A competitive analysis includes identifying the top competitors in your marketspace, comparing their products and services to yours, and planning how you’ll mitigate those risks.
An analysis of your top competitors should consider both those who are currently providing the products and services in your geographical location and/or online.
Complete this analysis by doing a simple online search using Google, yellowpages.com, or yelp.com. Pick five who are successful and compare their products and services, physical location, and marketing approaches to what you have planned for your start-up. For each criterion list your approach and theirs and, if they have the advantage, develop a mitigation strategy.
For example: they have both a bricks and mortar location and a huge online presence and you have a small EMAIL list of friends and family, your mitigation advantage is you don’t have that overhead so you can produce your product less expensively; they have a mature product set and you have one or two products or services, you can focus on building those products using the feedback of your initial customer base.
Several years ago, I was launching a low-cost start-up and was overwhelmed by the amount of competition already out there who had the advantage of already starting and securing their customer base. The number of steps just to get my product to market felt overwhelming and I began to doubt that I could be successful.
Then I realized I had the advantage of seeing what was working for them. I could leverage the work they’d done to not necessarily compete with them, but to either expand the market or develop mitigation strategies that would attract the business I needed to my start-up.
It’s important to remember that you’re launching a new business and need a successful launch. Limiting your launch to a manageable set of customers or clients to ensure you can successfully deliver your product and understand the full business cycle may feel like an extra step, but it mitigates the risk of not being able to deliver your product successfully
Leah Ward-Lee is a management consultant and business writer based in Dallas, Texas and the author of $1,000 Start-Ups. She’s currently developing a course and the $1,000 Start-Up Workbook to help entrepreneurs launch low cost business start-ups.