Looking for Validation
This is the first article of a three part series that discusses why “Competitors Are Not Your Enemy.” Many people think of competitors as the enemy. Not necessarily true. Listed below are three ways that will be discussed and how they can help you beginning with validation. This article helps you to validate whether or not your business idea is worth doing.
- Competitors can validate if your business idea is worth doing (Part 1)
- Talk to competitors to create your own Unique Value Proposition (UVP) (Part 2)
- Network and establish relationships with competitors to make your business stronger (Part 3)
Part 1 – Validation
In a free market, businesses startup to fulfill a demand – this is what you are doing too! The first step is to take your business idea and investigate who your competitors are. The vast majority of time, if there are lots of competitors, there are lots of customers buying or a few willing to pay a lot of money.
There are a few exceptions to starting any type of business, as your business idea may not be worth doing. There could be a monopoly (single company) or oligopoly (few companies) with the same idea. A monopoly could be one cable company providing service to a subdivision and you use them or do not have the service. Maybe you can find another solution such as a satellite service.
Another exception is when the product or service has a patent or copyright. There is only one legitimate company providing it or maybe a generic as in pharmaceuticals. Do you have the ability to find and create an alternative?
Another is when there are entry barriers. The barriers include extreme time, effort, experience, or funding to begin this type of business. Not everyone is going to able to build a rocket to help NASA shuttle people, equipment, and supplies to the space station.
So what can you do to validate your business idea?
- Look around your area if the business has a physical location. Go into the business and look around, talk to the employees and other customers. Consider buying some items or have them provide the service so you can learn what you do the same and better.
- Search online to find competitors local, other cities, or get digital information on a product. The more the better.
- Check their website for what they provide and any pricing, notice what information is shown and how professional and appealing the website may or may not be. Use this information and research to decide what you can do better.
For example, let’s take quilting. Hand quilting a blanket is going to take a lot of time and effort. If your time is worth $20/hour, what is the cost of the blanket? Could you easily find people to buy it at this cost? How many can you make in a month to pay for your lifestyle? If you cannot make and sell enough to pay for your lifestyle, then it is not a lucrative business idea. It is okay if you want to do this as a hobby and make a few extra dollars. OR you could turn quilting into a full time business if you have an efficient machine to make several a day AND there are enough people wanting to buy them. Don’t forget, there’s also the opportunity to expand your quilting business by selling supplies, offering classes, affiliating yourself with suppliers to sell sewing machines and other products, etc. through in store/retail advertising, blogging, online site, local advertising, and other marketing venues.
As you can see by researching a competitor’s business you can use validation and learn if your idea is a viable business opportunity. The research should yield possible pitfalls, job openings, which may reveal their future plans and directions and so much more. In the end use the information you learn to make your own business plans and improve your products and services to help you become and grow into a successful startup business.
Stay tuned for Competitors Are Not Your Enemy – Part 2 – How to Create Your Own Unique Value Proposition (UVP), by simply talking to your, competition!