Can you really afford the complacency of believing you are better than the competition? Do you really think that all you need to do is submit your business plan and the job’s done? Have you really thought this through and checked out the other runners?
The problem is that everyone, including me, has told you to be unique. This may tempt you into playing down the competition to the extent that they don’t matter, but they really do. Last week we went through your USP, but if you are now so unique, will the investor become sceptical and start wondering whether there is a market for your product or service at all?
Competition is healthy. Without it you will become stagnant and lose focus. Being the first in market takes a lot of courage and money to educate people. I would love to have been the first Fax salesman who sold his product on the basis that everyone will have one soon. The trouble is that not many people will believe you. It can be a tough mountain to climb!
On the other hand an ‘improved offer’ will be talking to an educated market that understands the benefits of your new product or service. This means market entry costs are lower and the customer will want to be part of it (for example: IPod v Walkman)
Also consider collaboration with a competitor. If someone somewhere has got a great idea that you would like to emulate, why not contact them and see if you could get an agreement? It will make you quicker to market and both of you stronger. This is becoming an increasingly popular way of doing business.
The funders understanding of competition is:
- Direct Competition; any service or product that a customer can use to fulfil the same need that your product or service offers.
- Indirect Competition; similar services products or substitute products that will fulfil the need (Butter v Margarine)
- Budget Competition; essentially the competition for disposable income (The Ferrari v The Racehorse)
So, don’t pretend that the competition is not a threat, if you do, the funder will either believe that you are trying to deceive him or that you are naive, either way you plan is in his bin. Spend time analysing the relevant competition, define their strengths and weaknesses, research their accounts at companies’ house and see how profitable they are, maybe they are not the dummies you thought they were. Once you have done this you can explain with authority how your offer is “unique” and that you have your rightful place in the market. This will be impressive stuff and will probably help you put the finishing touches to your marketing plan.
Lastly a thought from 6th Century BC: “He who exercises no forethought but makes light of his opponents is sure to be captured by them” Sun Tzu, “The Art of War.”