There are some schools of thought that say you don’t need to look at the competition to do well yourself, and others that focus on knowing about competitors to see how they are progressing. For those who like to see what the competition is doing, and for anyone who is making a business plan, it is important to do solid research on the competition, both direct and indirect. What information is available, how reliable it is, and how easily it can be found will be drastically different in each industry and business, but there are some tried and true ways to learn about other businesses.
First, learn the names of the main competitors in the space, and where they are located. This may seem like it doesn’t even need to be listed, but it is the place to begin. From the outside it may look as though there is very little competition, and there will be businesses of all sizes and focus in the space. It is key to look into all of them and determine which are a direct competitor and which is an indirect competitor. The level of research that goes into them will differ. For Asif Ali Gohar, he likes to focus on direct competition first, and do less intense searches on the smaller or less direct businesses. This includes each and every business who is located within the same geographical area and has a similar product or service. Exactly matching services and products are the place to start, as they will have the biggest effect.
He recommends that you focus on a few key facts first, and then expand from there. Size of the business is important, but also how much they make and how much they sell. This will not only give you valuable information on them, but also on the market itself and can help to guide a new business into the right decisions. If there is only a small market and a few businesses have large parts of it, then it may be harder to break into that market than if there is a large market with a few large competitors, or even several smaller ones. Knowing where to begin is a large advantage in business planning.
Once you have determined who the key players are and what they are doing, it is time to expand. Look for smaller suppliers and competitors as well, these will have a big effect on the layout of the market and how they all interact. Move on to their suppliers and distributors, so you can avoid being in a conflict of interest when approaching people. Knowing about what other companies they work with will make you look like a sound investment and can make businesses want to work with you.
A lot of information on these businesses will be easily available online, and is all public information. The yearend reports and information that they supply to their own stockholders will have vital information about the amount of money that can be made, and how much of it there is to go around to all the businesses in the space. This can be the determining factor of if the market is a good fit or if there should be some changes to location or end product to find a better space.
