How to compete as a high-growth entrepreneur
Don’t let your competitors drive you to distraction
Ben Fletcher, entrepreneur, angel investor and founder of Fast Growth Icons explores the good, the bad and the ugly side of competition.
Ben Fletcher’s view
Over the 20 years that I have been building businesses, both as an entrepreneur and investor, one of the things that most gets under my skin is my competitors. It’s hard to be dispassionate about what they are up to, especially when they always seem to be winning exciting new deals, launching new products, copying features and marketing, poaching staff and so on.
You often hear advice about ignoring your competitors and focusing on building your own business, but to what extent is this good advice? The answer is, as always, ‘it depends’.
What makes a business succeed?
Before we look at the threat of competitors, let’s look at the basics of building a successful business. What is it that makes companies successful? Why does one succeed and another fail? My belief is that great ideas are two a penny; successful companies are often those with the best execution. That said, your idea will ultimately determine the maximum potential size of your organisation.
To become scalable, you’ll need to have a product with a large potential market, which can deliver a clearly differentiated proposition in a way that’s better than the competition.
Great execution relies on the hundreds of decisions made, and actions undertaken, every day by everyone in the company. The best of those companies make better decisions, more quickly. So how does a competitor focus enable you to make better and faster decisions?
Don’t fret, don’t copy
You have to have good competitor intelligence. Your salespeople will need to be clear about your differentiating factors, but don’t always believe your competitors’ hype. Every business struggles to acquire new business and manage growth – they will have many of the same issues you do. I’ve sometimes been surprised talking to my competitors and hearing the positive view they had of my business, even when I felt things were going very badly.
One mistake I think you can fall into is blindly copying things your competitors do. You are a very different company to them, your customers are probably choosing you over them for a specific set of reasons, so a product or feature they introduce might work for them and not for you. Discount airlines charging for meals on their flights makes sense as their proposition is low cost travel. When premium competitors have followed suit it has landed very badly.
It is also worth noting that your competitor may have a bad idea or be experimenting with something new. No business has the ability to know what will work and what won’t, every time.
By copying your competitors, you could risk moving the battle into the area they are strongest, and where you can’t compete as effectively. If you understand what your key differentiator is and always play to your strengths, they will have to come and compete on your battlefield.
Finally, if everyone copies each other, you end up with similar products all trying to appeal to the lowest common denominator. In these markets, the product becomes commodified and it’s a race to the bottom on price.
To maintain your unique proposition, it’s much more important to be focused on your clients than your competitors.
Competition isn’t all bad
Having competition isn’t all bad: competitors aren’t just there to steal business, ideas and staff from you – they can also help to educate and grow the market. They provide validation that the idea has the opportunity to scale. I’d much rather launch a product into a highly competitive market than one where there are no competitors, since it’s more likely there is a higher level of existing demand.
It can be useful to have someone snapping at your heels as this could help keep you and your staff focused and driven. I’ve certainly found it useful in the past to use competitors as the ‘bogeyman’ to give my company a sense of identity and common purpose – almost a tribal cohesion. However, try not to knock your competitors (internally or externally). It’s tempting sometimes, but clients will find it unprofessional, and if you believe your own hype, you can end up underestimating them.
I also believe in maintaining a line of communication with competitors. Without giving away competitive advantage, you can share common challenges and come up with solutions that help you both grow. It’s not always a zero sum game.
Finally, I think it’s unhelpful to think about staying ‘ahead’ of your competitors. Your company should be unique and you should stick to the angle where you can be the number one for your differentiated proposition. Not ahead, not behind, just different.
Stick to your guns, don’t get stressed by what your competitors are up to, and build a strong position where your clients love you.
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