Whether you’re a mature, growing, or new business, you will have competitors. Other businesses out there want to outsell you and take your customers. The secret to survival and growth is to know as much or more about them as they know about you. And don’t think that because you haven’t heard anything from them lately, they’re not keeping an eye on you—they are. Competitors know what you’re doing all the time and are trying to come up with their own ideas to counter yours.
If you’re a retail business, you should be aware of every other business within a two- to three-mile radius of your store, regardless of whether they are competitors. Every time you see a building going up or a building permit on a window, stop and see who’s moving in. If you sell to other businesses, know your five biggest rivals in the market you serve—local, state, national, or international. Check the Internet often to see who is new in your industry or target market. Be sure to subscribe to all the trade magazines in your industry—many of them will be free. And a local business journal may list new businesses, as will your state’s Secretary of State website. Don’t be too busy to know who your competitors are and what they’re doing.
By knowing the answers to the following questions, you just might keep a step or two ahead of your competition:
- Exactly who are your competitors? In retail, you can simply check the phonebook and drive around your main selling area. If you’re in business-to-business sales, you can search your industry on the web or check directories at the library. The reference department will have books like the Million Dollar Directory and Dun & Bradstreet directories. Another idea is to search ReferenceUSA by SIC code and the state or area you serve.
- Are your competitors big companies, franchises, or small businesses? If your competitors are big public companies, you can easily find financial information from any of the stock-service companies. If they’re franchises, you can check the franchiser’s website and find out information such as how long they’ve been in business, what their franchise fees and royalty fees are, and so on. If they’re small businesses, finding financial or other information will be more difficult, but in some cases your banker may be able to help.
- What are your competitors’ strong points? What do your competitors stress or emphasize in their promotions,
advertisements, or yellow-pages listings? What are people saying about them, and why would anyone buy their products or services? Which of their products or services might be better than yours? Can you do it better or at least the same—and are you trying?
- Do your competitors have niche products? What are your competitors offering to customers and prospects that
is unique in your industry? How are they promoting these products or services—or are they? Are they always offering something new or relying on the same old line? Are any of these niche products patented, or can you quickly develop and offer a similar product? Do you have any niche products that they can’t match?
- Are the owners active in the business? If the owner is an absentee, it will take him longer to find out about any
changes you make. In a retail business, you’ll want to find out whether the owners actually work regularly in the business or just visit occasionally. When you have sales or promotions or you offer new products, an onsite owner can respond more quickly. Use this to your advantage whenever possible.
- What is their pricing strategy? How do your competitors price their products or services—expensive, rock bottom, or middle-priced? Are they looking for the low-price customer or giving the impression of the high-priced luxury? Maybe they’re in the middle and able to go up or down based on market demands. How does their pricing compare to yours? Who adds more value and service?
- Are your competitors opening new locations/offices? Is your competition expanding? How will this help or hurt
them and you in the marketplace? Do you need to expand or add locations to keep up? You may be able to find out about their expansion plans if you know any commercial realtors or brokers. You can also check city public records for any new building permits.
- How many employees do your competitors have? You may be able to find this out by visiting their store or office and asking people who work there or their customers. Are they hiring, laying off, or downsizing by attrition? Do they have more or fewer employees than you for a comparable amount of business?
- How do your competitors pay their employees? Are they paying above, below, or about average for your industry? Have you talked to any of their employees—are they satisfied with their wages? Usually the quality of work performed will be in proportion to the level of pay they receive. Are your competitors providing any benefits to their employees?
- How are customers treated? One way to find out is to be a customer or hire a friend to browse their store or call their business. Are they courteous, helpful, and informative? Are you left standing at the checkout or on hold for a long time? Do they cheerfully accept exchanges and refunds? Do they explain product benefits and features? Is buying from them a pleasant experience?
- What are your competitors’ weaknesses? Your competitors will have some areas you can attack by doing them
better. Do they offer poor quality, rude service, a small selection, or late delivery? Are they always out of stock on popular or sale items? Do their store or delivery vehicles need a good cleaning? Are they understaffed, which makes their service slow? What can you offer that will lure away their customers and keep yours from buying from them?
- Where are your competitors? Are they near or far from you? If they’re a retail store, are they easily accessible? Does it matter where they are as long as you both have toll-free numbers and/or websites? Are your competitors near your customer base?
- How do your competitors market? Do your competitors use a lot of print advertising in newspapers and/or magazines? Are they on the radio or television regularly? Do they have large, attractive signs at their location and elsewhere? Do they do direct mail, and are you on their mailing list? Do they offer coupons and frequent-customer cards? Are they selling on the web, and how is this promoted? Do they sponsor nonprofit events or are they highly visible for national causes? Are they doing more or less than you are? Can you afford to compete with them in the advertising and promotion marketplace? Do they do more marketing at certain times of the year?
- How do your competitors react to you? When you make changes, have special sales, offer new products, or have promotions, do they counter with similar offers? Do they do nothing or seem to pay no attention to you? If they do respond, how quickly? Do they try to outdo you or just match what you have advertised? Do they let you do your promotion and then have one of their own at a later date?
- Are you afraid of your competitors? Does thinking about your competitors keep you awake at night? Will they
come out with products or services that will make yours obsolete and put you out of business? Do you run your business more on the defensive rather than the offensive? How can you turn some of the negatives into positives?
These are questions you want to keep asking yourself and answering every six months or so. Don’t think that the situation today will be the same a year from now. Even if you’re not making changes, you can be assured that your competitors are. And don’t ignore your competitors, because they aren’t ignoring you. Find out as much information about them as you can and use it to your advantage whenever possible.