Is competition evil? How possible is it for a small business to operate without competition? Is it a good move to try and avoid competition? Is competition good for a business? One of the dreaded challenges most beginner entrepreneurs face is competition. In fact, most entrepreneurs and small business owners perceive competition as evil.
Every successful company knows that staying abreast with the market trends is needed to keep the development of an organization going. Therefore, the company must ready to do all that it takes to continue to develop a formidable competitive strategy all the time. For this reason, budding entrepreneurs must not relent at working at this very crucial area for continuous survival.
What is the advantage of developing a competitive strategy? In the simplest terms, a competitive advantage permits a company to produce or sell goods more successfully than other businesses. There are however a whole lot of things that must be put in place to develop these strategies, as well as be in the game. This article sure proposes to look at these areas. In today’s world economy, it must be worthy to note that creating an edge over your competitors is a key factor. All of these take constantly being informed and a whole lot.
“You are in a war. You must plan to take the other guy down first and do it. Winning is not the best thing; it’s the only thing. If it were not, no one would keep score. To win the war, you must take charge. You must set the organization’s objectives, establish a chain of control, delegate, appraise performance, adjust and act.” – The Mafia Manager
10 Reasons Why Competition is Good for Your Business
I. Competition paves way for creative thinking-: When you have competition within your marketplace or business environment, you are forced to put your brain to work with the aim of devising better ways to add value to your business. Creativity is the bedrock of any successful business but creativity can never be unleashed at its full potential without competition.
II. Competition improves your customer service-: When your business is booming, there simply isn’t enough time in a day to stop and really evaluate every single customer. But when there is competition in in place, you will give enough time and resources to evaluate, appreciate every customer, and treat them right. This in turn will help you win the customers’ loyalty.
III. Competition strengthens your weaknesses-: Competition forces you to study your strengths and weaknesses. This in turn will enable you work on improving on your weaknesses while pushing harder with your strengths.
IV. Competition enables you to discover innovative ways to promote your business-: If you keep your eyes and mind open to ideas, you can learn a lot from your competitors’ strategies, strengths and weaknesses and capitalize on it to achieve business success. You can also make use of what your competitors have put in place to adjust your own plan. You can be able to draw inferences from the way your competitors run their businesses, plus their products and services and implement such on your business.
V. Competition keeps you on your toes and brings out the best in you-: Competition can actually help your business grow because they keep you on your toes; and keep you up and doing. They also provide you with valuable market insight, and helps you to keep your product strategies fresh.
VI. Competition motivates your employees-: In an industry full of competition, there is always something new to learn. Your employees have a lot of experiences to learn from. Experiences like; how to treat customers when there is business boom and how to handle situations when your competitors have more customers than you do.
VII. Competition helps identify potential threat to your business-: If you are smart and serious with your business, you should be able to learn from other competitors what works and what does not work. By learning this, you will be able to know what plans and strategies or even products would be detrimental to your business; and you will also avoid loopholes that your competitor fell for.
VIII. Competition gives room for learning-: You have the advantage of learning new things from your counterparts. You would learn to broaden your horizon and at the same time add to the growth of your small business.
IX. Competition keeps you focused on your business goals and makes you work smarter-: It is a known fact that 80% of sales in business are generated by 20% customers. So in the face of competition, you will be forced to focus on your key customers. After all, your key customers are the reason why there is more cash inflow. By focusing on them, you also devise ways to serve them better. You cannot afford to work at a crawling rate when you are faced with competition. When there is competition, you must be up and doing; and always on the move.
“The speed of the leader determines the speed of the gang.” – Mary Kay Ash
12 Questions You Must Answer to Help Develop your Competitive Strategy
- What are the names of the top businesses in your industry?
- What are the names of the top businesses in your community?
- What are the tag lines and catch phrases that exist in your industry?
- What is your industry known for within the marketplace?
- How will your business contribute to the industry and the marketplace?
- What are you producing and providing for your customers?
- What does your business contribute to the community?
- What are the key traits about your business?
- How can these key traits be explained to your customers?
Image & Perception or your Business Within the Marketplace
- What makes your business unique in the industry?
- What is the perception of your business in the marketplace?
- What are your strengths?
We have always had a pretty competitive ferocious battle with British Airways. It lasted about 14 years and we are very pleased to have survived it.” – Richard Branson
Why You Need SWOT Analysis to Develop a Competitive Strategy
What is SWOT analysis? What competitive advantage can a SWOT analysis help your business attain? Can conducting SWOT analysis boost your profitability? SWOT simply stands for Strengths, Weaknesses, Opportunity and Threats. SWOT analysis therefore is the process of assessing the strengths, weaknesses, opportunity and threats of an industry or organization.
By conducting a SWOT analysis, you are digging up strategic information about your business, industry or your competitor. This strategic information is so important that it can make or break your business. A SWOT study does not need any high-qualified degree like MBA or the advanced business management skills. It just requires a good insight of their business and the response of the existing market. It is a significant strategic tool and a creative process.
The study must not just display the apparent but offer a chance to think productively about their business and its expectations. This entire SWOT hypothesis works on the theory of balance. Moreover, strength has an equivalent weakness and every opportunity retains a matching threat.
- A SWOT analysis recognizes the inner and outer factors that can possibly influence, affect, hinder or help the success of a business goal. This analysis is carried out by all the team members attached to the project, each with different skills to make sure that all the features are well thought-out.
- This study identifies the impending problems and negative aspects for pulling off a determined goal before spending any time, effort and resources on an eventually non-beneficial business objective.
- The assessment also makes certain that the set goal can be achieved. The team also acts confidently to complete the assigned task to attain quality results. Consequently, concentrating just on the achievable target will pilot the business forward efficiently. Thus, the business resources are not wasted in continuing the projects that would have turned out to be a failure.
- SWOT analysis can facilitate you to discern your position in the market and your challenger’s offerings to your intended market. For enhancing your customer base, it is necessary to have a formal or informal survey of customers to filter your target market. Thus, it helps to recognize your product deficiency to meet your customers demand and thus reposition yourself in the marketplace.
The bottom line is that a small investment of time in analyzing your competitive market will pay large dividends in future. Once the team agrees on the business objective, a SWOT investigation is commenced. The outcome of this search manipulates the decision whether the aim should be chased or must it be altered. If there is alteration required for the objective, then an analysis has to be undertaken once again.
How to Conduct SWOT Analysis
The first thing to consider when analyzing a SWOT is the strength of a business. Your business strengths can be a competitive advantage if fully maximized. You can discover your business strength by asking the following question: What do i have that other businesses don’t?
Business strengths can be divided into two:
- Internal Strengths
- External strengths
Internal strengths are the ones your business have total control over. You can manipulate them to your will. They include:
- Brand name
- Business connections
- Capital base
- Management team
- Customer loyalty
- Exclusive right
- Patent & trademark
- Copyright protection
- Technical knowledge
- Good product reputation
- Established marketing channels
External strengths are the ones you have limited control over. They are opportunities which you capitalized on to create a competitive advantage. They include trends, political situations, economic situation, and government policy. Anything that puts your business at advantage is strength.
“To obtain maximum effectiveness, you must use your strengths at full capacity to exploit your competitor’s weakness.” – Sun Tzu
B. Weaknesses-: Your business weaknesses are loopholes which your competitor could exploit if discovered. You must conceal your weaknesses and work to strengthen them. It’s worthwhile you know that the strengths listed above can also be your business weakness if they are maximized by your competitors. The aspects to look out for are the opposite of strength factors like lack of technology skills, poor marketing network, quality issues, no brand name and poor customer bonding.
Opportunities are simply factors or situations you can leverage to gain undue advantage over your competitors. Please note that opportunities abound in every industry but it’s up to you the entrepreneur to identify such opportunities and utilize them to the fullest.
Your primary duty as an entrepreneur is to identify opportunities and convert them to strengths. If you don’t identify and convert them, they might turn out to become a threat or business weakness. Look at the advanced technologies, fluctuating marketing conditions, removing trade blockades and new marketing channels.
The last but most important factor to consider when conducting a SWOT analysis is the business threat. I call the business threat the most important factor because if ignored, your business is doomed. Business threats are factors that make your business endangered and if not curtailed, your business will become extinct. All the elements that work as opportunities, if work adversely then they pose as a threat to your business.
For instance, new technologies have the probability to make your company’s product outdated or removing trade barriers will have the market flooded with foreign products that can offer competitive. I hope you also know that the internet was a trend that posed an opportunity to some businesses and a threat to others. Just as some companies leveraged the threat of the internet to their advantage by means of adaptation, your business can also do the same.
The solution i recommend to curtail business threats is advanced preparation, avoidance, strategic alliance or instant elimination. Examples of business threats are trends, technological changes etc.
How to Develop a Formidable Competitive Strategy for your Company
Truth is that you are in business to meet the need of a specific target market and so care must be taken in getting acquainted with your target market. The question therefore is; who really is a target market? It is a known fact that a target market is identified by socioeconomic, demographic, and common traits or needs that make them the best sect to focus on selling to. Therefore, the onus lies with you to find out which businesses are going after your same target market. Ask crucial questions like; how do they differentiate themselves from other companies in the industry? Where can they be located?
“When somebody challenges you, fight back. Be brutal, be tough.” – Donald Trump
“To win one hundred battles in one hundred victories is not the ACME of skills. To subdue the enemy without fighting is the ACME of skill.” – Sun Tzu
Whilst some may see competitors as nightmares, yet others make sure they use this medium to learn what have got to be learnt. It is important to note that in building a competitive strategy, you must use your competitors as a learning tool so that you can have right of entry of their business models.
So, what are those things that need to be imbibed? You must learn about their strengths and weaknesses and do not relent to take advantage of their weaknesses so that you can work on them and be better at what you do. If surpassing your competitors is foremost on your mind, then you must be ready to know what your rivals are up to. Furthermore, knowing about your customer portfolio will give you the advantage of maximizing revenue potentials, improve potential customers, and increase customer maintenance.
Developing a formidable competitive strategy is one great exercise you want to engage in as it would be very important that you maintain on a continuous basis your competitive advantage. Why is this important? It is important simply because your competitors wouldn’t just sit on the fence doing nothing.
“If you see a snake, just kill it. Don’t appoint a committee on snakes.” – Henry Ross Perot
This means that in order for you to be successful in this, you must have the ability to predict future style in your industry by relentlessly researching and observing your competitors, as well as becoming accustomed to your customer’s wants and needs. It is also important to do a thorough and exhaustive research when wanting to move with a new idea. This is so that you may avoid some costly pitfalls that may cause a setback.
It is no longer news that we are in the global era where the world has become a global village. How does this affect your ability to develop a formidable competitive strategy, you may wonder? Well, truth is that this is highly necessary because the information you are able garner, helps to create a competitive advantage by offering companies with new ways to do better than their contenders. The more knowledge you stumble on, the more solutions on business you can come up with.
“I hire people brighter than me and I get out of their way.” – Lee Iacocca
What would this step help with, you just might wonder? To attain the post of using the cost leadership medium for example; means that your company attains the position of being the lowest cost production company in your industry.
This implies that one of your strategies would be how to improve profits by increasing sales or decreasing costs. This means that you must center on gaining raw materials that are the highest quality at the lowest price. There is also the need to use the best employees you can possibly find to transform raw materials into valuable consumer goods
Developing pricing strategies to maintain a competitive advantage means that you must put in place promotional strategies, penetration strategies, and bundle strategies amongst others. Knowing when and how to put all of these strategies in place ultimately means that this would allow your business to produce more products at a considerably lower price. Under the Promotional pricing strategies for instance; there may be a situation whereby you may consider an addendum benefit to consumers, such as a buy-one-get-one-free business plan, and what have you.
7. Work Really Hard
This sub topic needs no introduction, as it exactly means what it suggests. You must be a hard worker if developing a formidable competitive strategy for your company in your priority. If you looked at the track records of those who have successfully created theirs, then you just would agree with me that it requires that you are extremely tenacious in this activity.
There you have it. 7 steps that you can follow to a logical end and you can be sure to make a huge success. In addition to all of these steps, it really would pay that you stay consistent without wavering as you already might know that Rome wasn’t built in a day.
10 Ways a Good Competitive Strategy and Plan Can Help Your Business
Being in business, means that you would be competing with loads of other people (entrepreneurs) doing similar or same businesses as you in the market place. No matter how fantastic your product or services is, you need a good strategy and plan to be able to penetrate the market and get your own fair share. A good competitive strategy and plan is not negotiable if you truly want to make profit and do pretty well as an entrepreneur.
What is the use of starting a business if you don’t have the strategy to penetrate the market? As a matter of fact, if you think you don’t have the capacity to create a good competitive strategy and plan for your business, you can hire the services of business consultants to help you design one. Although, you would have to pay a fee for it, but the truth is that it will be worth your money in the long run.
“If You Don’t Have a Competitive Advantage, Don’t Compete.” – Jack Welch
Now let us quickly examine the 10 ways a good competitive strategy and plan can help any business person grow his or her business.
a. Help You Penetrate the Market
The first and most important thing any new business needs is to penetrate the market. If you are thinking of starting a new business, then your major concern should not just be about how to generate startup capital but also on how your products or services can be accepted in the market. The truth is that you can only make money when people make use of your products or services; that is why it should be a major consign to you. With a good competitive strategy and plan, this aspect of your business will be well covered.
If you are interested in getting new customers and retaining them, then you should create a good and competitive strategy and plan for your business. As a matter of fact, you are not expected to write your business plan without including the strategy on how to increase your customers’ loyalty to your business.
c. It Would Help You Maximize Profits-: One of the things a good competitive strategy and plan will do to your business is that it helps you maximize profits. With a good competitive strategy in place, you won’t have to struggle to make sales and in essence make profits.
It is important for any business man or woman to look for ways of cutting the cost of running his or her business. Part of what a good competitive strategy and plan does to your business is that it helps you plug all loop holes and in essence help cut the cost of running your business. The truth is that if you can cut the cost of running your business, you will definitely increase your profit margin.
e. Help You Avoid Unnecessary Pitfalls in Business
“Before making an important decision, get as much as you can of the best information available and review it carefully, analyze it and draw up worst case scenarios. Add up the plus or minus factors, discuss it with your team and do what your guts tell you to do.” – The Mafia Manager
One of the reasons why many small scale businesses close down is that, the owners don’t have the foresight to see challenges before it becomes an emergency. Another major benefit a business man or woman may get when they have a competitive strategy and plan in place is that it guides them in their decision making and it will help them avoid unnecessary pitfalls. The truth is that one wrong decision can lead to the collapse of a thriving business.
f. It Helps You Expand Your Business and Gain More Ground
If indeed you have the intention to expand your business and gain more grounds as an entrepreneur, then you must put in place a good competitive strategy and plan in place. No doubt every business person wants his or her business to grow and become very big; this cannot happen if you are not deliberate about it. This is not about just wishing it; it is all about creating a very good competitive strategy and plan that will make it happen.
g. It Helps You Design Products and Services That Will Suit Your Clients Need
The ability for you to continue to improvise and improve on your product and services is a necessity if you want to be among the market leaders in your industry. A good competitive strategy and plan will help you design products and services that will suit your clients need per time.
h. It Guides You in Hiring Only the Best Hands
There is no doubt that if you have a good competitive strategy and plan in place for your business, it will guide you in hiring only the best hand to help you run your business. The truth is that if you don’t create a standard process for screening applicants for job openings in your company, you might end up hiring people that will ruin your business.
i. It Helps You with Business Projection
Part of what gives a business man or woman peace of mind is the assurance that their business is heading in the right directions with a lot of positive signs. With a good competitive strategy and plan in place, you can easily draw projections for your business. It can help you plan your budget and successfully execute it with little or no hassle.
The joy of any entrepreneur is not just starting and building a solid business, but also to successfully retire and handover the business to whoever they choose to succeed them. If as an entrepreneur you are working towards building a business that will outlive you, then you should ensure that you have a good competitive strategy and plan in place for your business.
Over and above, it pays a great deal to have a good competitive strategy and plan for your business. The benefits you stand to get can’t be limited. There you have it, the 10 ways a good and competitive strategy and plan can help a business.
- How to Protect LLC from the Bankruptcy of an LLC Member - October 24, 2020
- What Happens to LLC Business If You Personally File Bankrupcty? - October 20, 2020
- How to Dissolve an LLC in Kentucky in 4 Steps - October 20, 2020