Generally speaking, entrepreneurs do NOT like competition!
And can you really blame them? As a business owner, competition makes things a lot more… let’s just say… challenging.
But what if that’s not necessarily a bad thing? In fact, what if (bear with us here) the challenges brought on by competition lead to better products and services?
At CapForge, we firmly believe that competition spawns innovation. And while that may seem far-fetched to you now, we promise that if you keep an open mind while reading the rest of the article, you’ll start to see competition in a whole new light.
And so, without further adieu, we present to you 10 positive ways to look at market competition:
1. Forces You to Think Outside the Box
When you’ve got rivals, you’re always trying to think of ways to outsmart said-rivals. This, in turn, can lead to some very creative ideas you may not have otherwise thought of.
For example, when Phil Knight, co-founder of Nike, set out to create the world’s best track shoe, he already faced steep competition from Adidas and Puma—two of the leading brands at the time.
Rather than reinvent the wheel by merely mimicking what had already been done, he decided to create his own unique footwear; shoes that were lighter, had better grip, and were more durable than anything else currently available on the market.
While it took him and his team years to crack the formula, they eventually did, and now Nike is a 30 billion dollar company. Innovation at its finest.
2. Highlights Areas for Improvement
Nobody likes the idea of a bright spotlight being shone on their weaknesses. But if you want to improve your business and attract more customers, you’re going to have to take a long, hard look at your shortcomings.
Oftentimes, our competitors outperform us because they excel in an area we are deficient in. Maybe their designs are more stylish. Maybe their customer service is better. Maybe their marketing campaigns are more effective.
Whatever the case may be, it’s your job as an entrepreneur to identify those weaknesses and strengthen them. Doing so will lead to continual improvements that will keep your company moving forward.
3. Helps You Better Understand Your Customers
Studying your competitors can tell you a lot about the market at large, including why consumers choose one brand over another, as well as which demographics are most apt to purchase your products or services.
Understanding your customers’ needs will not only help you define your target audience, it will also help you create value by designing products or services that cater to their preferences.
4. Gives Customers an Alternative
You’re probably wondering how on earth this could possibly be a good thing, but there are situations in which a customer may not be the right fit for your particular product or service.
We’ll use ourselves as an example here. As a small business bookkeeping firm, we’re sometimes approached by large corporations with projects that are simply outside of our scope. Rather than take on a project that is beyond our capabilities, we instead refer them to another reputable accounting firm that has the resources available to accommodate their needs.
For example, some clients are interested in a service that can post invoices for them and then follow up with those customers to collect payment as part of the overall accounting service. That’s not something we offer so if that’s their need, we’ll happily refer them to a service that can accommodate that request. We’d rather save our time and effort for clients who need exactly what we offer and will benefit most from our services. That way, everyone wins.
5. Drives Lower Prices
Everyone knows that price is one of the primary factors consumers consider when shopping. And because of that, competing companies are constantly trying to outbid one another in a perpetual game of price limbo: how low can you go.
While this puts a lot of pressure on businesses, in the end it’s a good thing for consumers and society at large. Remember: no competition = monopoly. And the problem with monopolies is that they can charge whatever exorbitant amount they want and people will still pay it because there is no other option.
6. Increases Efficiency
The pressure to cut costs often leads to the advent of new technologies and systems that not only save both time and money, but increase output as well.
Take the tractor, for example.
“The ascent of the tractor brought with it the beginning of the mechanical age of farming… farmers could turn soils, carry heavier loads, and bring in their harvests in a way they never could have imagined with animals,” writes Yokohama, a company that specializes in off-highway tires. “The widespread use of the tractor had such a dramatic impact, that it’s still the backbone of the modern farm a hundred years later. Before the gasoline farm tractor, a farm grew food for two other people—today, one farm can feed as many as 130 people.”
What new processes might you adopt to ramp up productivity?
7. Boosts Consumption
You would think that the more competitors you have, the less sales you’ll make, but that’s not always the case. In fact, sometimes your competitors end up boosting your sales!
For example, when air conditioners were first introduced, the majority of consumers considered them to be a waste of money and space. It wasn’t until other companies began releasing their own air conditioning units that the devices became more commonplace.
These days, you can get a reasonably sized air conditioner for an affordable price, and it’s all thanks to market competition!
8. Promotes Nationwide Economic Growth
It’s easy for entrepreneurs to get so wrapped up in “me” that they forget to focus on “we.” As povertycure.org points out, entire nations benefit from market competition:
Countries that possess and foster competitive markets tend to encourage the entrepreneurial spirit and experience economic expansion over the long-term. Countries that suppress market competition, however, tend to have less entrepreneurs and therefore, experience less economic growth.
9. Pushes You to Create a Better Workplace Environment
One of the most valuable assets you have as a business owner is your employees. Fortune 500 companies know this, which is why they go to great lengths to attract top-tier talent, offering everything from snack bars to relaxation rooms to onsite daycare. And that’s in addition to standard benefits like health care, retirement plans, and paid time-off.
You want the best of the best on your team, which means you need to give them a reason to work for you as opposed to your competitor. Even if you’re operating on a small budget with limited funds, there are always little adjustments you can make here and to make your company more attractive to job seekers.
10. Keeps You on Your Toes
As much as we all like to whine and moan about our problems, imagine how boring life would be if everything were easy. Not only would it be boring, but we would also suffer from lack of fulfillment, considering that overcoming obstacles is part of what gives our lives meaning.
When you’ve got competition, life is anything but boring! A good rival keeps you on your toes, as you’re constantly anticipating what their next move will be. Also keep in mind that if you didn’t have competition, you would become complacent, and complacency stunts innovation.
For all the emphasis placed on operations, finance, and marketing, it’s a shame that many business owners don’t place the same level of importance on cultivating the right mindset. After all, mindset plays a HUGE role in one’s likelihood to succeed.
Think about it. If you view market competition in a negative fashion, you’re more likely to feel discouraged and give up when times get tough. On the other hand, if you view market competition optimistically, you’re more likely to embrace the challenges you face and grow from them.
That being said, at the end of the day it’s your choice as to whether you view the glass as half empty or half full.
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