It’s easy to overlook analysing your competition when starting a new business. You might assume them to not be in your league or simply be content about existing in the market yourself. As a financial advisor, I’ve spoken with many young entrepreneurs who overlook this important factor when launching their new business. This initial naïve attitude not only starts the business off on a bad -footing but will like haunt the entrepreneur in the long run as they’re left behind in the competitive market place.
Always remember – don’t wake the sleeping dragon and, if you do, make sure that you have a plan to counter it. An industry giant likely won’t care about you, unless you are a threat to them. The industry players will begin to see you as a threat once you noticeably start infringing on their market share. In order to be in a position to resist growing competition and make it out the other side, you need to plan for it in advance. In this post I have mentioned ways through which you can be prepared and armed to tackle your competition and stay ahead.
Let’s get started:
- Focus on Quality:
Whilst a strong work ethic is a great start, if you’re going to succeed, you need a quality product or service. You need to deliver quantified value along with what you are selling so that customers feel the effect of their purchase. Just having taglines like “paradigm shift”, “breakthrough product” etc. aren’t going to convince potential investors or your target customer base nor help you stand out amongst your competition. Instead, you need a product that does all the talking for you. It’s not rocket science to understand that a business or company that offers quality products and services is going to take you into the upper echelons of your niche or industry.
- Line Up Stakeholders:
Stakeholders are the people invested, or who could potentially invest in your business, as well as the business leaders and gurus who influence other key people. Early adopters can generally be sold online with ease, but the success of any new technology product is usually dependent on adoption by mass demographics. Know who you’re targeting and who you need to impress to make waves in the industry.
- What Are Your Key Deliverables:
The last thing you need in your new business is a bad start, where you fail to deliver on a deadline, manufacturing or support. Resources that you have and the deliverables are the two faces of the same coin. Make sure that all elements are properly aligned before making any further commitments.
- Ensure Your Financial Projections Stay Consistent With Reality:
It’s imperative to separate dreams and optimism from the market possibilities. Question yourself- “If you were an investor, would you support the business effort, given the traction and cost to date?”. We can all see that Google makes billions every year, however, this doesn’t mean it’s possible for every business.
- Have An Effective Model To Predict Future Funding Requirements:
Without ample funding and other people to support your business efforts, you are more likely to face trade-offs that cause cash flow issues. In order to not suffer the burn of the financial crunch, you should create a financial model with the help of advisors and keep a reserve fund of at least 25 percent of outgoings for future requirements.
- Have an Alternative Business Fund Plan:
Most businesses fail to make it through their first few years, succumbing to fierce competition and financial instability. Any new business faces this common situation where customers and retailers don’t pay the agreed terms on time, which creates cash flow problems in their business. A bank loan with high interest rates will only exacerbate your problems. So, how do you deal with your cash flow pain? Alternative finances such as cash flow finance and invoice finance are some of the options provided by business finance providers that can be the solution to your finance woes. Look for a trustworthy business provider who’ll stand with you through any financial instability.
- Monitor and Measure success:
Define both soft (anecdotal) and hard data metrics related to your new business, right down to the productivity of your team. If possible, uncover the current state of your competitors and measure yourself against the same metrics. Doing so will allow you to highlight issues much more quickly, increase efficiency and grow. It’s crucial at this point to ensure that your team has all the resources they need to remain motivated and succeed.
- Have the Business Patience to Prevent “Scope Creep”:
First of all, let’s define scope creep. It’s probably something you’ve already experienced, but didn’t know had a name. Scope creep is the exponential growth of a project or product as it develops, in terms of resource and time allocated. It generally happens when the project isn’t properly defined or documented and can quickly grow out of control. It requires a strong team with strong leadership to manage the scope creep. Documenting requests for changes in process, as well as assessing resource allocation as the project develop are crucial to managing it well.
- Have A Well Documented Business Plan:
This is one of my core tips – make sure you have a well documented, well thought out business plan that has been approved by all the key stakeholders within the business. Standardise your plan, incorporating finances and the people that are available to deliver. Keep your business plan simple and update it as you develop. Learn and make changes according to outcome from initial experimentation and customer feedback.
- Be Prepared to Hire and Train Team Members
To keep at the forefront of your industry, you’re going to need to stay on top of the latest knowledge, skills, behaviours, mind-sets and processes, as well as keeping on top of your relationship with employees. You need to provide enough time, training, and processes to new staff in order to cover the critical facets of your business plan.
- Have an Emergency Plan In Place To Diminish Risk:
One of the key aspects of mitigating risk is to identify what the key risks to your business are and build emergency plans to counter them, should they arise. Establish trigger spots to ascertain how and when your emergency plans can be implemented and what criteria should be met. Not only will this mitigate the damage of any disasters that do occur, it’ll allow you to concentrate on growth, safe in the knowledge you’ve got everything covered.
Whilst you might feel you have no competitors today for the business you are planning to launch in future, carefully considering my tips and staying prepared and ahead of the competition that may appear in the future will keep you powering forwards.
If your target industry is huge, it’s likely there could be dozens of potential competitors, who will all be working against you. It is always better to kill the competition than waiting for them to overthrow you. Being vigilant and prepared with the right tools will ensure that your business continues to gain an edge over them.