This post originally appeared at www.chrisamarks.com in 2011
When building a start-up, competition is always on a founder’s mind. Generally speaking, they set out to tackle big opportunities — and to do it with limited resources. First-mover advantage is important, and positioning within a market can make the difference between success or failure. As a result, entrepreneurs tend to spend a fair amount of time looking over their shoulders.
In my experience, competitive threats can serve as both great motivation and great distraction. Here are a few thoughts that can help them stay the former, and not become the later.
- Don’t Let Your Competition Drive Your Strategy. It is important to be aware of your competition, and to know what they are doing. With that being said, the primary drivers of strategy must be product, customer and market. If the decisions you make are strictly reactionary, then you will by definition, never get ahead. Be aware, but stay proactive.
- Don’t Overlook the Unknown. It is trite, but true: “The toughest competitor is usually the one you don’t know.” In other words, look beyond the obvious players and be aware of those who could compete in the future. What companies have the resources, talent or customer base to jump into the game? Is there a way to position your company today to lower that risk? Is there a way to turn these potential competitors into partners? In most cases, allies are better than enemies.
- Don’t Wake a Sleeping Giant. Too often, early stage entrepreneurs feel the need to shout their vision from the hilltops. It is probably a remnant of the fundraising process. A start-up company, however, is often much better off operating in stealth mode. After all, the opportunity usually exists because some larger company has experienced success and, as a result, stopped innovating. Therefore, why not fly under the radar as long as possible? Why wake the sleeping giant? Compete on your own terms, when you are ready for the fight.
- You Don’t Need to be Different, But You Do Need to be Better. Many entrepreneurs who come in to pitch us spend an inordinate amount of time trying to differentiate themselves from their competition. It is a worthy discussion, particularly if the competitor has a lead in the marketplace. What often gets lost in the shuffle, however, is how and why they will outperform the other players in the space. If the market is attractive, and the opportunity is large, there will be others. At the end of the day, the company that executes the best usually wins. Rather than explaining why you don’t need to beat your competitors — explain how you will.
Competition is inevitable. In fact, if you don’t have any, you either aren’t looking hard enough, or you’ve chosen the wrong business. How you deal with your competition often determines the long term success of your company. Be smart, be aware, but keep looking forward.