One of the first steps an entrepreneur takes when starting a business is researching the competition. Before you can even write a business plan, you need to know who your top competitors are, what they’re doing right, what they’re doing wrong, and how you can make your business different than theirs.
On the most basic level, competitor research is easy to do. Run a quick Google search for any business idea or industry, and you can quickly generate a list of several competitors in that space. But in-depth competitive research requires much more from entrepreneurs, and unfortunately, most business owners get a few things wrong.
These are some of the most common mistakes companies make regarding competitor research.
Underestimating the Value of Competitor Research
For starters, some entrepreneurs simply underestimate the potential value of competitor research. Better understanding who your competitors are and what they’re doing can help your business in a number of different ways.
For example, you can study your competition to get new ideas for products and services. If your competitor has come out with a complementary product that provides customers with a better experience or some other advantage, it may be in your best interest to develop a similar product. You can also study what the competition is missing to generate ideas for how you can get a leg up on them.
You can also use competitor research to differentiate yourself from a marketing standpoint. If you want to attract more people to your brand, you’re going to need to find some way to make your brand different than everything else on the market.
That could mean lowering your prices, offering different products, or just positioning your brand in a different way – but you won’t know the right strategy unless you know your competitors inside and out.
It’s true that competitor research does take a long time and can be expensive, but the value of the insights you glean far outweigh the initial costs.
Using the Wrong Tools
These days, competitor research is easier than ever before. That’s because many businesses create tools and resources designed to help business owners streamline their competitor research approach. But if you’re using the wrong tools, or if you’re not using any tools to assist your efforts at all, you could end up in a losing position.
You can do some competitor research on your own, without any tools; an introductory Google search is where most of us begin. But if you want more valuable insights and want to spend less time getting the information you need, you’re going to need some extra support.
Choosing Only One Competitor
Competitor research doesn’t mean picking one competitor and studying them exclusively. In fact, if you take this approach, it could end up working against you. You might end up with a false sense of security, thinking that your biggest competitor is a non-issue.
Instead, it’s important to research every major competitor that you can find. Even spending a few minutes on each potential threat could be valuable in helping you understand the dynamics of the market much better.
Treating Competitor Research as a One-Time Ordeal
When researching your business plan, you probably spent time looking at your competitors. Unfortunately, this is where many entrepreneurs stop. They see competitor research as a one-time ordeal; an investment that is made once, at the beginning of the business’s launch. But you should know that managing a business is an ongoing affair. Competitors change. Markets change. Products change. If you’re going to stay with the times and continue being relevant to your target audience, you need to keep researching your competitors on an ongoing basis.
Getting Tunnel Vision
Some business researchers also suffer from tunnel vision. They choose to focus on one narrow aspect of their competitor research, while ignoring some of the other takeaways. For example, you might become obsessed with one particular strength of one of your competitors, or focused only on the weaknesses of your biggest rivals. In this way, you can become bogged down in details and miss some of the most important takeaways and conclusions from your efforts.
The Silo Problem
Competitor research also suffers from the development of organizational silos. The truth is, almost every department in your business can benefit from better understanding your competitors. If competitive research is left to the marketing department alone, or to some group of upper managers, the practical value of the competitive research you did is going to decline.
Competitor research doesn’t have to be perfect to be valuable to your organization. But if you want to lower your costs and increase the benefits you get from this endeavor, it’s important to proactively acknowledge the potential mistakes you’re making.