How to Do Competitive Analysis for Your Small Business
Whether your small business is in the startup stage or thriving and growing, competitive research is essential to your success. Researching your competition helps you spot their weaknesses and take advantage of opportunities they might be missing.
With those goals in mind, here are 12 competitive research tactics to add to your business arsenal.
- Shop the competition. Visit your competitors' stores or websites to see what they offer and what type of service they provide. What is it like to be a customer of this business?
- Talk to your competitors' customers. Why do they buy from your competitors? What do they like and dislike about the company? What do they wish that company would provide? Why don't they buy from you?
- Go online. Search the Internet for news about your competition. Visit their websites and set up online alerts to receive instant notification about their activities. Follow them on social media to see what they're doing and planning.
- Investigate their management teams. Where did they go to school? Where have they worked? How long have they been in the business? What are their strengths and weaknesses? It's easy to find out this information online -- you just need to seek it out.
- Buy stock in your competitors. If you're competing against a publicly traded firm, consider buying a few shares of its stock. That way you'll receive regular updates on the firm's financial results and business strategies.
- Check public filings. Many actions your competitors may take, such as applying for building permits or registering for patents or trademarks, require public filings that you can access to gain information about the company's goals, strategies, and technologies.
- Get to know local librarians. You can find a lot of information online, but a smart local librarian can save you lots of time and effort by quickly guiding your research or showing you resources you may have overlooked.
- Attend industry conferences and trade shows. Whether you attend traditional or virtual trade shows and events, these are great places to see what products and services your competitors are promoting, and how they sell themselves.
- Assess the competition's goals. If you know your competitors' goals, you'll be better able to anticipate their strategies. For instance, a competitor trying to increase market share might lower prices, or a company attempting to increase profits may cut costs.
- Be on the lookout for new competition. The competitive landscape is changing rapidly. A national chain may not have entered your region yet -- but what if it does? Likewise, companies that don't currently compete with yours might shift their focus and pit themselves against you.
- Define the competitive landscape broadly. Your competition includes anything that could draw customers away from your business. For example, movie theaters compete not only with other cinemas, but also with restaurants, live music venues, theaters, and even cable TV and video games.
- Don't delegate competitive research. You might enlist someone to help you do the grunt work of research. But as an entrepreneur, you need to read, digest, and act on information about your competitors.
