There is an unfortunate trait that most small businesses have, and that is the mentality of being afraid of their competitors or seeing them as their enemy. It’s true that they are competing for the same customers that you are, but even so, they can help you far more than they can hurt you.
The first basic principle to understand about competing businesses is that, if there are multiple businesses who are offering the same product or service within the same general area, then that means there is a large enough market to support them all. If the market for that product turns out to be not large enough, then there is a kind of natural selection that comes into play.
The market has a way of correcting itself wherein the finite number of customers who are interested in a particular product will gravitate towards the businesses that are the best, and if there aren’t enough customers to patronize the less-successful businesses on the lower end, those companies will inevitably be put out of business unless they pivot in some way or find a way to scale up.
What that means is that, if you’re still in business and doing well, then you’re one of the businesses that your market prefers, and so are your competitors. If that is the case, you don’t have much reason to worry about a competitor putting you out of business, but instead, you can actually improve your own business by learning from those businesses who are competing with you.
Research the Competition
The first thing you’ll want to do, if you want to learn from your competitors, is to find out who they are. Depending on what line of work you’re in, you may not have hardly any competitors, anyway, but finding out for sure is the first step to taking advantage of their experience.
Sometimes, you might already be acquainted with some of your competitors if you’ve been active in your community, which is not the worst idea because staying in touch with the community of your local businesses is one of the ways you can see what your competitors are up to, and if anything they’re doing is something that you can use for your own business.
Interfacing with other business owners in your field, face to face, is a much better way to get to know them and learn from how they run their businesses than just looking up as much information as you can online.
Search Online Listings for Competing Businesses
That works too, though. In addition to a meet-and-greet with a fellow business owner whenever possible, you should also take advantage of the information available online to learn as much about your competitors as you can. You can find your competitors in a few different ways.
A good way to start is to run searches through various channels for other businesses that provide the same products or services that you do. The most obvious avenue is to check listings through various sources like Yelp, YP (Yellow Pages, the website), local directories in your area such as the Chamber of Commerce, and any sites that you can find with company listings organized by category.
Once you find similar businesses to your own, you can then do some further research to look into them, find out if their products or services are the same as yours, and see whether or not they are actually your direct competitors.
See What Works for Your Competitors
So, now that you’ve discovered your competitors, you can take the opportunity to learn from what they are doing. They may have some great ideas for a product that you never thought of, and you can use the same good ideas for your own product.
Some businesses feel like that is an easy way out (and it is), but it’s certainly not unethical in any way. The idea is to build on the success that your competitors have had and to learn from their strategy and technique in any aspect of their business—not just their product.
It’s also worth noting that there is a difference between using methods and styles of competing businesses to use them in your own business, and outright stealing an exact design or plagiarizing their work, brand slogan, etc.
The former is just a way to improve your business by learning from the experience and strategy of another business; the latter is unacceptable because simply stealing the end result achieved by another business, after they’ve undergone a long process of development, nullifies their hard work and actually cheapens your product because it’s completely unoriginal, not to mention highly unethical.
Finding Gold in the Slush Pile
So, what are some examples of things you can take from your competitors, and use for yourself? Perhaps you’re researching a competing business that you found online, and you find out that the business accepts many different payment options instead of just credit cards.
As you look into it and find out that the multiple payment method strategy is working well for your competitor, then you might start accepting all kinds of payments, too, because you just have to use what works.
That is a perfect example of something that you can learn from a competitor and implement it for your business. You’re not stealing a design, you’re not plagiarizing anything, and you’re not taking something for yourself that doesn’t belong to you.
All you’ve done is learn a new process for accepting payment, which is an idea very much in the public domain and simply a useful upgrade for your methods for taking payments from customers. Basically, when you’re just utilizing tips, tricks, and strategies to help you improve how you do business, it’s completely acceptable and very useful to grow your business.
Learn from Their Mistakes
These can be some of the most valuable lessons to take from competitors. There’s no reason that you should repeat the same mistakes which other businesses in your field have already made, just because you were unaware of those mistakes. The only challenge with this method is finding out what those mistakes are.
To begin, you may even be able to simply ask a competitor, directly, what problems they’ve had and what kinds of things have not worked out for them. Taking this direct approach won’t always work, and you might have trouble just getting in touch with the owner of a business.
Many business owners, however, will be happy to give you a bit of advice on what to avoid or watch out for, as a kind of professional courtesy. An experienced entrepreneur knows that you’re not a threat just because you want some advice for improving how you run your business.
They know that they’re already established with their own business and won’t lose their existing customers or new sales because you’re just not a threat to them. As we mentioned before, the size of the market in a given field is sufficient to provide customers to all the competitors in that space, simply because there are enough customers to go around (if there are enough customers to go around in that instance).
Learn What to Watch Out For
Learning about pitfalls that you can avoid before they happen can save you a lot of time and money that you would otherwise waste. Something you can do to identify those pitfalls is to look at ongoing mistakes that are happening right now in your competitors’ companies.
What you do is observe a competitor’s business, watch for things that they appear to be doing wrong, and make a note of it so that you can avoid those things. This is a valuable strategy because what it allows you to do is to essentially pinpoint mistakes in a business like yours and completely avoid them, without ever having to suffer the consequences of those mistakes, yourself.
It’s kind of like when your Grandma tells you not to mess around with that girl you’re with because she knows the girl is trouble, and you actually listen to her and get rid of the girl before things get ugly. You can avoid mistakes without ever needing to go through them.
Look at Your Competitors’ Customer Reviews
In the same way that you can learn valuable information from your own business’ reviews, you can learn from competing business’ reviews, too. Most small businesses are not going to be doing this kind of research, but they should be because what better place is there to gather information about how your competitors are actually performing, than the customers, themselves?
You can obtain all kinds of useful insights from reading your competitors’ customer reviews, mostly because you’re getting the information, unadulterated. And depending on how you want to process that information, you can either search their comments for specific complaints people had about the product, or you can just read through them and take the comments as they come.
Get Specific Details from Customer Comments
What are people saying about their product? What did they like about it, and what did they hate? Once you start looking through the reviews more deeply, you’ll get a comprehensive picture of how people are responding to your competitor’s company, which can quickly inform the strategy, structure, etc. that you should be using for your own company.
Just looking at the number of people who respond in a generally positive way, and how many responded negatively, can give you a lot of insight. One other aspect that can be really useful is to look at the reviews for a product that you’re planning to release but haven’t released yet.
This way, you can see how it’s working out for your competitor first, to help you decide if you will need to change your thinking about that product, or if you want to offer it at all.
Customers Have a Lot to Say
You may not get the exact, specific details that you’re looking for, but you’ll be surprised how much information you find about a business, just from the content in those customer reviews.
When a customer writes a review for a business, they have some things to say, and they’re usually going to give some details about the experience they had with that business. That’s the kind of thing that you want to see when you’re doing your research, the description from a customer of exactly what it was like to be a customer.
You will naturally want to see the negative reviews, so that you can find out exactly what you should not be doing, but the positive reviews are helpful, too, because they will tell you when to double down on certain elements that people really liked.
Competition is a Good Thing
Your competitors are going to be there whether you like it or not, so while they are there, you might as well get something from them. What you can get from them is mainly knowledge, but if you just pay attention to how your competitors run their businesses, you can learn a lot more than that.
First of all, the fact that you have competitors is a really good sign because it means there’s a large market for what you’re selling, and customers are paying attention. Both you and the other businesses like you are all trying to do the same thing. That being the case, you can take what they have learned, what is making them successful, and where they fall short.
All you really have to do is pay attention to your competitors, and you’ll be able to much more quickly figure out how to reach your customers, what strategies are going to work, and which ones will not.
Stephanie is the Marketing Director at Talkroute and has been featured in Forbes, Inc, and Entrepreneur as a leading authority on business and telecommunications.
Stephanie is also the chief editor and contributing author for the Talkroute blog helping more than 100k entrepreneurs to start, run, and grow their businesses.