Choose your competition wisely

Every business has ideas about who the competition is, but how much thought has gone into identifying those competitors? And was it just guess work, or analysis of solid facts?

The truth is that choosing who you see as your competition has a really powerful effect on business strategy.

Obviously every business is unique and so there’s no easy tool for identifying the right competitors, but one of the things I do when I work with businesses is to ask them lots of questions. So I would like to share some of them here:

Currently who are your competitors? What is it that makes them competition?
The power of knowing your competition is understanding what they have that you would like to have. Greater market share? Greater recognition? More profit?


Who do these businesses see as their competition? And how do they see your offering?

Is that from your customers’ perspective or from your own?
What’s important to you, probably on the same list as before – market share/ recognition/ profit – is not necessarily what your customer sees as the main difference. They will value quality and service as well as price and it is important to understand whether they see price differences as a key decision maker.

Being clear about what is important to your target customers lets you see which comparisons are valuable in your decision making and what is purely distraction.

Are competitors a distraction? Can customers replace your product/ service with a substitute instead?
It’s not usually as simple as identifying a business in exactly the same location or market and even where there are competitors in the same market the “competition” from substitutes (customers replacing your product with something completely different) can be just as interesting.

Let’s take McDonalds as an example. They list their UK competition as:

  • Other fast food chains, obviously
  • Coffee shops
  • Traditional fish and chip outlets
  • So they are not just interested in the names that we immediately think of, but also other places that get in the way of potential customers choosing McDonalds. What stops your target customer buying from you?

    “Measure yourself by the people who measure themselves by you”
    Carter Chambers, The Bucket List (2007)

    Is your view based on current facts or marketing fluff?
    We are all guilty of this. The media (traditional and digital) is full of fabulous headlines about business successes in every sector and the huge sums of money raised in share sales. No-one ever released a press release that said “we made mistakes and lost a crucial customer so our plans have gone awry”!

    Recently I read an article in the business press which heaped praise on a growing SME for achieving 11% year on year sales growth. It was only at the end of the article about wonderful ongoing investment and new opportunities the author quietly mentioned the pretty sizeable losses that the business was still making, drawing me to the conclusion that sales growth was requiring big sacrifices from the owners.

    What does the future hold? Who are the rising stars in your market place?
    We can only ever be certain about the past, but what really matters is the future!

    A little more than just 10 years ago the big supermarkets were competing with each other to try to capture market share but then their battles were swept aside by the growth of the likes of Lidl and Aldi.

    How do you see your market changing in the future and how can you adapt? (Chances are you’ll be wrong here, but if you plan for something you will be better placed to react to whatever comes your way.)

    Most importantly: what are you going to do with this information?
    Can you see opportunities that you can exploit? Have you got strengths that the competition haven’t got? Maybe what you need to focus on is doing more of what you do best?

    At the end of the day what matters is how you’re doing now compared with how you did last time (last year, last marketing campaign, last product launch, etc) but by having good information you can make good decisions for the future.

    If I can help you work through some of these questions I am running free consultancy sessions across Devon over the next few months. Click here for more details.

    Make your own Brexit plan

    Note: this is a blog about business planning – I have not intended to express any political views here and while I welcome feedback I do not want to start a political debate!

    In any other sphere (except possibly wartime) the idea that what feels like the prosperity of the whole country was hanging in the balance the way it seems to be at present would be unbelievable. But still, here we are: less than 100 days to go and no concrete information to make decisions on, no way to realistically plan for 2019, right?

    Well not quite. We know that the world will not stop spinning (*actually I’m just guessing on this) and although there will be political, social and economic upheaval we know that the businesses who have prepared will be the best placed to survive, and even indeed thrive.

    The government announced in December that they would be writing to 140,000 businesses to help them plan for no-deal, but there are literally millions of businesses in the UK so this suggests that if you are not involved in directly importing or exporting goods then HMRC isn’t interested in communicating with you.

    So if you’re an SME with a predominantly UK customer base how can you plan for whatever Brexit comes along?

    No forecast ever perfectly predicts sales/ margins/ cashflow even on a relatively short timescale so the most important feature is to set out what you think the future will look like and identify the opportunities and threats that may arise. As a result you are better prepared to respond to whatever real twists and turns appear along the way.

    Where are the risks in your business?

    How might import tariffs affect your suppliers? Will that affect your profitability or lead times? Do you have other options that may not have seemed competitive before?

    What about your customers – do they export your products? Will their business be affected by import or export duty on other items? How might this will affect you?

    Even if this does not affect your profitability is there a chance that Brexit may cause them to slow down their payments? I think the answer to this generally has to be yes, because it is a natural response to uncertainty.

    What about opportunities?

    When it comes to marketing, are there opportunities to challenge bigger rivals who may be more affected by the effect of whatever Brexit deal comes about?

    Can you make more of advertising how UK based your supply chain is?

    Perhaps there are other opportunities – home grown food producers will be hoping that they can replace a lot of items which are currently imported. However when considering risks it always pays to think the other way around as well: will your market suddenly become more attractive to overseas suppliers, especially as a result of currency fluctuations.

    The effect of all of this planning is that while you still won’t know what the future will hold you can make the best possible decisions for your business rather than following the crowd or being forced into making hurried reactions to situations that you are not prepared for.

    More than anything else I firmly believe that spending time now considering the implications Brexit could have on your business will ensure you are best prepared for whatever comes.