Starting your own business: Overcome your competition

Do you have a great idea which you would like to turn into money? Then there are lots of things to consider. For example: What will be my biggest risk?

There are many threats in business: economic downturns, the financial crisis, adverse international exchange rates, government and regulatory barriers, politics, skills shortages, labour disputes, and lack of capital – to name a few.

However, there is really only one threat that should keep you awake at night. And that’s COMPETITION. Competition from others is the only force that you cannot control. Let’s take a closer look at this unpredictable threat.

You will have competitors! That’s a fact!

Successful entrepreneurs are paranoid about their competitors. If you believe that you don’t have any competitors, think again. If you don’t see them, believe that they exist. You can bet that someone somewhere is chasing the same opportunity that you are.

Even if there aren’t any obvious competitors, there are likely to be alternative solutions that your target customers are buying to meet their needs. Their suppliers may become your competitors. Search the web. Go to trade shows and conferences. Read industry magazines and journals.

How to enter an existing market

Those that are first to market are not always the ones who end up dominating a market. Apple is a good example of this. Apple didn’t invent computers, music players, tablets or smart phones. They just made them friendlier and more attractive and pricier to boot!

Entering an existing market (i.e. one with known competitors) is not a bad thing. It may be easier to beat known competitors than it is to beat those that haven’t yet been identified.

When entering an established market, what would those already in that market think about you? Would you be a threat to them? If you don’t think that they may find you threatening in some way, does that tell you that maybe their customers won’t switch allegiance?

Who will eat your lunch

If you’re onto something big, what’ll keep others from beating you – either existing or new competitors? What are the barriers to competition? Describe any barriers to others competing with your product or service. Examples might be:

• Patent, copyright or other IP protection
• Time to engineer a new product
• Capital requirements
• Regulatory approvals
• Trade barriers
• Access to know-how and skilled labour
• Strategic relationships

What about timing

How long will it take you before you start generating sales? Is there still a lot of development work that is required? Even if development is complete, will there be production delays – tooling, regulatory approvals, supply constraints, and testing or training issues? Your main advantage may be getting to market first.

What to consider

• What offerings are potentially competitive to yours?
• Name your top 3 competitors, regardless of size or dominance
• Why will your product “beat” the competition?
• What are the barriers to competition?

Competition is the biggest risk

All competitors in a particular industry face similar risks with respect to economic, political, and environmental factors. If there’s a global economic downturn, they will all be equally affected. The worst form of competition is when a new technology unknown to you is introduced. Many companies have failed because they hung onto traditional ways of doing things – not just limited to technology, but also business methods – instead of constantly innovating.

Many technology ventures get started because of some new invention or technological break-through. These companies are always at risk of losing out to a newer technology. Therefore, they must always maintain ties to research organizations to avoid technological obsolescence.

In summary, you should ask yourself 3 basic questions before starting your own business:

• What can go wrong?
• What can you do about it?
• Do you have what it takes?

Good luck!

Find out more about what it takes to start your own business by downloading “Making the Business Case” written by Michael C. Volker.