(As appeared in Forbes.)
Entrepreneurs get a notion for a business and start building. When the excitement of starting the work begins, many forget to step back and truly see what is already out in the market.
Most businesses have been done in one form or another. And even if the idea is new, others are likely starting up on a dime creating something that could be exactly what you think is unique.
You are likely not alone in your area of innovation
I’ve been in the marketing space for nearly 30 years and I have rarely had a meeting where the prospect or customer didn’t say, ‘We’re the only ones doing this.’
The only thing that has changed in the last 10 years is that people have started to say, ‘As best we can tell, we’re the only ones doing this.’ Or, ‘we’re the only ones doing this, in this way.’
These conversations are often followed by work in which we encounter a sea of me-too players and also-rans and fight like hell to differentiate our customers. Often, we focus our energy on the ‘we’re the only ones doing it this way’ part and build a story around the uniqueness of the model or delivery strategy.
Knowing who else you compete with for customers and capital is critical
Something that is hugely useful, and usually in short supply, is good competitive research. By good, I don’t mean quantitative research. It doesn’t take statistical validity to quickly get a grasp on what is happening in the marketplace.
And while quantitative research is not essential, a wiki someone threw together with links to 20 company’s websites is useless. Lists don’t provide analysis on market dynamics that can help you build your story and your model.
What kind of research & analysis should you do?
- How many organizations like yours are there? Can you quickly identify two or three stories about companies doing what you’re doing?
- Are there two or 200 potential competitors? Just a few could mean you’re on to something early, which might be good; and an angle to consider when speaking with investors. 200 competitors could signal a real market need with a lot of people trying to solve it. A market with many early entrants can also be used when convincing investors that a market is hot, and you’re the one hoping to lead the space.
- Who are the competitor’s customers? Do they already have major named clients they are referencing for credibility? Do they appear to have one big client or dozens of established customers? Knowing these things can help you refine your ideal target market. Will you be a niche player or mass-market focused? Will you focus on a set of enterprise customers or a sea of small businesses? The differences affect your story, your chances for success and the people who may be interested in investing.
- Where are these businesses? Is there a particular region that is hot for what you’re trying to do? Better yet, are you in that region? If you’re not, could that mean you have hit upon something good without local competition and more white space to grow your market? Should you consider relocating to be in an epicenter of the kind of innovation you are focused on?
- Who is paying attention to these companies? Are potential competitors featured at a local incubator where they’re getting love and attention from investors? Are they already getting national, credible press coverage when you haven’t even come to an agreement with your co-founders on what to call the company?
- How well networked are these companies? Did the founders graduate from Harvard, Princeton, or Yale, where alumni maniacally support one another with business advice, partnerships, and investments? Did you? Seek to understand the network or ecosystem surrounding your most likely competitors and build your own to compete.
Research doesn’t have to cost a fortune—find a Grad student
The last decade has proven that there are a ton of talented young people under-employed, unemployed, bored or continuing their education in the hopes of gaining greater insight.