Ideas and Validation July 22, 2020

Should you be scared of the competition when starting a business?

Prakriti @prakriti108

In my opinion, you should avoid sectors that DO NOT have competition. The reason for the same is that if the sector is worthwhile of pursuing, it will have players. It is also beneficial in that you may not have to spend substantial time and resources in educating customers.

That being said there are a few strategies and business frameworks you can use to win against competition. Please see below:

Market Selection & Product Positioning

-The best case scenario is that the market is large but fragmented, and has some barriers to entry like such regulatory, technological, geographical limitations which result in fewer new entrants.
-Start with something that the customers fundamentally understand but with a clear innovation that you can market around. Ideally start with cloning 80% of what competitor does and innovate on 20%.
-If you add all of the competitors' features + 1, you will have to put in more effort and competitors can easily copy that one additional feature. The best response is to have a simpler product that attacks the current shortcomings of the market leader with a different market position and different design intentions.

Beat Competition by Disruption

-Disruption is not throwing off an existing company only. It means:

  1. Targeting segments which could not earlier access the service/product. Eg Airbnb, Run the World (people who have never been on a conference attending it online)
  2. Taking away cheapest customers from the current set of customers by providing a low cost offing (low-end disruption). Eg: Canva
    Disruption works in industries with large players as they do not consider the market segments being targeted by the disruptor as attractive enough to target, and hence give small businesses a moat to generate good business results even in the face of compeition.

Beat Competition by Blitzscaling

-Blitzscaling refers to the practice of prioritising speed over efficiency in industries with winner take all situation, where getting in early and growing fast makes all the difference.
-This is a risky exercise, and involves leveraging existing network and distribution and creating a product where people are incentivised to bring other people on board.
-Taking feedback from customers and having mentors in the industry you can discuss business with will be useful.

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  1. 2

    We built and didn't market it as aggressively enough as we should, so in those years there are far more competitors come onto the scene. I actually welcome it as its making my job of selling the idea for the service a lot easier with lots more services doing it.

    So all I need to do is focus on making mine the best and when people check the competition to get the right product then hopefully they pick me

  2. 2

    I like the idea of finding popular products that are becoming bloated and creating a lighter, faster, cheaper alternative.

    1. 1

      Unbundling + disruption :)

  3. 1

    Thank you for this valuable insights.
    And I completely agree on this: "Start with something that the customers fundamentally understand but with a clear innovation that you can market around."
    In my case, instead of coming up with something completely new that doesn't exist yet, I went with a product that already existed. But for uniqueness to my product, it can be brought by talking to customers, it will help me differentiate my product from existing competitors.

    1. 2

      Thanks for your reply! Very true :)