Yet a lot of new entrepreneurs do think this. Worse yet, they say it out loud.
“Who’s your competition,” the prospective investor inevitably asks.
The entrepreneur exclaims, “That’s the best part – we don’t have any. This idea is so original; no one else in the whole world is doing it!”
Credibility destroyed. At best, it means they don’t understand their business. At worst, it means they haven’t done their homework.
In either case, they won’t get the money they need. So here are three things to understand about competition for your start-up:
Your customer could do something else
You may have the only newfangled whiz-bang store in town. But your future customers have been getting by with a substitute for quite a while now.
It may not be ideal, but they will have to make a change to buy your product. Most people resist change. How will you entice them to do so?
Your number one competitor may be your customer
If your new business is a service, can the customer do it themselves? If so, your customers may be your top competitors. This is true of both the consumer market and the business market.
They can probably do it themselves for less than you can do it for them, at least in the short run. What makes your service so special that they should pay you more? Or can you prove that you are less expensive in the long run?
No competition is probably a bad thing
This is another miscalculation in thinking. In almost all cases – if no one is doing what you’re thinking about doing – it probably means you shouldn’t do it either.
It may mean that the market isn’t large enough or receptive enough. If it’s the latter and you really have no competition, how much money will it take to educate the market?
If you had a competitor, you could share the cost. But you don’t. So you will have to do it all alone. It’s an incredibly expensive task for a fledgling start-up.
If you’re in the midst of planning your start-up, study your business so you can talk intelligently about your competition. It will get you one step closer to the funding you need.
Image in ttoday’s post from lusi