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So, you want to start a business? Although the right resources and passion will go far, you must employ competitive analysis techniques before you can launch! Not sure how to carry this out? Read on!
There are many ways to conduct the kind of market research and competitive analysis that’s necessary to succeed as a business. These include:
- Forming focus groups
- Distributing surveys and questionnaires
- Making observations
- Conducting in-depth interviews
The process of gathering data using any of these means is a challenge. It takes time and money. But if you want to be a profitable business with great longevity, you can’t afford to skip this process. You need quantitative and qualitative data to back your most important business decisions.
There are a lot of things you have no control over in business. But it’s always better to be overprepared than not prepared at all. Here are five of the top reasons you should understand and leverage market research and competitive analysis!
1. Determine Whether or Not Your Idea Will Work
Supposedly great business ideas are a dime a dozen. Feasible business ideas, on the other hand, are a lot more uncommon. Market research is really the only way you can figure out if there’s a real need for the business you want to create. Is there a place in the market for your product or service? Hopefully, the answer is yes!
It’s important that you can say with confidence that your business will not only be able to launch successfully but also be set up for long-term growth. There will always be some risk involved when starting a business. But the right amount of research will help you eliminate as much risk as possible.
When conducting research before launching your business, don’t just analyze your potential customer base. You should also get the input of other entrepreneurs. If this is your first business venture, there’s really no substitute for the experience of long-time business owners. Talk to as many as possible and take their advice seriously. If the general consensus is your business plan isn’t a strong one, it may not the best time to start a business.
2. Learn How to Differentiate Yourself from the Competition
Sometimes you might want to enter a market that’s already pretty crowded. The only way you can make sure to not get lost in the mix is by using a competitor analysis framework. Not every entrepreneur will necessarily know who their top competitors are immediately. Whether or not you know your competitors, you should make a quick Google search. After all, that’s probably how most of your customers will find you.
In the process, you should be careful about what competitors you’re analyzing. If you’re only looking at the very top businesses in the industry, you’ll probably be deterred from starting your business. Look at diverse competitors, including smaller businesses and larger ones so you end up with the most accurate look at who you’re competing with.
Once you’ve identified your competitors, you should look for the customer needs they aren’t fulfilling. Assess what strengths your business may have to offer that other businesses lack. Your greatest strength could be the employees you have, your personal skillset, your technology, or a unique feature on your product. The process of market analysis could help you find out your unique selling point or validate what you already thought it is.
On the flip side, if you can’t identify a unique selling point, you may need to do some work. Find areas you can improve upon with your product or service. You have to find a way to make consumers choose you over your competition. This type of research never really slows down. Even after you’ve been in business for a while, you continue conducting research to help stay a step ahead of your competitors.
3. Find Out Why Your Competition is Succeeding
Although there needs to be a way for you to stand out from your competitors, there are also hopefully some ideas you can “steal” from the competition. Why are customers choosing their products or services?
Just finding out why your competitors are succeeding isn’t enough. You need to take the information you’ve found and figure out how you can apply it to your business. You may not be able to do it perfectly. But if you can emulate your competitors’ strengths well, you can turn these into your business’s strengths.
The leg up your competitors will always have on you is their experience. They’ve been in the marketplace longer and already have a loyal customer base. You can’t emulate experience. But you can learn from your competition’s experience.
If you can turn your competitors’ strength into your strength and add your own unique selling point, you’ll have a winning combination for success. It probably won’t be enough to take all their loyal customers, but it should be enough to start attracting some of them.
4. Identify Barriers to Minimize Their Effect on Your Success
Every business will have its own weaknesses and deal with certain barriers that could potentially hold it back from success. Your business is no exception. It’s important you’re aware of your weak spots. If you know what barriers your business could face, you also can figure out how to overcome them or at least minimize their effect on your business.
There are some challenges you may have no control over and may be unable to overcome. For example, an unstable political climate could mean your business faces more uncertainty. This isn’t something you have the ability to change. But there are usually still certain ways you can alter your business practices so you can still thrive in spite of the challenges.
5. Adjust to Your Customers’ Needs
At the center of every smart business plan is a desire to please the customer. To succeed as a business owner, you’ll need to come up with a plan for how you will attract customers that are currently being served by your competitors. You need to know what affects your customers’ buying decisions and how you can capitalize on that.
Doing market research isn’t just about determining if there’s an immediate demand for your products or services. It’s also about the long-term potential for profitability. You want a business that will give you plenty of room to scale.
Even if you’ve been in business for years, you still need to continue analyzing the market. All businesses must meet their customers’ needs to stay in business. Your customers’ needs will sometimes evolve. If you’re truly marketing to your customers, this shouldn’t be a concern. If you’re a smart business owner, you’ll adapt your practices to continue profiting.
Using well-rounded competitive analysis techniques is the best way to start a new business, no matter what industry you’re in. Market research will help you make an informed decision on whether or not your business is actually feasible. By taking a closer look at your competitors, you can figure out what they’re doing well and what they’re doing poorly. This will help you find the best way to differentiate yourself from your competition. It will also show you what your competition is doing that you should imitate.
By learning what obstacles your business is facing, you can work on conquering them and succeeding in spite of them. As time goes on, you can also learn how your customers’ needs may change and adjust according to them.
Clearly, there are so many reasons why you should employ a competitor analysis framework if you aren’t already. If you need help figuring out where to start, you should take advantage of all the public and private business support found at Entrepreneurial Goals. Whether you’re just breaking into the market or you’ve been in business for years, their resources can benefit you.