Editor’s note: “The Angel Connection” is a regular feature in WRAL Local Tech Wire. LTW asked consultant Bill Warner to share advice for entrepreneurs seeking angel investors and/or venture capital investment. He is chairman of the Triangle Accredited Capital Forum, an angel investor network with over 100 members throughout the Southeast.
RESEARCH TRIANGLE PARK – Once you have pulled together your competitive assessment, investors want to see how you are going beat them.
You product or service certainly has to meet a compelling market need, but you better know how to beat all comers.
How to Use Your Competitive Analysis
Once all the information is available, your strategic initiatives come from summarizing what you have learned from the competitive assessment.
Here are a few examples of possible summary points:
• They are missing many of the key product features that are required to win in the marketplace
• They are financially weak by carrying too much debt
• They have a cost disadvantage so dropping their prices will be hard
• They are spending far too much on development at this point in their maturity
• They are loosing market share and don’t seem to be responding with new marketing initiatives
• They could merge with another company and become a powerhouse
• Their customers dislike the quality of their service
• They are missing a great opportunity in another market
• If we had integration partners we would have a key strength they don’t have
• Their management changes indicate they are preparing to sell the company
• They have three rounds of funding and their investors are tapped out
Strategies for Winning
From your summary, formulate what the most effective initiatives will be to assure your company’s success. Your company cannot have several competitive strategies; only one. So, your strategy has to be the composite of what you need to do to beat the ones that matter. The ones that matter are those that have the greatest strengths and represent the greatest threat.
Here are some examples of strategic initiatives that illustrate what the elements of a possible competitive strategy are:
• We will position the company as having the most comprehensive solution because none of the competitors really offers all of what buyers need
• The chemical industry is best for us because none of the competitors have presence there
• Our cash position is strong, and theirs is running low, so we will spend money on marketing initiatives and gain market awareness with our superior product
• We will partner with the leading complementary software product company and present a more complete solution than any of our competitors
• They cannot drop their price; our price is below theirs and we offer much more
• We will partner with the large integration services companies where our product adds value to what they are offering
• Briefings will be given to all the leading industry analysts so they know how superior we are when they advise their clients
• Our media blast will position us as an emerging leader with more capability for much less money
• We will feature our patented technology which gives a tremendous improvement to our customer’s processes and save them money
Proceed to Win
Your basic marketing strategy and product plan needs to be founded in a sound understanding of what it takes to win. Have a solid and realistic understanding of what you are up against. This leads you to respond in a way that overcomes all objections you are going to experience from customers or investors.
So, create a winning strategy. It’s a good thing.
About the author: Bill Warner is the managing partner of Paladin and Associates, a business consulting firm in the Research Triangle Park area of central North Carolina, and is the chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast.