Editor’s note: “The Angel Connection” is a new feature in WRAL Local Tech Wire. LTW asked consultant Bill Warner to share with readers advice for entrepreneurs seeking investment. He is chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast. The Angel Connection is published on Mondays.
RESEARCH TRIANGLE PARK, N.C. – It’s going to be a bad day when your potential investor knows more about your competition than you do or identifies competitors that you have not considered.
If you show that you don’t know your competition, your potential investor will have little regard for your understanding of how to win in your marketplace.
Here are some tips for being smart about your competition.
No Competition, Really?
It’s even worse if you say that you do not have competitors because you are in a new market or nobody has a product or service like yours. That may be true but there’s no such thing as no competition. After all, your primary competitor is the status quo. However your buyer solves the problem today is your first competitor. So your first competitors are your buyers themselves. Whatever you are selling has to improve their productivity in a material and measurable way.
Find Them All
Do a thorough search for relevant competitors. Think broadly about what a competitor is based on your understanding of the various ways your buyers can solve their problem. For everyone you identify, find out about their:
• Business strategy and model
• Chosen market segment(s)
• Product and services offering
• Marketing and sales strategy
• Distribution channels
• Manufacturing strategy
• Management team
• Alliance partners
• Current business performance
I am sure you have heard about Strengths, Weaknesses, Opportunities and Threats (SWOT). This kind of analysis should be taken very seriously. You need to know all four of these dimensions about each of your competitors. From this information you can then formulate your competitive strategy to beat them.
Whether your competitors have weak sales experience, a price disadvantage, weaker features, poor support infrastructure or a myriad of other issues, you learn all about them by a thorough analysis of each of them. Once known, you attack their weakness with your strengths.
Be Current and Conversant
Stay current on your most important competitors. Be well read about their status so that you can take action if necessary. Competitive analysis is really a life long practice. You need to be able to effectively communicate what you know about them to not only investors, but customers, alliance partners and employees.
You need to always know everything about your competitors.
Bill Warner is the Managing Partner of Paladin and Associates (www.paladinandassociates.com), a business consulting firm in the Research Triangle Park area of central North Carolina, and is the Chairman of the Triangle Accredited Capital Forum (www.capital-forum.com), an angel investor network with over one hundred members throughout the southeast.