Starting a business is no easy task.
It goes without saying that the number of topics you need to be well-informed on if you want your business to succeed is significant. Just one of those topics? Your competitors.
Competition comes with its pros and cons, but one thing is for certain: It’s best to get a head start and examine them early.
In this article, we’ll cover the pros and cons of competition for startups and outline some best practices for how to maintain the right balance.
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Pros of Startup Competition
It might sound counterintuitive, but there is a benefit of some healthy competition. While many might view business competitors negatively, especially in an oversaturated market, they can hold a surprising number of advantages for startups. Here is a collection of the best reasons to embrace your competition.
Strengthens the Market
Competition makes the market stronger because it can push businesses to innovate. When companies compete, they're motivated to come up with new ideas, improve their products and services, and be more efficient. Competition can also indicate strong demand — which means more customers to win over and greater revenue opportunities.
Refines Your Product and Elevates Your Services
To make a product that will truly stand out, you need to keep a close eye on what others are doing and strive to make your product even better.
Let’s say Company A has a small support team and only offers phone and email support. As a result, its response times can be several hours. A competitor, Company B, introduces a chatbot feature for customer support, enabling them to handle more support tickets faster and improving customer satisfaction. Inspired by this, Company A decides to implement an AI-powered chatbot for certain support needs to provide faster, more efficient customer assistance.
When you compare your product to competitors, it becomes easy to tell where your products are lacking or where you might be doing better. Without competition, it may be challenging to determine if your product is reaching satisfactory levels or if it sells because it is the only option.
Keeps You Personally Motivated
Having competition is a great way to maintain the drive to continually improve your startup — some healthy competition is a great way to stay motivated!
When a few companies are competing, they will always be making changes and improvements. Without competition, on the other hand, it’s tempting to settle for mediocrity. The drive to stand out from the crowd is one of the best ways to motivate your business to innovate, progress, and make its mark.
Helps You Learn From Others' Experiences
Whether a competitor is successful or not, their experience and decisions can help you learn what to do (and, sometimes, what not to do).
If a competitor falls behind because they make more supply than there was a demand for, didn’t advertise enough, or lowered their prices too much to compete, those are lessons you can learn from.
Conversely, if a competitor surges ahead of the pack because they constantly introduce new, innovative products or offers regular sales and unique offerings, you could try these approaches as well.
Local competition can also be a great learning opportunity because they offer the same services within the same market.
Cons of Startup Competition
Just as competition can be an asset, it can also be a hindrance. Here are the biggest downsides of competition to watch out for.
Potential Resource Exhaustion
One con of trying to keep up with competitors is that, as a startup or small business, you might not have all the necessary resources to spend on iterating, testing, and consistently competing.
If you’re not careful, devoting too much time and effort into exploring or chasing your competition may detract from your business rather than add to it.
Possible “Copycat” Issues
Copying exact ideas as a way to compete doesn’t guarantee success. While making improvements inspired by competitors' moves can be a smart strategy, you don’t want to be just like them. You want to be better than them.
How To Maintain the Right Balance of Competitiveness
Competition can be both good and bad for startup businesses and entrepreneurs alike. On the one hand, your competitors can drive you to innovation and give you the push you need to reach new levels of success. On the other hand, too much competition can also exhaust your resources.
So, how do you strike that ideal balance of competitiveness in these crucial early stages? Let's dive in.
Play on Your Strengths
Start with an assessment of your business and its unique strengths. What do you have to offer that sets your brand apart from its direct competitors? Focus on that and make it your competitive advantage or unique selling proposition (USP).
Perhaps your business makes a donation to charity with each purchase, or maybe you offer a lifetime guarantee on your product. Whatever your strengths are, focus your time and effort on those and get the word out about them. This might mean ramping up your marketing efforts or messaging.
If you don't know what your strengths are yet, start by asking this simple but illuminating question: How can you distinguish your brand in a unique way that cannot be easily duplicated?
Focus on Your Customers, Not Your Competitors
As a new business, you might already be dealing with the challenge of having limited resources. With this in mind, it's important to allocate those resources wisely so your hard work and efforts aren't going to waste. In most cases, this will mean focusing more on your customers than your direct competitors.
New companies can learn just as much, if not more, from their customer base than they can from companies offering similar services or selling similar products.
When you focus on your customers, you'll gain new insights into what they need, their pain points, and what your business can do to alleviate those pain points. In turn, you'll differentiate yourself from your competition while better serving your target audience.
Continuously Innovate and Be Ready To Adapt
No matter what industry you're in, running a startup means constantly thinking on your feet and being prepared to make changes at the drop of a hat. Even if what you're doing is working right now, there's a good chance that your competitors are already planning their next big move.
Rather than trying to keep pace with your competition or stay the course, it's important to stay in the mindset of continuously improving and adapting to your dynamic industry.
Embrace Competition as a Learning Tool
As challenging as it can be to have a lot of competition in a new market, your best bet is to embrace it as much as possible. Rather than viewing it as a threat to your business idea, consider competition one of your best learning tools.
In addition to learning directly from your competitors' mistakes, you can also keep an eye on what's working on their end. From there, you can brainstorm ways to apply similar concepts to your brand.
Take on the Competition With Hunt Club
Even the best products or business strategies can only take you so far without the right leaders on your team. In fact, talent can be the key that unlocks your business's full potential and gives you the competitive edge you need.
The right people with the right skills and expertise can drive innovation, fuel creativity, and bring fresh perspectives to the table. This ultimately affects your ability to drive growth, deliver exceptional results, and outshine the competition in today's dynamic business landscape.
Do you need high-quality talent to set your business apart from the crowd? Hunt Club specializes in exactly that.