Top Ten Reasons Small Businesses Fail is a series of articles to help you avoid common pitfalls of many solopreneurs. Here’s how to tune into competition so you keep your competitive advantage.
You should always be able to answer the question why someone should buy from you instead of your competition. The key is playing to your strengths and to your competition’s weakness. You can’t do that if you don’t know what your competitors weaknesses are.
As a solopreneur or a small business owner, you are a niche player by definition. It means you have to specialize or offer something really unique the large competitors in your industry don’t care about.
The way you make real money is to serve a client base that has special tastes or special needs your competitors aren’t serving.
Why? Because you will rarely have the scale or the big budgets your large competitors do. The good news is, those solopreneurs who find their niche can charge a premium for what they do. Your customers will also have a harder time replacing you.
Anita Watkins of Sixx Foota, is a great example. Anita stands almost six feet tall and she couldn’t find beautiful clothes to fit her. She opened Sixx Foota for discriminating, vertically blessed, men and women. Check out our Celebrate section and you’ll see our interview with Anita.
Once you find your niche, you need to remember two key things: the source of value for your customers changes over time, and second, your competitors are always changing too. You need to keep pace with those changes.
In order to avoid the top ten reasons small businesses fail, you must keep your finger on the pulse of your direct and indirect competition. Most small business owners don’t know how, so they simply don’t do it. Here are some simple market research tips to help solopreneurs.
Your analysis should start with the demand side of the equation. Figure out what will be happening to your potential customer pool. Will it be growing? Shrinking? Changing in demographics? Where, how, and why do they purchase currently?
Next, look at the supply side of the equation; that’s your competition. Figure out who are your direct or indirect competitors. If you want to know who they are online, do keyword searches relevant to your business and see who pops up on the first three pages of Google.
Chances are, these are probably competitors. If you’re a hairdresser, photographer or dentist, make sure you have your city or town in the search.
One of the top ten reasons small businesses fail is the solopreneur is blind to the trends in his or her industry or geography.
Here are a few great places you can go to find out trends with your potential customers. You’ll also learn what competition is doing in your geography and in your industry on and off line.
First, approach your industry trade association. These guys capture data on all kinds of wild stuff. They might also point you to publications and websites that will give you valuable tips and resources.
Next, I’d do a Google Alert feed on keywords relevant to your business AND your niche. Everyday, Google will pull articles being written by experts in your field. You’ll see the subjects and the key players writing about them.
We have Google Alerts for small businesses here at Best Small Biz Help.com. It keeps us current and enables us to focus on what matters to our solopreneurs.
Offline, your local business library is a treasure trove of information. Find a librarian you can relate too (these people really are unsung heroes) and search for trends in demand for your products or services.
Local colleges, community colleges, and local SCORE offices are also great resources. Narrow your search so you’re not doing research until you’re on medicare.
If you want to avoid a top ten reasons small businesses fail and you’re LAZY, go to Hillsearch.org. They charge a small fee but aggregate online and offline research.
You can try it free for a short time or pay a very small monthly fee. Your fee covers access to tens of thousands of dollars worth of help and database information. It’s the best deal ever.
Hillsearch has real, live, librarians waiting for you to call. If you’re stumped, they’ll do the digging for you. It’s like having personal research assistants at your elbow for no extra charge. How cool is that?
The Hillsearch.org folks love it when you call because they receive their grant funding based on the number of phonecalls they receive. More calls equals more money.
CALL HILLSEARCH! Tell them the business you’re in or want to enter. They’ll help you figure out what questions you need to ask. This will help ensure you’re not going toe to toe with competitors who will squash your business like a bug.
Should you launch that new business? How much should you charge for your product? What niches are saturated and which ones need what you have to offer?
Consider using Hillsearch.org. We use them at The Levin Institute for Entrepreneruship and they’re top notch. Tell them Dawn Fotopulos sent you.
The other way to keep your finger on the pulse of competition is to become a customer of your competitors. Buy from them online. Use their services off line. Find their Achilles heel. Every company has one or many. Then you offer a better option for customers.
If you industry is profitable, you won’t be in it by yourself. Ignoring your competition is like swimming in a sea filled with sharks and expecting you won’t get bitten.
Avoiding the top ten reasons small businesses fails means tracking your competition through the great resources provided above.
They’re smart and they’ll leverage your time. They’ll also help you find the more profitable parts of the ocean where fewer sharks lurk.