Conducting competitor analysis and market research is an essential part of the journey towards starting up a new business, as Christopher Allen has discovered for himself.
I recently started a new venture and wanted to get a feel for the sector, competitors, prices, best practices and pitfalls. I read a number of articles and spoke to people within the sector to understand more, and was pleasantly surprised by how forthcoming people were with information.
After completing a business plan and cash flow forecast, I needed to identify how viable the business would be. In the past I have spent too much time planning and not doing the real work, but this is where you understand what is involved.
I decided to jump in. At first I was nervous and apprehensive, but as time went on my confidence increased. This worked to my advantage, as I realised I was doing the right thing and wasn’t left second-guessing whether I had made the right move.
I regarded this period as the ‘building stage’, as it allowed me to use my existing skills and to develop new ones. This is where I developed my style and image. It is often said that ‘imitation is the sincerest form of flattery’, and in this regard I had to review my competitors’ strong and weak points to create my own unique offering. This ranged from logos and business cards to prices and even telephone manner.
I was shocked how unprofessional my competitors were. This worked to my advantage, as it allowed me to build a business based around providing sterling customer service.
My current and past roles have been customer service-oriented, so I could apply what I had previously learned. I realised that it’s the small things that count, such as the appearance of marketing material and following up initial contact with a text, email or offer of a free trial.
I made it my mission to pay close attention to my successful competitors. For instance, I noticed that they would post content on a regular basis and use predominantly video content, and that their brand would have an overall cleaner and fresher appearance.
I would advise that you conduct market research on your sector before starting. This is a process used to gather information about a specific area of business.
There are generally two types of market research: desk research and field research.
Desk research uses information gathered from books, articles and the internet, while field research focuses on gathering information externally via surveys, telephone and post. It is useful to use analytical tools such as SWOT (strengths, weakness, opportunities and threats) and PESTLE (political, environmental, social, technology, legal and economical) to obtain a better understanding of different areas within business.
Consider the following points when completing a SWOT analysis:
Strengths: This includes factors you are in control of, such as money, skills and your network. You may ask the following questions in your competitor analysis: What are they doing well? How can you replicate it? Why do customers buy from your competitors and not you?
Weakness: What can you improve? How does your business compare to competitors on issues such as staff, location and opening times? What are they not doing well, and how can you capitalise? What could they improve?
Opportunities: Determine factors that have a positive impact on your business, such as market growth, timing and the market environment. What new products or services does the market offer?
Threats: Identify factors beyond your control that can pose a risk to your business, such as technology, markets and equipment. For example, if an item of equipment breaks down, do you have a backup, or could you borrow or rent one? What are the potential threats to your competitors?
I thought I had a good understanding of how my direct and non-direct competitors operated but, after completing a SWOT analysis, I realised I needed to learn more. For example, a number of my competitors had a static price list, while others offered a range of packages. This allowed me to revise my price list and offer free sessions, introductory rates and create an inner and outer London rate.
So where are we now? The business is moving in the right direction and naturally has its ups and downs, as all businesses do. It has proven to be very demanding in the sense of having to do everything myself, including administration, attracting customers, book-keeping and the work itself.
A major lesson has been that competitors can provide vital insight into the sector by allowing you to understand the market, customer behaviours and trends. They should
also be reviewed on regular basis to identify what they are doing well and
not so well.