As a small business owner, you must be aware of the competition in your market. While the idea of conducting a competitive analysis may seem daunting and sometimes even humbling at times, its main purpose is to position you to improve upon your own small business by keeping you up to date on what’s going on in your local industry.
The three keys to keep in mind when doing a competitive analysis are:
1. Keep An Open Mind.
Turn yourself into an unbiased customer looking for the best of what you and your competitors have to offer. This requires serious objectivity on your part. Through this exercise, you may discover that you need to change some parts of your business practices. This is a good thing. A flexible small business is ready for change and prepared for success. So take notes!
2. Determine Your Market.
Your market is the geographic area in which you do business. The breadth of your analysis is based upon the size of your market. Many single unit small businesses will only need to engage in a local market analysis. But if you have a multi-unit business, you will need to engage in a competitive analysis on a regional level.
3. Know Your Own Business.
- Who is your customer [demographics and psychographics]?
- What is your mission?
- What is your competitive advantage?
- What is unique about your business?
- What is your price point?
Once you’ve completed your own business analysis, you’re perfectly poised to conduct an analysis of your competition by focusing on the following main areas:
Visit your competitors as a customer to analyze:
- Size of their facility.
- Space allocation for segments of the business.
- Amount of staff on duty.
- Amount of retail products.
- Condition of the facility and overall cleanliness.
Success in your industry is predicated upon delivering unique and exceptional services with unparalleled guest satisfaction. Consider:
- Skill levels of the service providers.
- Customer service on the telephone.
- Customer service responding to an email inquiry.
- Customer service during site visit.
Analyze how your competitors position themselves in the market and how they communicate their message.
- Examine their web site.
- Review their marketing collateral materials.
- Get on their email mailing list.
- Follow them on all social media platforms.
Digest What You’ve Learned
Now that you’ve played the covert customer role and you’ve had the opportunity to review and analyze the way your competition works, you will now have an understanding of the services that they are able to offer and which services seem to be driving their business. You will also discover if they are able to provide a high level of customer service. After reviewing your notes and the business development and marketing practices materials, you’ll be able to see if the business operates with a structured plan for communicating their mission and message to their target customers.
Now You’re Empowered To Take Action.
After this thorough analysis you’ll be able to determine how their business compares to yours and how you can direct your efforts. You’ll be able to create a comprehensive business plan that will focus on your goals while taking into consideration how the consumer is being targeted and serviced by your competition.
The Bottom Line:
Knowing your competitors’ business strategies can help to strengthen yours. To learn more about competitive analyses, please read our Business Management Guide.
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