How to Assess Your Business Competition
Assessing your business competitors is critical for any business owner. Why? A good business plan includes strategies for capturing market share. To grow your business, you need to gain market share (commonly known as your slice of the market pie) by drawing customers and purchases away from competing companies. In this portion of your marketing plan, you summarize what kind of competition your company faces, including
Direct competitors: These competitors are companies that your customers consider when they think about buying products like the ones you sell. Describe each direct competitor you face, along with what you know about the threats each one poses.
Indirect or stealth competitors: These competitors are companies that go after your customers in different and unexpected ways. For example, accounting software poses indirect competition to accounting firms.
Competition creates threats and provides opportunities, and how you handle both is a determining factor in the success of your company:
Stay aware of competitive threats and opportunities: Examples of threats include new competitors, improved or expanded offerings from old competitors, and new options that let prospects fill the need that your product addresses in a whole new way — such as online buying, do-it-yourself solutions, or new technologies that replace the need for your offering altogether. Opportunities include changes that weaken your competitors, the closure of competitors, or new trends that contribute to greater interest for your offering.
Protect against threats and capitalize on opportunities: The surefire approach for defending and growing your business is to conduct a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis. The process will help you identify ways to align your capabilities with the realities of your business environment.