Getting a business started can be as easy as putting up a website. But what about actually operating, and staying ahead of the competition, in today’s economic climate?
Fifty-nine percent of U.S. small businesses believe it’s harder to run a business now than it was five years ago, according to a 2013 survey by Constant Contact, a provider of online marketing tools and coaching services. What’s harder about it? Forty percent of those survey respondents attribute the difficulty to more direct competition.
Understanding your competitors can help you devise successful marketing strategies, boost sales, and avoid failing as a company. Here are five steps toward getting to know your rivals, gauging how your performance measures up, and keeping your business operating at its best.
1. Conduct research. Start with an online search of your top-performing products or services to find companies with similar offerings. Take particular note of any business that’s vying for customers in your area. Beyond general search engines like Google, try Alexa.com, Hoovers.com, and the Internet Archive’s Wayback Machine for industry-specific information. Consult local business directories and your Chamber of Commerce as well.
Remember to consider your indirect competitors. For instance, if you run a pet-grooming business, be aware that other animal-related companies, such as dog-training schools, may compete for the dollars any given household spends on the family pooch.
2. Monitor activity. Once you know who your top competitors are, keep tabs on them. Check out their company websites to see which products or services they highlight and what discounts they offer. Follow them on Twitter or “like” their Facebook pages to learn about sales and promotions.
Meanwhile, consider setting up Google Alerts to track their blog posts, news releases, and other mentions of their names online. (If you haven’t already, create an alert for your own business, too, so that you know when your company gets talked about.)
3. Find opportunities. As you monitor competitors’ activities, you may spot key market segments that aren’t being tapped. Let’s say you run a coffee shop in a town with a university. If other local cafes cater to college students, consider reaching out to other types of customers: Offer a discount to business owners or a special for members of a nonprofit group who meet at your place in the evenings.
4. Check the numbers. Tools such as QuickBooks Trends can give you an in-depth financial overview of how other companies in your industry are performing. For instance, if you run a Florida-based business that specializes in administrative services, Trends could show you that similar companies statewide have seen sales increase during the past year — and that more than 10 percent of those sales came from new customers.
This data enables you to compare your company’s performance to industry averages in your area. It also can help you set accurate, attainable goals for growth.
5. Build alliances. For indirect competitors, consider forming a partnership that’s mutually beneficial. For instance, imagine that your firm specializes in yard care. You could agree to recommend a nearby home-repair business to your customers if, in return, that business refers its clients to you.