Entrepreneurs possess unique characteristics and traits that drive them to identify, create, and pursue opportunities to innovate, develop businesses, and create value. Here are some key characteristics of entrepreneurs:

Visionary: Entrepreneurs often clearly envision what they want to achieve. They can see opportunities where others might see challenges or obstacles. Their vision guides their actions and decisions, helping them to stay focused on their long-term goals.

Passionate: Passion is a driving force behind entrepreneurship. Entrepreneurs are deeply passionate about their ideas, products, or services. This passion fuels their commitment, perseverance, and resilience in facing setbacks and challenges.

Risk-taker: Entrepreneurs are willing to take calculated risks to pursue their goals. They understand that entrepreneurship involves uncertainty, and that failure is a natural process. However, they are not reckless; they carefully evaluate risks and opportunities to make informed decisions.

Innovative: Innovation is at the heart of entrepreneurship. Entrepreneurs constantly seek new and better ways to solve problems, meet needs, or fulfill desires. They embrace creativity and are not afraid to challenge the status quo.

Adaptable: Entrepreneurs operate in dynamic and often unpredictable environments. They must be flexible and able to quickly adjust their strategies and plans in response to changes in the market, technology, or other external factors.

Resilient: Building a successful business requires resilience in the face of adversity. Entrepreneurs encounter numerous obstacles and setbacks along the way but have the resilience to persevere and bounce back from failure. They view setbacks as learning opportunities and remain determined to succeed.

Self-motivated: Entrepreneurs are self-starters who are driven by internal motivation. They do not rely on external validation or incentives to act; instead, they are driven by a deep sense of purpose and intrinsic motivation to pursue their goals.

Resourceful: Entrepreneurs are resourceful problem-solvers who know how to make the most of limited resources. They are adept at finding creative solutions, leveraging their networks, and strategically using available resources to overcome challenges and achieve their objectives.

Leadership: Successful entrepreneurs are influential leaders who can inspire and motivate others to work towards a shared vision. They possess strong communication skills, empathy, and the ability to build and empower teams.

Persistence: Persistence is a hallmark trait of successful entrepreneurs. They are not easily discouraged by setbacks or failures; instead, they maintain a steadfast commitment to their goals and continue to pursue them with determination and resilience.

These characteristics are not mutually exclusive, and entrepreneurs often possess a combination of these traits in varying degrees. Additionally, these characteristics can be developed and refined over time through experience, education, and personal growth.

As we think about entrepreneurs, it is fair to say that in many cases, entrepreneurs need to possess the knowledge or business acumen common to more experienced business leaders. For example, entrepreneurs often need help articulating their vision in a strong business pitch. Consequently, the entrepreneur might need help with funding or financing their vision. New entrepreneurs are generally functional area experts and might need help understanding the full suite of business functions, such as sales, marketing, manufacturing, human resources, finance, accounting, and engineering.

Historically, successful entrepreneurs might be labeled as born into entrepreneurship; however, in nearly all cases I have experienced, great entrepreneurs are life-long learners. They pursue their vision through curiosity and an appetite to learn. They leverage their strength by surrounding themselves with others with expertise in key business areas. However, they are often a one-man or woman show before they can surround themselves. Consequently, new entrepreneurs devour help to see their vision come to life.

At the Auburn New Venture Accelerator, we provide new and existing entrepreneurs with the tools and encouragement necessary to pursue excellence. In this document, we are sharing our best practices for competitive analysis.

What is Competitive Analysis

 

Competitive analysis is evaluating and understanding the strengths and weaknesses of competitors operating within your business’s industry or market space. It involves gathering and analyzing information about your competitors’ strategies, products or services, market positioning, strengths, weaknesses, and other factors that can impact your own business.

The primary objectives of competitive analysis are:

Identifying Competitors: Understanding who your competitors are and what they offer regarding products, services, and value propositions.

Assessing Competitive Strengths and Weaknesses: Evaluating the strengths and weaknesses of competitors relative to your own business. This includes understanding their market share, brand reputation, distribution channels, pricing strategies, technology, and innovation capabilities.

Identifying Opportunities and Threats: Analyze the competitive landscape to identify opportunities for growth and expansion and potential threats to your business. These could include new market entrants, disruptive technologies, changes in consumer preferences, or shifts in regulatory environments.

Informing Strategic Decision-Making: Use insights gained from competitive analysis to inform strategic decision-making processes. This could involve adjusting marketing strategies, refining product offerings, making pricing adjustments, or entering new market segments.

Monitoring Changes in the Competitive Landscape: Competitive analysis is an ongoing process that requires tracking changes in the competitive landscape over time. This allows businesses to stay agile and responsive to emerging threats and opportunities.

Competitive analysis typically involves a combination of qualitative and quantitative research methods, including:

Market research: Gathering information about market size, growth trends, and key players.

Competitor profiling: Creating detailed profiles of competitors, including their business models, product offerings, target markets, and key differentiators.

SWOT analysis: Assessing the strengths, weaknesses, opportunities, and threats facing each competitor.

Benchmarking is comparing your own business performance metrics (e.g., sales, profitability, customer satisfaction) against those of your competitors.

Market surveys: Collecting customer and industry experts’ feedback to understand competitors’ perceptions and their offerings.

 Why is Competitive Analysis Important?

Entrepreneurs tend to be hyper focused on their product or service and miss the reality that business success reaches far beyond the product and/or service that a company offers. For example, why is Chick-fil-A so dominant when compared to other fast-food franchises? What differentiates Chick-fil-A? I won’t debate this idea with you. I will simply ask the question, is it only the chicken?

 

The key to building a competitive and dominant company goes well beyond the product and service. It is not just about chicken at Chick-fil-A.  Competitive analysis provides a method of understanding your business relative to your competitors. It allows you to plan strategically the process you will follow to dominate your competition or lean into their markets and take share. Dominance is not always the goal. A niche business strategy that allows you to pull away customers from competition that might not serve those customers and their needs is an excellent strategy for entrepreneurs. For example, the soft drink market is enormous globally but rich with niche markets, including bottled water. Bottled water had a dramatic impact on the soft drink industry.

Throughout the 1980s and 1990s, the bottled water industry experienced significant growth, driven by concerns about tap water quality, increased health consciousness, and the convenience of bottled water for on-the-go consumption.

Today, bottled water is a multi-billion-dollar industry worldwide, with numerous brands and varieties available to consumers. However, it also faces criticism for its environmental impact, particularly regarding plastic waste and the carbon footprint associated with production and transportation. What was the response to the ecological pressure on bottled water containers? An entirely new market for environmentally friendly water bottles.

 

The Process of Competitive Analysis! 

Completing competitive analysis is an ongoing process. There is no end, but there is a beginning. The beginning requires a commitment to a few fundamental ideas.

 

1. Competitive analysis demands your attention now and every day in the future!
2. Competitive analysis reveals opportunity and risk!
3. Developing competitive data is time-consuming and difficult!
4. Market studies contribute to competitive analysis, but more is needed!
5. Experience is better than speculation or assumption!

 

Now and Forever

 

Now and forever, it feels demanding, but time changes everything. Think about bottled water. When first introduced in plastic bottles, the product was a huge success. Years later, the environmental impact of plastics demanded change. The product, water, was still in demand years later, but the packaging was impacting market share and growth.

 

Entrepreneurs with a great product or service idea will be challenged as their success grows. Consequently, all business leaders must see the ongoing need for competitive analysis and research around their markets and customers. At one time, Kodak dominated the film market globally, and cameras were a product category that stood alone. Today, camera film is dominated by mobile phones with cameras; photos are digital and stored. Did Kodak see the impact mobile phone cameras would have on their business?

 

Opportunity and Risk

 

The opportunity and risk for a product or service depend on how it fits into existing markets or the strength of the idea to create new markets. Competitive analysis unfolds the opportunity and risk. The Auburn New Venture Accelerator offers a book on Startups that provides an overview of the journey. In this document, we asked, “What job does your product or service do?”  “What would customers hire your product or service to do?”   The concept comes from the book Competing with Luck. (we need to cite the reference properly). It is essential to ask these questions about your competitors’ products or services.

 

Time-Consuming

 

Collecting competitive data is time-consuming. In the Startup Journey, we talk about “time friction” and how the desire to complete a task quickly will often lead to a compromise in the outcome of the work. Competitive analysis suffers from time friction. Understanding your competition, market, customer, and strengths and weaknesses takes time. Keep going. Accept that competitive analysis is an ongoing process. Great companies make it part of their DNA. It is omnipresent in their thoughts and strategies. In doing so, you will realize the compound factor of continuous learning, and your business will benefit from the DNA surrounding competitive analysis.

 

Market Studies

 

Market studies are great tools; however, they nearly always need more depth to drive business performance. Additionally, market studies tend to look at the past and the here and now. They could be better forecasting tools because assumptions are always based on the past.

 

When Apple entered the personal computer, music, or mobile phone markets, I promise they were relying on something other than market studies for most of their strategy. They were offering alternatives to the existing solutions customers were buying. Apple was a fast follower with a desire to improve the user experience. Their competitive analysis told them that customers loved the promise of technology but were frustrated by the learning curve and the difficulty of reaching productive experiences.

 

When I was a CEO in the technology space, I preached the concept of FUMIFU (First Use Must Inspire Future Use). While FUMIFU was my cute way of motivating my developers, Apple cracked the code on FUMIFU in every market they entered. Apple was innovative, but they won because first use inspired future use from their customers. And it remains true today.

 

Market studies are not inadequate tools; if available, I suggest you purchase them; however, they are not a substitute for great competitive analysis.

 

Experience beats Assumptions and Speculation.

 

The single, most common mistake I see entrepreneurs make begins with the assumption or speculation that they have the best idea, best product, and best service.   Their vision is often built around their own experiences but might need to be supported by others, particularly future customers.

 

If you can quantitatively and qualitatively support your claims, you are likely to succeed or at least be surprised by the resiliency of your competition. The key is to gather accurate and justified data on the performance of your product or service relative to the market, customer, and competitors. The best competitive analysis uses head-to-head testing, focus groups, and customer experiences. The power of social media offers entrepreneurs unfiltered feedback on what customers like and don’t like about your company, your product, and your service. Invite it and listen to it. Don’t resent it. Please don’t ignore it.

 

 

 Elements of Compettive Analysis

 

The elements of competitive analysis can be found on any search engine.   Before we deliver these, I want to share a perspective that was extremely valuable for me as CEO. “Customers will not consider your product or service unless you meet the minimum requirements of the market,”  I call this the market ante. If you play poker, you know every hand starts with an ante, a minimum bet everyone must make if they want to play.

 

The market ante, or ante, is defined by the minimum requirements for entering the market. For example, ten years ago, food delivery was a value add for restaurants and grocery stores. Why? Because most suppliers didn’t offer delivery. In many cases, suppliers still need to provide pick-up. Today, post-COVID, nearly every food service offers delivery and pick-up. If you don’t, you are losing share. In simple terms, delivery services moved from value-added to an ante. (This is a reminder that things change, paying attention matters, and competitive analysis is ongoing).

 

A second concept that I hold in my research is market value. What is your customer willing to pay for your product or service? It has a market value if you are willing to pay for it. Here is a simple example: a cup of coffee at Starbucks costs nearly $4.0 compared with a few dollars at the convenience store or is accessible in the hotel lobby. What is the value of a cup of coffee? It depends on location, quality, and brand.

 

An outline of the critical elements is helpful as you consider competitive analysis. Here is a general summary of the elements for competitive analysis.

 

1. Introduction
• A brief overview of the startup and its industry.
• Importance of competitive analysis in strategic decision-making.
2. Identification of Competitors
• List all direct and indirect competitors.
• Direct competitors offer similar products or services targeting the same customer segment.
• Indirect competitors offer different products or services but compete for the same customer’s needs or budget.
3. Market Overview
• Size and growth rate of the market.
• Key trends, drivers, and challenges shaping the industry.
4. Competitor Profiles
• Detailed profiles of each competitor, including:
• Company overview: size, location, history, target market.
• Products or services offered.
• Pricing strategy.
• Distribution channels.
• Marketing and advertising strategies.
• Strengths and weaknesses.
• Unique selling propositions (USPs).
5. SWOT Analysis
• Conduct each competitor’s SWOT analysis (Strengths, Weaknesses, Opportunities, Threats).
• Identify their advantages and disadvantages compared to your startup.
6. Market Positioning
• Map out the positioning of each competitor of your startup.
• Determine where your startup stands in terms of price, quality, features, and target market.
7. Customer Analysis
• Understand the customer segments targeted by each competitor.
• Analyze customer preferences, behaviors, and feedback.
• Identify gaps or unmet needs in the market.
8. Technology and Innovation
• Assess competitors’ technological capabilities.
• Identify any patents, intellectual property, or proprietary technology.
• Evaluate their innovation pipeline and future potential.
9. Distribution Channels
• Analyze how competitors distribute their products or services.
• Evaluate the efficiency and coverage of their distribution networks.
10. Sales and Marketing Strategies
• Review competitors’ marketing campaigns, messaging, and branding.
• Evaluate their online presence, social media engagement, and advertising efforts.
• Analyze sales tactics, promotions, and customer acquisition strategies.
11. Financial Analysis
• Examine competitors’ financial performance (if publicly available).
• Assess revenue growth, profitability, and market share.
• Look for any patterns or trends that may impact your startup.
12. Conclusion
• Summarize key findings from the competitive analysis.
• Identify potential opportunities and threats in the market.
• Outline strategic recommendations for your startup based on the analysis.
13. References
• Include all sources and references used for gathering information during the competitive analysis.

The work required for competitive analysis is daunting and time-consuming. Time friction will be a factor. Please understand that the details matter. Taking time to complete a thorough and honest competitive analysis will allow you to make sound strategic decisions.

In this document, I won’t belabor each element; however, I want to review each and offer comments for consideration that should help you complete the work meaningfully. I will skip over the introduction and begin with the competitors.

Competitors:

 

Understanding competition can be challenging! Direct competitors are often easily identified; however, indirect competition could be more obvious. As you approach competition, challenge yourself and your team to consider competitors that are not direct.

 

For example, in the early 1990s, when Apple introduced the iPod, were the companies publishing music CDs prepared for the competition resulting from the iPod? When UBER was conceived and introduced to the transportation industry, were taxis ready for the competition? When streaming was introduced to the entertainment industry, were movie theaters prepared? In all cases, it is more than likely that the traditional suppliers to these markets must be adequately prepared for the resulting entry from unexpected competitors.

 

Identifying indirect competition becomes very important when you enter a market. Take your time, do it right, pursue the alternatives, and do your homework.

 

Markets

 

Understanding your market is very important. It drives your strategy, forecasting, and capital investments. Startup companies often need to pay more attention to their market opportunities or grossly overestimate the market.

 

How can you tackle market size? In simple terms, whether you sell a product or provide a service, market size is a function of the population of people or companies that would directly benefit from your offering. Consequently, focus on the census of those customers—who will benefit from your product and service, and where are they found?

Work to answer these questions:

1. Are there trends underway in the customer universe that your product or service leans into and would benefit from today?
2. What is driving those trends? Do customers need more current offerings?
3. How do current offerings fall short of satisfying customers?
4. Are there external forces that are driving change? i.e., environmental law or consumer perspectives
5. Are there new challenges that current suppliers face and that require change?

Competitor Profiles

 

The outline for competitor profiles provides an excellent foundation. I offer a few additional thoughts here.

 

1. Work to learn how the business is financed. What does the balance sheet look like?
2. Understand and map the organization and its people. Who is CEO, CFO, and sales leader?
3. Try to profile the company’s personality. Aggressive, passive, reputation

 

Work to understand more than the quantitative aspects of your competition. All companies are made up of people, and people have personalities and tendencies. Learn the personality and tendencies of your competition.

 

So, how can you profile your competition’s personality? Meet your competition and get to know them. You can do this by visiting their company, attending industry events, attending marketing promotions or other company public events.

 

Technology

 

Understanding your competitor’s unique position with technology and intellectual property might be the most critical competitive information required. Patent positions, intellectual property, and proprietary information present the challenges your startup must understand to compete.

 

Why do I rank this portion of competitive analysis so high? Infringing or not understanding IP (intellectual property) can destroy a startup with lawsuits or injunctions. Pay attention and do the work necessary to understand how your product fits against your competitor’s IP.

 

Distribution and Sales and Marketing

 

Distribution, Sales, and Marketing are among the most accessible elements of competition to research. Salespeople love to talk, so why not speak to them? Marketing is put in the market for everyone, and distributors always look for new products.

 

The most important part of researching distribution, sales, and marketing is reverse engineering the actions you observe from your competitors to define their driving force or strategy for customer success. Don’t look at these three elements individually; think about how they fit together to form a “go-to-market strategy” for your competition.

 

Financials

 

You can get the annual report and dive deeply into the financial reports for a publicly held company. Gathering necessary information is no problem; however, when you are researching a privately held company, financial information is difficult to secure.

 

There is no magic wand to secure accurate and complete financial information; however, you might be surprised by what you can learn.   As a first step, network in your industry and ask peers what they know, think, or can confirm. You might be surprised at what you learn. You can also learn a great deal by observation. As an example, most industries have metrics. Research the average revenue per headcount in your industry and use this to estimate your competitors’ sales by headcount.   Do the same for margin, percentage of sales and marketing as a percent of sales, and net profit averages. Use public company financial ratios to estimate your competition’s financials.

 

Understanding your competition’s financial data isn’t critical compared to the other elements. It helps you forecast and anticipate what to expect from your business, but if you can’t get it all, don’t worry that much about it.

 

 Summary

 

Competitive analysis is a crucial process for businesses to understand their position within their industry and identify competitors’ opportunities and threats. By systematically evaluating the strengths and weaknesses of competitors, companies can gain valuable insights into market trends, customer preferences, and emerging technologies. This analysis informs strategic decision-making, helping businesses to capitalize on their strengths, address weaknesses, and identify opportunities for differentiation and growth. Ultimately, competitive analysis empowers businesses to stay agile and responsive in a dynamic marketplace, enabling them to maintain a competitive edge and achieve long-term success.

 

Competitive analysis holds paramount importance for startup companies for several key reasons:

1. Understanding Market Landscape: Startups often enter industries with established competitors. Conducting a competitive analysis helps them understand the existing market landscape, including the number of players, their offerings, and market dynamics. This understanding enables startups to identify gaps, opportunities, and potential niches to target.
2. Identifying Competitors: Startups must identify direct and indirect competitors to assess their strengths, weaknesses, and market positioning. Knowing who their competitors are allows startups to develop effective strategies to differentiate themselves and carve out a unique market position.
3. Informing Product Development: By analyzing competitors’ products or services, startups can gain insights into customer preferences, feature gaps, and emerging trends. This information is invaluable in informing the development of their own products or services to meet or exceed market expectations.
4. Setting Competitive Pricing: Competitive analysis helps startups benchmark their pricing strategies against competitors. By understanding how competitors price their offerings and the value they provide, startups can determine optimal pricing strategies to remain competitive while maximizing profitability.
5. Identifying Unique Value Propositions: Startups must differentiate themselves from competitors by offering unique value propositions. Competitive analysis enables startups to identify areas where they can excel, whether through product innovation, superior customer service, or other competitive advantages.
6. Marketing and Branding Strategies: By analyzing competitors’ marketing and branding strategies, startups can gain insights into effective messaging, channels, and tactics to reach their target audience. This allows startups to tailor their marketing efforts for maximum impact and differentiation.
7. Risk Mitigation: To mitigate potential challenges, startups need to understand competitive threats and market risks. Competitive analysis helps startups anticipate competitor reactions, market disruptions, and other external factors that could impact their business, enabling proactive risk management strategies.
8. Attracting Investors: Investors often scrutinize a startup’s understanding of its competitive landscape as part of their due diligence process. A comprehensive competitive analysis demonstrates to investors that the startup clearly understands its market positioning, differentiation strategies, and growth potential.

In conclusion, competitive analysis is indispensable for startup companies, as it provides valuable insights and strategic guidance for navigating competitive markets, differentiating their offerings, and positioning themselves for long-term success.