Thursday, January 24, 2008
When VCs or other investors hear an entrepreneur claim that "there are no competitors," they immediately tune out the story. I can't tell you how many times I've heard that claim, only to go online and immediately find a slew of competitors. When you think of competition, you've got to think not only of direct competitors, but also indirect competitors. You've got to think of your entire category. If you bake specialty artisan bread, all bread bakers are your competitors because consumers must decide where to spend their bread money and which bread calories they want to consume. Analyzing the competition is very useful. You can find out what they do, how they do it, what their financial structure is, their suppliers, their allies and who they believe their competitors are. You can also learn more about the industry from reading competitive information. Finally, studying the competition is the best way to figure out what your competitive advantage is. If you don't have time to do the research yourself, you can hire an expert to do it for you.