A Quick Way To Define Your Competition
Time for a strategic conversation.
The day-to-day world of your business keeps you incredibly busy, mostly working on managing details and maintaining progress. Or, if you’re like 100 percent of other businesses in the universe, putting out fires.
Getting the time to think about your own business and make big plans for growth and sustainability doesn’t present itself.
Truthfully, it never will present itself. You have to create the time to think about your business, collaborate with the best business minds you know, and make big plans to keep your business healthy and growing.
With summer just around the corner, block some time on your calendar right now. At least one full day. Get out of the office and challenge yourself to identify at least one way you can create additional value in your business.
Here’s a question I like to answer because it usually reveals many opportunities for value in a business – how is your marketing spending increasing your profit?
The reason this is a good question to start with is because the focus is on profit, not sales. Sales are great, but if you’re not making any money on what you’re selling, what’s the point?
I have worked with many smart business owners who are adamant about setting up a new ad campaign, or running a series of content that has nothing to do with products that actually make the company the most money.
So, how do you decide which products or lines of business deserve the marketing investment?
It starts with knowing what your products all cost to produce. Hire an accountant to help you figure that out if it’s not clear.
Once you know how much your products and services cost, it’s now time to study the competing forces at work in your business and industry that threaten your ability to make money.
There’s a handy exercise you can do to help guide your thinking: The Five Competing Forces Marketing Model.
Define what competitive forces exist for your business. Write them down, study them, and share them with your team.
The Five Competing Forces Marketing Model:
Customers: All customers are in a competition to pay less and get more. What do yours want?
- Suppliers: All suppliers are in a competition to do less and make more. What do yours want?
- Alternative Solutions: All alternative products or businesses are competing for your customer base, even if they are not in your industry. For example, an airline is competing with a car company because it presents a solution to the same problem – traveling a medium to long distance. The solution could be driving or flying. What alternative solutions existing for your business?
- New Entrants: Most new entrants into your market are there because they’ve figured out how to provide the same solution at a better margin than you. Who entered into your market in the last 12 months?
- Existing Competition: Existing competition will either force you into a price war or innovate and improve their offering over yours. When does your competition win against you?
Undefined competitive forces limit the success of your business by eroding your margins. Defining threats to your profit allows you to make a plan to beat everything that is competing for your business.
Make a plan this summer, and you’ve made a valuable long-term investment in your business.