Sit down, relax, and ask yourself: “Who does my business compete against?”

I’ve asked this question to exclusive car hire agencies, consultancy practices, small business owners, restauranteers and more. If you are anything like these people, your answer is probably among these responses: “We have no competition,” “We are unique,” or “Nobody does what we do.”.

You’re wrong and you may be killing your own business for thinking this way!

I believe the problem is that most business owners and professionals connote competition with “direct competition.” You need to look at competition in a far more basic way and ask yourself, “If I don’t earn $1 from a customer, who gets that $1?”.

Illustrating this by examples is easiest: Assume you are the only bakery in a small town. The closest independent baker is a 20-minute drive away. It sounds reasonable to claim a lack of competition, but you would still be wrong.

Clearly, the first point of competition would be the local supermarket which also sells bread. You are both competing for the same customer. But you are probably smart enough to have picked that one so let’s go a little deeper and assume you are the only store who sells bread within a 20-minute radius. Who, then, are your competitors?

We need to answer Who, When, Where, Why and How:
WHO is using our product?
WHEN are they using it?
WHERE are they using it?
WHY are they using it?
HOW are they using it?

Answering for the bakery, I buy bread to make sandwiches at home for lunch (Who: Me, When: Lunchtime, Where: At Home, Why: I need to eat, How: Using to make a sandwich). What other products might I consume instead of a sandwich? Salad. Pies. The list goes on. On the contrary, if I packed sandwiches for work our baker may be competing with a local restaurant.

Think a little bit on what alternatives are available. They are your competition too. And it’s that simple. Hopefully, you are able to sit down and figure out the answer to the question “Who are my competitors?”

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