Learning as much as you can about your competition is an excellent entrepreneurial strategy and a marketing must. Ideally, you should obtain this information before you open and while you are writing your business plan. Some entrepreneurs work for their competition before starting a new business. They try to learn all the ins and outs of the business ahead of time.
One of the best strategies to learn more about your competition is to locate a competitor at a distance. Often, your direct competitors will not divulge much information about their operation. You will be more likely to obtain significant industry and competitive information from a competitor outside your geographic area. Try to find several competitors in other states who operate the same type of business in a similar demographic area.
For example, contact your industry trade association and inquire about the industry leaders with a comparable business in another part of the country. Call or visit those entrepreneurs. Because they will not view you as a direct competitor, they are likely to share a wealth of information with you.
Go to your library and access an information database that contains an industry periodical and journal index. Work with the business librarian to properly search this data source. Look through INFO-TRAC, a database that lists published articles providing both industry and competitive information.
Go to your local city hall to see if any financing statements have been filed on your competitors’ pledging collateral. Or check with the secretary of state to see if any liens have been placed on their collateral. Publicly held companies publish annual and interim reports with various governmental bodies. The New York Stock Exchange listing applications and the Securities and Exchange Commission’s 10-K and 10-Q forms include offering circulars for new security issues. Some states publish an annual statement of condition about the corporation issuing new securities.
For privately held companies, you should talk to potential suppliers. Ask them what services your competitor provides. Try to estimate how much volume they can handle. Talk to dealers, reps, and distributors. Find out what they think about competing firms. Sometimes these people enjoy talking about the problems and concerns they have-for example, the problems they have encountered with late deliveries.
Find former employees who have worked for your competitors. Ask them about the problems at your competitor’s place of business. Do some comparison shopping. Analyze your competitor’s place of business. The more information you obtain, the better prepared you will be to plan your marketing strategy and to launch your new business.
Another strategy is to seek out contact with your competitors’ customers. Try to determine what they like about the business and what aspects they are dissatisfied with. If possible, conduct a telephone survey or attend a meeting where competitors’ customers will be present. Attend a local or national trade association meeting or convention where you will find a variety of competitors and suppliers. Introduce yourself, ask questions, and listen. Finally, ask your banker, accountant, or attorney for information about/your competition or your industry.
Once you launch your venture, continue accumulating competitive information. Projecting market trends and determining your competitors’ strengths and weaknesses is an ongoing activity that can give you a competitive edge in the marketplace.
For online businesses, a simple look at a competitor’s website will give clues about search terms they are targeting. We worked for an online wine information site and were asked to check out a rival. Looking at their pages we were able to identify that they were aiming to appear in the search results for the phrase u-line beverage center. We worked that out via clues such as the URL and how many times the keyword was used. We advised our customer to create a page about wine coolers and market it appropriately.