Updated: October 31, 2020
When you have a successful business, expect competition to come.
Competitors, especially those who will imitate your business and will put a store right next to yours is something you should accept as a fact of life.
Believe me, it happens – and it happened to me at least four times already.
Many first time entrepreneurs dread the idea of having to face competition.
But I discovered that the sooner you get over the idea, the sooner you can focus and act to keep your business ahead.
Remember that “all is fair in love and war” – and that includes business wars.
Now here are some tips on how you can stay on top.
Have a healthy mindset about competition
Like you, your competitors are just there to make a living.
Don’t waste your time feeling bad that someone just copied your business. Instead, turn that negative energy into something positive by seeing this as an opportunity to make your business better.
Know how your business is currently doing
One of the best ways to know the current status of your business is to do a SWOT Analysis. This gives a detailed look at how your business stands today and where it is most likely going.
Check the competition – both old and new
Sure, that new store will take a slice of your profit. But before that, is there someone else that’s taking a piece of your pie?
A comprehensive study of your market will help you come up with a business strategy that will not only keep you ahead of the new players but make sure that the old ones stay at bay too.
Trivia: Currently, who do you think is the biggest competition of Coca Cola in the Philippines? If you answered Pepsi, then you’re wrong.
According to a friend of mine who works for a market research firm, their studies show it’s C2 Green Tea that’s taking most of their profits – a “health drink” and not another soft drink brand.
Build on your strengths
Once you know where your business stands and learned everything you can about your competition, it’s now time to make changes. The first thing you should do is to build on your core competencies.
These are the things that your business does well and most probably the reason why your customers love you.
Quote: “Market your strengths and your market will strengthen.”
Improve on your weaknesses
No business is really perfect and there will always be room for improvement. And once you’ve identified your weaknesses (by doing a SWOT Analysis) – draft a plan to improve.
And remember, always measure the efficiency of your actions by doing a gap analysis.
A price war should be a last resort
The “knee-jerk reaction” of some people against the competition is through a price war.
From experience, I learned that lowering your prices to retain your customers or boost your sales is never a good idea when there’s a new competition. Even if they open with cheaper tags, never be compelled to instantly follow – as stated – make it as a last resort.
Key points you should remember regarding price wars:
- A new business will always attract the market, so expect a sudden dip in sales and don’t panic. Things will stabilize once the novelty of the new business subsides.
- People are usually willing to pay a bit more in exchange for good service. So rather than having cheaper items, opt to first try to have better customer service than your competition.
- Try to initiate a “coopetition” (cooperation-competition). Talk with your competitors and see if you can agree on a common price tag for your products. Propose a win-win situation.
I hope these tips can help your business stay ahead of new (and old) competition. Remember that in today’s market – a business monopoly is as rare as gold. So always be ready to fight for your place in the market.