Webster’s Dictionary defines a competitor as “one buying and selling goods or services in the same market as another.” Pretty self explanatory at the high level – yet many executives fail to properly assess their full competitive set.
Here’s the best way for you to not miss any competitor that could get between you and your goals.
Study industry associations, search engines and startup databases
I typically start with high level industry research. Find the major trade association in your industry and see who they are talking about as key players in your space.
Then, do Google searches with the same keywords that will be important for your business to see who is advertising around those keywords. If those keywords are important to those advertisers, they are most likely directly competitive with you for all, or at least a part, of their businesses. That should pick up the launched businesses.
In addition to simple Google searches, you should also look in the venture capital funding records at sites like CrunchBase, AngelList and VentureBeat, as well as as searching patent registrations at the USPTO to see if anything new is in the works, that directly overlaps with your business.
Ask prospective customers
Once the high level research is done, you need to start digging even deeper. This will include asking prospective customers of your business, if they are aware of any similar businesses in the market. Similar businesses could also include tangential businesses that could easily pivot into your space if you are successful.
For example, if you are launching an online restaurant reservation software, competition could easily pop up from tangential players like point of sale register manufacturers (e.g., Micros, Radiant) or other large online businesses in the restaurant space (e.g., Restaurant.com, OpenTable, GrubHub, Zagat).
Think about like-minded businesses
Another example includes making sure you think about all players that are aggressively going after the same target audience, even if in very different businesses.
Let’s say you are building a fishing website. In addition to all the fishing websites, you are also competing with magazines like Field & Stream, cable networks likes Sportsman Channel, retailers like Cabela’s, fishing gear manufacturers like Daredevil lures and online portals like Yahoo (that may have a fishing content section).
All of these businesses will be putting a lot of consumer marketing muscle to work to own the online fishing space, so prepare for a lot of competition from many different businesses all looking for the same fisherman eyeballs.
Only proceed if you have a better “mouse trap”
Once you fully assess who your current or potential competitors are, then you have to assess their strengths (e.g., customer base, revenue base, cash resources, product offering) and weaknesses to see if you can build a better “mouse trap” within your budget.
Some companies decide not to move forward at this point, because it is simply too much of an uphill battle to win the space, or will require much more monies than are available to spend. But, if you are confident you can offer a better product, better pricing, better marketing tactics or bigger budgets than your competitors, then “bring it on!”