Conducting research on your competitors helps you accomplish two things. First, you can gain valuable insight about how other businesses in your area operate. In order to fully evaluate your venture, you’ll need to plan its operation in significant detail. By taking a close look at your competitors’ operations, you can start to answer questions about similar businesses, such as:

• Where do they obtain their supplies?

• How do they make their product?

• How much do they pay their employees?

• How do they recruit and train their employees?

• What is their cost structure like?

• How much profit are they earning?

• What kind of capital equipment do they have?

• Do they have a service guarantee? What is it?

• How do they advertise and promote their services?

• What partners do they have?

In addition, once you’ve identified your likely target market, you need to determine whether or not these consumers are currently being served (and served well) by a competing business. In order to do that, you first need to conduct thorough research about both your direct and indirect competitors.

Start by gathering all the information you can about your competitors. Try to answer questions about each competing business:

• What products/services do they offer?

• How big is the organization?

• What is their market share?

• How do they advertise?

• Who are their customers?

• Where do they do well? Where do they struggle?

Once you have obtained and organized the information on your competitors, you can start to analyze how your business measures up against the competition. Consider those factors that matter most to your target market and think about how you compare to your competitors in those areas. Many businesses succeed by identifying a market niche—a particular segment of the market overlooked by the competition, or a product/service that customers want that isn’t offered elsewhere.

The goal of your competitive analysis is to identify and expand upon your competitive advantage. Think about the benefits you can offer the customer that aren’t currently being offered by a competitor.

What Next: Click What is a thorough competitive analysis?