Look at figures from competitors to work out what sort of demand you will have. What will your production costs be like, and how much will you need to charge for your offering to make it viable? Will your target customers be able to afford it? What will your margins be like? How much repeat custom will you get? If your costs are too high, you’ll find it difficult to make any money, so start small and keep your overheads to a minimum. If it isn’t absolutely necessary to take office space, start from home instead or become a start-up at the University’s incubator, HIVE.
Your business idea doesn’t need to be new, but it does need to distinguish itself from the competition. Check it’s unique by conducting extensive competitor analysis, and even if you’re not planning to lodge a patent, make sure it isn’t violating copyright law by checking the Intellectual Property Office’s patent database at www.ipo.gov.uk/patent.htm.
Analysing your competition allows you to come up with a set of Unique Selling Points (USPs) and decide how you will differentiate your business from its competition. Looking at where your competitors’ weaknesses lie will help you determine where your own business’ strengths will be, and where competitors pose will pose threats. For example, do they have a larger marketing budget or do they hold more sway with certain suppliers or distributors? Conducting an analysis of all your competitors’ strengths and weaknesses will help you to determine exactly how and where your product should be placed in the market and how your customers will react to your business.
Use the SWOT analysis diagram below to help you.
Looking at how your competitors price their goods will give you a good idea of how to price your own, and whether you want to follow the lead set by your competitors or take an entirely different approach, looking at how they promote their businesses will help you to come up with an effective marketing strategy for your company.
There are several things you need to find out about your competitors:
- What their customers think of them. Search the internet, blogs and social networks to find out what people are saying about them.
- How they are promoting and branding themselves. Looking at your competitors’ promotional activities. Look at their website, any promotional materials, social media, adverts etc.
- Find out how much they’re charging for their product or service and what that cost provides. Do they have any special offers? Do they bundle in any freebies? What sort of customer service or support package do clients receive as part of the price?
- Find out who their suppliers and distributors are and whether they have signed an exclusivity deal with your competitor. Would they be willing to stock your product or supply to you? If your product is better than your competitors’, is there a chance they might ditch them altogether in favour of your product?
A business which doesn’t distinguish itself from its competitors will find itself struggling. Define strong unique selling points (USPs) for your business to prevent this from happening. Look at your competitors’ weaknesses and build on that: is there space for a premium version of their product? Could you add value by offering a wider range or better customer service?
Your product can compete on price, quality, having a product that makes a process quicker or easier, being smaller, safer, greener, more ethical, better looking, easier to store or set-up and disassemble, be tastier, more retro, approved by certain organisations, more reliable, more durable, longer-lasting, made of a unique material – the possibilities are endless! Your USP might also relate to the way you package your product, or be product related – such as no frills deals, range of products, product finance offers.
If you want to differentiate yourself from the competition on service or the way your business is run, you might like to consider customer service, opening hours, green credentials, speed of delivery, extra services, being online, proximity to customers, international delivery, the gender or age of employees, employees’ expertise or demeanor, being a social enterprise, offering your service in a completely new location, offering community-building dimensions to your business.
More advice is available from business advisors at HIVE: 01227 82 4641 firstname.lastname@example.org