Do I need to know who my competitors are in my chosen field of business? Why does this matter?
by Pete Gossman
One of the most basic principles in business is that of “Supply and Demand”. Consider “Supply” as the number of businesses offering the same products as you and “Demand” as the number of customers who purchase these products.
If the number of customers desiring your products far exceeds the number of businesses offering your products, then you may well continue to successfully grow your business, even if you ignore your competitors.
However, this is a highly unlikely scenario, particularly in countries with high unemployment. If there is a demand for your products, then inevitably there are going to be other businesses offering similar products to your target market, and there will only be a limited number of customers who are purchasing these products. These other businesses are your “competitors”. By ignoring your competitors you could be losing out on a significant portion of potential business.
To highlight the importance of considering your competitors, it is useful to consider the common analogy of a pie. The pie represents the total of all sales made in your line of business, to all potential customers in your target market. If every one of your potential customers bought only from you, then you would own 100% of the pie.
However, the more your potential customers buy from your competitors, the smaller your slice of the pie becomes. In order for you to increase your portion of the pie, you will need to attract customers away from your competitors, and entice them to buy from you instead.
By researching your competition, you will be better equipped to devise strategies that could take pieces of the pie away from your competitors, so as to increase the size of your slice. To do this, it is useful to consider the following questions:
1. Who are my competitors?
Make a list of all the other businesses that constitute the balance of your “Pie” – all those companies that are in competition for your potential customers (target market).
2. What can I learn about my competitors?
What are their products, prices, service quality, strengths and weaknesses? Can you learn from, or copy, their successes to improve the way you do business?
3. How do I attract some of their customers to my business?
Can you add some worth, or benefit, that your competitors are not offering? Can you improve on quality, service, or value for money? What are your strengths? Can you do better at marketing yourself and the unique aspects of your business?
Bear in mind that your competitors are not your enemies. In fact, you could greatly benefit by learning from successful competitors or even working together with some of them.
Your goal is not to destroy other businesses, but to entice customers to your business by doing things better. Just like athletes in a long-distance race, there is no glory in defeating your competitors by wounding them. Instead, work harder at improving yourself so that you can perform better than them!
Peter Gossman is a Business Trainer at The Hope Factory. He began his career in Engineering after graduating with a BSc in Electrical Engineering in 1989. He later started his own company and, over the years, he has started and run four different companies and organisations. His primary passion in the area of business is to train and equip entrepreneurs to grow successful and sustainable businesses.
The Hope Factory
Founded in 2001, The Hope Factory is an established Enterprise Development Not-for-Profit organisation effectively governed by the South African Institute of Chartered Accountants (SAICA). Driven to develop black business owners, The Hope Factory offers a strategic mentorship programme to help entrepreneurs achieve their goals, vision, and purpose to grow their business and to ultimately give back to their community.
The Hope Factory provides an easy, hassle-free way to earn Enterprise Development and Socio Economic Development points. Through continued investment with us, South African organisations can secure assistance with Supplier and Skills Development, as part of the amended B-BBEE Codes.
We exist to grow people, to develop businesses, to impact communities, through our unique mentorship model while adding value to our investors.
For more information visit The Hope Factory
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