In business, competitors should be viewed as more than the “enemy.” They are critical people to know and understand and can:
- Help you better understand your current and future markets
- Be the source of additional business
- Be the source of growth through acquisition
- Potentially provide an exit strategy for you
Understanding your markets
What is it that’s making your competitors successful? Often, it is not lower prices, but better marketing, better customer service, more efficient operations or more innovative products. By identifying their strengths, you can also identify your weaknesses and begin taking steps to improve in those areas.
Getting competitive information on others in your industry is easy. Visit their websites or walk through their stores. If you attend or exhibit at trade shows or conferences, be sure to pick up some competitive materials or talk to competitors’ representatives.
If your competitors are publicly held, review their annual reports, which can tell you a lot about their plans, strengths, accomplishments and the critical issues they face.
Understanding your strongest competitors can help you identify areas where you can improve and potentially some niches the strong competitors are ignoring. Knowing more about your weak competitors can help you identify your strengths that you can exploit. You may even be able to identify a competitor’s customers that would be your best prospects.
Getting additional business from competitors
The business world is becoming more interconnected and interwoven every day. Joint ventures are commonplace. The common characteristic of most joint ventures is that both parties receive a benefit. Most companies have strengths in only a few areas and weaknesses in others. Their weaknesses may be capacity limitations, product limitations, financial constraints or something else. If their customers want something they don’t have and you do have, it may be beneficial to “share” that customer. Consider working with your competitors on a subcontractor or joint venture basis.
Acquiring your competitors
Staying abreast of your competitors may enable you to identify if they may wish to sell all or part of their business. Every business goes through an ownership cycle. If a competitor is closely held, pay attention to the owner’s age, especially if there are no younger family members involved in the business. Most owners of successful businesses recognize that ultimately they will sell the business. Without a family member present, the logical buyers are key management employees or competitors (namely you).
An exit strategy
When it’s time for you to consider selling your business, a competitor may be the most logical buyer. They understand the business, probably understand your operation and can evaluate whether there are economies of scale if they acquire your business.
This news is provided as a service to you by Marlin Business Services Corp., a nationwide leader in commercial lending solutions for the U.S. small business sector. Marlin’s equipment financing and loan programs are available directly and through third-party vendor programs, including manufacturers, distributors, independent dealers and brokers, to deliver financing and working capital that help build your success.