Why is competition a good thing in business?

When it comes to launching a business, there are always so many things to consider and this often derails people from executing on their vision. Self-doubt, financial resources and the practical realities of running a business are all things that need to be considered.

As well as analysing the internal factors, many people also consider outside influences such as the state of the marketplace as well as the competitive environment. All these considerations are important as the most successful businesses are those that have been launched in the right way.

However, one area that gets a lot of coverage and time is the competition, meaning similar businesses that are already operating in the space that you wish to enter. Almost every business faces some kind of competition, either directly or indirectly, that is simply the nature of the global marketplace that we live in.

In this weeks blog, we wanted to focus on the idea of competition and highlight why in fact, it can actually be a good thing in business.

Initial considerations
When starting a business, it’s important to understand that most businesses are a marathon and not a sprint. There are very few legitimate businesses that will see you become an overnight success.

Most businesses require time, effort and commitment to really excel. This is why we always stress the importance of having a short, medium and long term plan for your business. This helps you keep you and your business on track to realise your ambitions and become successful.

However, taking a step back, it’s vitally important to understand your motivation for starting a business and what you are trying to solve for your customers. Some common examples of why people launch businesses include monetising a passion/skill, having more flexibility in their life or simply having a desire to earn more money. There is no right or wrong motivating factor for starting a business as it’s unique to us all.

What is competition?
In its simplest form, competition is basically similar businesses to yours that operate in your market space and aim to serve the same customers. If you think about almost every kind of product or service, you will most likely be able to name at least 2-3 similar businesses that operate in that space.

For example, if you think about cars you will be able to reel off multiple manufacturers who aim to target the same type of customer. If you look at your local high street or town centre, you will see all types of industry sectors from accountants to restaurants that are competing against multiple other businesses within their space.

Switching to the online world and you will still see competition. As a business owner or potential business owner, it’s important to understand your competitive environment and then either frame this in a positive or negative way.

Researching your competition
Research plays a big part when you’re assessing your competitive environment. It’s always good to appreciate what your key competitors are doing well but also areas that they can improve.

The advent of technology makes it easier than ever to research your competitors. From going through their website to signing up to their emails, there are lots of ways that you can really deep dive into your competitors.

This research should be something that you do on a continuous basis as things are always evolving in the business world and therefore it’s important that you stay up to date on changes within your market.

Fearing the competition
When it comes to competition, many people sadly fear their competitors. They see similar businesses and struggle to see how they can compete. This plays into the self-doubt and fear that many people have when they are launching a business. As a result, they almost set themselves up to fail because they are beaten before they’ve even started.

Competition will always be there but as a business owner, especially a new business owner, you shouldn’t fear your competitors. The fact that you have competitors actually to some degree validates that there is already a demand for the products/services you intend to launch and a customer base ready to buy.

If every new business feared their competitors, we would have very few businesses launching each month and as customers, we would have very limited choices. A great example of this is the social media world that is now dominated by the likes of Facebook, Twitter and LinkedIn.

Looking back about 15 years ago and the dominant social media platform at the time was called MySpace. In around 2006, MySpace actually surpassed Yahoo and Google as the most visited website in the US. However, this didn’t deter Mark Zuckerberg launching Facebook as well as others entering the social media world.

Fast-forward a few short years and MySpace was consigned to the history books as they were left behind by their competitors. Innovation and competition is healthy in every market so competition is not something that should be feared in our opinion.

Looking at competition in a positive way
The better approach when analysing the competitive environment is to approach it positively. As we have highlighted above, competition to a certain degree validates that there is a market for your products or services.

Your role, especially as a new business, is to improve on what your competitors are doing. This could be through offering a better product or excelling in your customer service. There are actually hundreds of ways that you can differentiate from your competitors once you start to think positively.

For example, here at iOB Business, one of the ways that we stand out as a company, but also help our partner network, is through our own technology platforms that have been created in-house. This gives our network a huge competitive advantage as our software is only available to partners whereas most technology franchisors actually white label their software from third party vendors in India or the US.

Understanding your competitors can help you benchmark your business and highlight areas that you can do things better. These areas can then be communicated through your marketing message to differentiate your offerings in the marketplace. It can also be a great way to amplify your competitive advantage proactively during the sales process.

The benefits of competition
Competition in any marketplace is a good thing in our opinion as it means you don’t need to reinvent the wheel in order to be successful. Where there’s competition, there is demand which means that your education/nurturing journey with customers will be a lot smaller than if you were trying to sell within an untapped market.

Another benefit of competition is that it pushes you to improve and innovate which will give you longevity in your business. When operating in a competitive environment, you understand that you always need to introduce new products and services in order to compete and lead. This will focus your energy on improving every part of your business which is a vital component of long term success.

Summary
As we have seen throughout this weeks blog, competition is not something that should deter you from launching or succeeding in business. In actual fact, competition can help you improve and better align your products or services to the needs of your customers.

Your mindset plays a big role in how you view your competitive environment. However, by remaining positive and using your competitors as a benchmark, you can ultimately succeed within any industry sector.

Helping our partners build a competitive advantage when launching and scaling a Digital Agency with us is something that we are truly passionate about here at iOB Business.

To find out how you can launch a Digital Agency and stand out from the competition from day one, please contact a member of our team.

Until next time, take care.