During tough economic times, one statistic that rarely gets mentioned is the number of new businesses being registered. Of course when you think about it, it should come a no surprise.
As more people are offered incentive packages to take early retirement or accept a severance package as a result of company downsizing, many of them are find themselves with no job, but not ready to end their working careers. With a one time influx of cash, they are ready to make the jump into self employment.
While starting a business can be as easy as registering a name and opening a bank account, the real test comes in being able to survive and thrive in a market place already occupied by established companies.
One of the most often asked questions I hear is how to enter a market dominated by a couple of big players. New business owners are overwhelmed at the notion of being able to compete with known names and brands who have had years to solidify their market position through strong marketing and market recognition.
The fact is that in many cases, especially with small business, market leaders do NOT have a legitimate hold on the market. They are just lucky.
One of my clients relocated to a small town after taking an early retirement package form the company he worked 30 years for. He had always wanted to open a pizzeria and decided that this was the right time.
In this town there was one other eat-in pizzeria that everyone in town went to. Word on the street was that they had the best Italian food around. My client was concerned that success would be tough to get as this other business seemed to own the market.
But when we looked at the competing pizzeria closer, we realized their market position was not legitimate. The prices were high, the menu was limited, and the décor was old. What they had going for themselves was great food and no competition.
Even if you’ve never owned a restaurant, you can see where the opportunities are to take a run at this market. Within a year, my client had built his own pizzeria. The menu was bigger, the prices were better and the décor was clean and inviting.
As for the food, he used proven recipes he had grown up with. He also lured away one of the cooks from the original pizzeria buy offering a slice of the business (no pun intended).
If you are starting a new business, or have an existing business and find the market place ruled by someone other than you, take a closer look at why they’re there.
Ask yourself these questions regarding you current or potential competitor before creating your business strategy.
Are they the only place in your area that provides the same product or service as you?
If so, maybe the time is ripe for you to start your business. If not, you’ll have to decide if the market is ready for another entry.
Is their quality of product or service perceived or real?
Just like the story of the pizzeria, even if everyone says they’re the best, the best compared to what? Don’t let people’s opinions be your deciding factor. Opinions can quickly change in your favour.
What makes them unique?
Being unique can be as simple as having an unconditional satisfaction guarantee, or and eclectic variety of products. Find out what your competitor’s unique selling proposition is and how you can adapt it to your own business.
What benefits do they do they offer their clients?
As yourself “what’s in it for me to shop there instead of at my own business?” Do they help their clients save money, make money, have more fun, have more free time? How does your business measure up to what benefits they can provide to the market?
Are they resting on their laurels?
Many business owners can grow complacent and lose the innovative thinking that brought them success early on. This can be especially true for companies run by second or third generations of family. Beyond a name and reputation, look closely to see if there’s any real reason your competitor deserves to still be in business.
Remember that every existing business at some point started with just one location and one dream. McDonald’s, Wal-Mart, Sony, and Honda are all examples of companies that have grown from a single location with one owner. Why shouldn’t you be next?