will benefit the business planning and help flesh out ideas in order to find your unique place in the industry.
Identify the Competitors
Find comparable businesses of the same size and location. If your business will mostly be based online, you will also want to conduct your market research globally. While searching for similar businesses, you will quickly find the competitors in the same area or online, selling a similar product or service.
Research Detailed Information
Gain as much detailed information as possible about your competitors. Some details to start with include:
Competitor’s strengths and weaknesses
Areas they cover
Evaluate the Competition’s Strategies
What can be learned from their experiences? This will help in deciding which direction is best to go with your own business. You can find the characteristics and service that will set you apart from the competition.
Determine the Most Relevant Information
While researching the market and competition, determine the most relevant information and prioritize the results based on that. There’s no need to research every little detail that doesn’t apply to your business.
Advantages of Competition in Business
You may be wondering why all this competition research is necessary before starting a business. You probably don’t want to come across as an aggressive competitor. We definitely recommend collaborating and networking with those in the same field, but if you want your business to thrive, find a way to set yourself apart from those offering the same services. Even if your service or product is unique to the area, it’s unlikely you’ll be the only one for too long.
Remember, competition isn’t a bad thing. On the contrary, it can actually be healthy when exercised in good nature. Here are a few reasons why competition could be good as you begin the process of starting a business.
1. Complacency isn’t good for our personal wellbeing and it’s not good for your business either. Competitors will challenge you and your business to serve customers wholeheartedly and provide quality service. This will push you out of your comfort zone in order to reach your full potential by working hard and growing in creativity.
2. By working alongside competitors, the overall market will improve and bring more awareness to the service or product. This means that the demand will increase and you will gain more customers and ultimately more profit. That’s a win for everyone!
3. Competition will drive you to be more innovative and create better services and products that will keep up with the changing times. Technology changes, society changes, and the needs of consumers change. With a market that is constantly evolving, it’s important to keep your business pushing forward in order to provide the best products to your customers.
4. Along with quality products, always strive to improve customer service. Many times, people will use a certain business solely based on friendly customer service.
Pro Tip: You may not offer the best product, but if you always greet customers with a smile and a willingness to serve, you won’t have to worry about bad ratings or reviews, and your customers will surely come back.
You will keep learning by observing competitors. Gaining experience from watching their successes and failures will be beneficial as you begin the process of starting a new business.
Remember that taking anything too far can be harmful, and, without certain protections in place, your business could be vulnerable to serious risks. When it comes to starting a business, make sure you have a solid foundation. Check out our plans and pricing to form your entity today––and remember, your first LLC is on the house. If you’re still not sure you’re ready to dive in on your next idea, consider these five things before starting a business.
LegalZing provides business owners with consultations, services and affordable access to legal assistance to successfully start, grow, and manage your business in today’s market.