"Your friends will know you better in the first minute you meet than your acquaintances will know you in a thousand years. "
- Richard Bach
As someone who wants to start their own small business, you must have wondered – What are my competitors up to? How does competition affect a business? After all, without knowing this, there is no way to go ahead with your business idea.
First, what is competitive analysis? It is a critical part of any business’s marketing plan without which it is impossible to go ahead with any business ideas. A competitive analysis for your small business consists of thorough research on your competitors’ products, services and marketing material along with identifying their strengths and weaknesses. Being aware of the business opportunities in the market and the threats that your competitors may pose is also very important for long-term survival.
Competitive analysis is as important for small businesses as it is for the big ones. This is because it helps you to curb competitors and refine your overall business strategy. For a small business, a competitive analysis does not have to be anything elaborate or time-consuming. Just identifying some basic things about your competition will help you focus on your marketing, product or service planning and sales efforts in those areas which give you the highest revenue.
Now that you know what exactly competitive analysis is and why it is important, here are some pointers about how to conduct a competitive analysis for your small and home-based business and make it a long-term success :-
Identify your competitors –
Many of you may have wondered about how to identify competitors for a small business. You may not be aware of all your competitors so to identify them, use Google, Bing and Facebook. Make a list of the top five companies that show up and note down their domain names. Look at where your competitors rank in the search listings and analyze their business descriptions. This will give you an indication of what the search engines think is important about their pages.
If you are a local business, do some specific searches that include your city name, county or other geographical information followed by the product or service you sell. If your competitors show up in the search results for those terms, but your company does not, then take a close look at the pages that the search engines link to on your competitor’s websites.
Collect and analyze the competitors’ sales material –
Take a look at the kind of sales material your competitors hand out. What type of information is on their flyers? Do they promote a particular product more than others? Has the sales material been professionally designed? Analyze all this carefully and compare it to your own.
Join local business networks and groups –
If your business is local, joining one or many local business networks and groups will help keep you on top of the local competitors and new competitors coming into your neighborhood. These local business groups are your eyes and ears into the business community at large. By becoming a regular attendee at business networking events, you may get some important information like which new businesses are moving into the area, whether people are happy or unhappy with any of your competitors, and other things that will give you competitive and strategic information to help your business grow and survive.
Talk to customers, vendors and suppliers –
A little networking with your customers, suppliers and vendors can bring you a gold mine of information if you’re tactful and have formed a good rapport with them. The key is to be a little chatty and interested enough to ask questions. When you’re talking with vendors, see if they can give you any suggestions about how other companies who buy from them are promoting their products, or which products they’re selling more of. If a customer calls and mentions a competitor, ask them what they think about the competitor. Have they ever bought from them? Were they satisfied? How does the customer think the competitors compare to you? These are vital questions to be asked.
Set Google Alerts –
You can find out when there is new information on the web about your competitors, their products and their employees by setting a Google Alert for each. These alerts will make you aware of all the mentions, press releases and new websites that have been found according to the alert terms you set up.
Analyze your competitors’ websites –
Take a look at your top competitors’ websites and look for common factors (like types of products featured, keywords, inclusion of geographic location, social media links, etc.) that they are including on their sites that you have not included on your own website. Some other points to be analyzed are – Do they have a blog? How do they display what they sell? Are their sites easy to navigate? In short, how does their overall website compare to yours?
Sign up for your competitors’ email lists –
When a company is about to introduce a new product, planning a sale or event, or just looking for repeat business, they email their customers and subscribers. So if you’re on the email list, you’ll have that competitive information delivered right to your inbox.
For many small business owners, doing a competitive analysis is not exactly a priority. But by following these simple steps, you’ll definitely be giving your small business the much required competitive edge.