Competition Matters
Dear Readers,
We received a question from a business owner asking about competition and why competition matters. One of our clients, who we will call Jorge, wants to expand his market and start providing services in Independence. He wondered where to start looking to find out which businesses would be in his new footprint and ultimately who his new competition will be.
Josh: That’s a great question!
Pedro: The HEDC (Hispanic Economic Development Corporation) has a lot of great resources that he should check out. As a business owner, Josh, where did you start to find out information about your competitors? Do you have any suggestions for how Jorge could start researching his competition?
Josh: There are a lot of public sources for competitive information out there. First, it’s important to read. I try to read as many different publications as possible – from industry magazines to international newspapers. Good sources of competitive information are Dun & Bradstreet, your public library and a solid Google search. Second, know your NAICS (North American Industry Classification System) code, so you can quickly see which businesses are working in your industry. You can find this information online, from the U.S. Census Department.
Josh: So Pedro, why do think competition matters? How do you think competition helps businesses thrive?
Pedro: Competition promotes innovation. Do you remember the last exciting advertisement your local gas or water company published? Probably not. This is because most utility service companies operate with no competitors, allowing them to deliver their products and services at a price and level of quality without fear of losing their customers. Without competition, they are not pressured to prove to us what makes them great.
When more competitors exist, customers are given the power to choose which businesses they want to buy from. This is usually based on personal needs: price, quality, or other factors important to the consumer. When this occurs, we must become more creative in how we present to our customers how we are different – and better – than our competitors. This leads to better prices, quality, and overall satisfaction.
Pedro: What’s your take on it Josh?
Josh: Similarly, I agree about innovation. Strategy is another. Understanding and knowing one’s competition is important because that knowledge allows a business owner to fulfil a need that’s NOT being met in the market. When you study your competitors, you can adjust your business model so you can fill that void in the competitive landscape. Can you find a gap in your market? How can your business provide value that others are not providing? Businesses that answer and execute these questions will win!
Thanks for your question Jorge. We’d love to hear from you. Please submit your business questions to together@lead.bank
