Every battle is won before it is fought, as the saying attributed to Sun Tzu, author of The Art of War, goes. In business, as in battle, the moment you decide to start your own company you are starting a war: your business against your competitors’ businesses.
To win, first and foremost you have to know your enemy, and that means knowing your competition. Studying your competitors thoroughly is one way to get ahead. That way, before you even open your own business, you will know what you need, what you can take on and what you can’t, and above all, who you are up against.
What to study about your competitors:
- Their customers: What kind of customers they serve, and what kind of customers their advertising is aimed at.
- Their prices: Imagine your competitor is a large business that gets far bigger discounts on the same products than you could get at first. In that case, they would have a clear price advantage over you.
- The area they cover: They may be number one in one province or state but, for one reason or another, have no presence in others.
- Their strengths: The things they have mastered, where they are seen as experts and offer good prices and good service.
- Their weaknesses: Every company in its sector has some services it hasn’t mastered, or products it rarely deals in.
Once you have studied your competition, you need to start planning your strategy:
- How can I get in?
- Where can I offer better service?
- Where could I beat the competition on price?
And your plan of action:
- Start by attacking your competitors’ weak spots: Specialize in products and services where you can outdo them.
- If at first you have to live off the crumbs your competitors leave behind, don’t worry: little by little you will grow stronger.
- Move into the areas where your competitors are less present: If getting started means driving more miles, the effort will pay off as long as it makes you money.
- When you feel ready, attack your competition: Once you have gained know-how and experience and have a foothold in the market, launch an aggressive marketing campaign. Special offers, added value on your products or services, free gifts and so on. Work out which products leave you the biggest margin so you can cut their price, and even make nothing (but lose nothing either) on some products that are sold together with others that carry a higher margin. Visit their customers. This will make your competitors nervous and force them to make decisions.
In the art of war in business, the key is to:
- Go in slowly and quietly.
- Advance step by step, consolidating as you go.
- Establish your position.
- Once you are established and ready, attack.
Historically, small businesses have ended up buying out big ones, because the big business had grown comfortable and settled. Too relaxed, and we must never relax. By the time those big businesses realized what was happening, they were already threatened by a competitor they hadn’t considered important. Now the big business was dancing to the small one’s tune.
Further reading
- The Chinese entrepreneur’s ten commandments
- 5 ways to grow your business
- Tips for running your company
- Start a business or buy one?
- Our mindset affects our success
Featured image: vlasta2, bluefootedbooby on flickr.com, CC BY 2.0, via Wikimedia Commons.
