Santa has packed up his sleigh and credit cards are bulging at their limits, which means just one thing for small business owners … the quietest time of the year. Sure, trade may be at a trickle, but that’s no excuse to twiddle your thumbs. In fact, it’s the perfect opportunity to spend a few hours developing a competitor analysis … you never know, you might find a way to reduce next year’s post-Christmas lull! What is a Competitor Analysis? The term “competitor analysis” sounds very serious and complicated, but is actually a matter of three simple steps:
- Identify your main competitors
- Research and profile each one
- Use your findings to develop a competitive advantage.
Know Your Industry
Your first step is to understand the “bigger picture” of your industry by researching its: size, value of goods or services produced, employment levels, growth rates and unique characteristics. This information is free on the Australian Bureau of Statistics website, and many industry bodies also conduct and publish their own research. As a fan of detective novels, the next step is my favourite — scan your data for clues as to where your industry is heading. Are their trends, patterns or special issues? Who Are Your Competitors? Competitors can be real or perceived … and both are equally valid. Company X may be completely different from you, but if your customers don’t think so, you need to change their opinion! Start by identifying your main competitors; that is, up to six businesses that directly impact your success by offering the same products or services to the same target market in the same region. If you’re not sure who these are:
- Search Google, the Yellow Pages or the White Pages
- Check out industry websites and publications
- Ask regular customers and business associates
- Attend tradeshows, conferences, seminars, product demonstrations and other networking events.
Next, develop a profile for each competitor — put that sleuth’s hat back on and make a note of:
- Products or services
- Ideal customer
- Pricing
- Distribution methods (store, online, mail order)
- Marketing strategies
- Company size and employee numbers
- Corporate image
- Strengths and weaknesses.
Where do you find this information? On top of the four methods above for identifying competitors:
- Visit the business in person or send a friend or associate — just make sure what you do is appropriate … you’re a small business owner, not Magnum PI!
- Go online to their website and blog, paying careful attention to press releases, news, annual reports and the “about” section.
- Keep an eye on the employment section of your local paper or sign up for job notifications in your industry on the major employment websites.
- Read trade publications.
Use Competitor Profiles to Your Advantage This is where the rubber hits the road … it’s now time to compare each competitor profile with your own business. What are you doing better and how can you leverage that? What do you need to improve and how will you achieve this? Type up your competitor analysis and give yourself plenty of time to mull over your findings — they might spark new ideas, reveal an unfilled niche or highlight industry trends. Lastly, add the analysis to your business plan, remembering, of course, that it’s a “living” document to periodically review.
