“If You Want to Beat 'Em, Learn From 'Em First”
The idea of becoming your own boss may be very appealing but most often misleading as rising entrepreneurs skip vital homework assignments while starting new ventures. Common misconceptions include flexible work schedule, more time off, and subjective decision making process. While all that is true for most established businesses, the beginnings are much more challenging, especially when external environmental forces must be taken into account: the competition being most fierce.
However, the word competition must not always be associated with the negative connotations as the Wall Street Journal author– Barbara Haislip – explains. The rivals can prove to be invaluable source of information as the title of her article reveals “If you want to beat ’em, learn from ‘em.” They all have been there already and chances are they might provide advice that closely matches the dilemmas of the inexperienced ones in the field. For that reason an insight into competitors’ financials or supplier relationships might reveal where you are heading or what to avoid on your way to flip your passion into profit.
Let’s do the homework and analyze what you should learn from the competition.
“Ballpark Their Sales”
New entrants must not only find their market niche to serve but also thoroughly analyze the industry leaders in order to estimate their own market share of the products or services offered. The most convenient way is to glance at competitors’ sales figures to be aware of rival’s power or weakness. If the growth potential is probable, the numbers will specify which key players may become future strategic partners, likely acquirers, or with whom relationships uncover risky threats. Most secondary data nowadays is available online; however, trade groups, analysts, and consultants are excellent sources to reach to for the size of your industry.
“The Lowdown on Salaries”
As the business grows, so will its needs and the investment in human resources is inevitable. But behind the headcount cost, the salary is not solely cost. The cost of new hires includes: recruiting expenses, basic salary, employment taxes, and benefits just to name the most important ones. The labor cost is a big chunk of overall business expenses. Therefore, it is important to compare the percentage of the cost to revenues with the competitors’ to arrive at reasonable margin and stand a chance in “hunt game” for the best talent out there. And if the rivals’ secret for best employees lays in the large array of voluntary benefits that are out of reach for start-ups, alternatives may be offered.
“Get Face Time”
Interpersonal communication should not be underestimated as it is a goldmine of information when data is not publicly available. Your suppliers, customers, and most importantly employees interact enough in everyday business dealings to provide facts and figures about industry rivals. An excellent way to communicate and interact with the larger pool of suppliers is during conferences and trade shows. It is five times more difficult to win new customers than retain the existing one. Therefore, excellent customer service provides competitive advantage. However, if things go not as planned, be honest, take the blame, and correct what is broken and continuously improve what is not through customer interactions. And lastly, some job interviews might reveal interesting answers from the job seekers previously working for the competition.
“Go Straight to the Source”
Going straight to the source is a win-win situation. Of course do not expect that someone will provide you with the success recipe, trade secret or patented operations; however you will definitely gain valuable tips and “the other side” may be willing to help to promote healthy competition. And who knows, perhaps the initial meetings might lead to strategic partnership alliances in the future. However in order to gain mutual benefit, there is one rule to follow: honesty. According the Mr. Holekamp of Olin Business School, “The ethical line is crossed when you misrepresent yourself in order to seek access to information not readily available to the general public." Most helpful in this category are mentor programs through SCORE, where retired executives are closely matched with your direction of operations. After all, they had been in your shoes.
“Don’t Lose Your Focus”
And last, but not least, no matter what your do or what your industry is, the most important advice is not to lose the direction where you are heading. Yes, it is important what your competitors do; however, the exact same steps might not suit your business model or additional market research might be required before going “live.”
Source:
http://online.wsj.com/article/SB1000142405...
Posted By: Sylwia Adamczyk
Sunday, April 14th 2013 at 8:28PM
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