Inadequate preparation frequently causes the premature downfall of many would-be startups, as the most threatening challenges can usually be avoided with the right foundation, planning, protocol, and infrastructure. In a haste to turn a business into an overnight sensation, many owners and directors rush into power moves while overlooking essential preliminary duties.
Although it is easy to see how a sound establishment could help any company avoid unnecessary troubles, is it really possible to confidently ensure the inevitable success of a business endeavor before the first transaction takes place? Ironically, the most sure-fire way to guarantee a minimal chance of failure is to create a thorough and detailed blueprint prior to investing any funds or serious effort. After all, why commit your time, money, and energy to an impractical dice-roll that might never generate a decent ROI?
Fortunately, by adhering to the tips below you can prevent or circumvent 90% of the problems faced by struggling startups:
Before founding a business it is imperative to understand how the most successful competitors in the industry are soliciting and retaining clients. Here are a few aspects that should be examined when conducting competitive research and analysis:
- Internet Presence
Inserting a startup with a modest budget into a highly competitive niche is like throwing a raw steak in a lion’s den – it won’t last long. Any reputable and lucrative company should have an official website and some kind of internet reputation. Examining their landing page designs, content strategy, and site navigation features will give you an idea of how good your site would have to be to compete. This facet of competitive analysis is particularly important for online startups dealing in eCommerce or web services. Utilize software applications to perform search engine optimization analysis and determine which keywords are the least competitive/most valuable.
- Advertising Methods
Although the World Wide Web is a massive digital landscape, search engines (and apps that retrieve information from them) have greatly simplified the tracking of competitors’ online advertising methods. Using a backlink checking tool – a simple web search will return plenty of these – will allow you to find every site that links back to a company’s home page. Follow the footprints and take note of which directories, review sites, niche blogs and other web properties they’re advertising on to see how the top brands are spreading awareness and converting leads into customers. Once you can emulate the outreach efforts of your greatest competitors all you’ll need to do is compete with them in terms of price/value.
- Customer Service and Account Management
How are your competitors servicing customers in need of assistance? Do they offer several methods of contact? Is phone support and live chat available? If you can’t match the standard level of service that consumers in the target industry are accustomed to, then you’ll definitely need to be prepared to compensate by either reducing price or significantly increasing value. Becoming a customer of potential competitors will not only allow you to see what you’re up against, it will also provide an inside look at how they manage accounts and support issues (i.e. – phone prompt systems, email response templates, average wait times etc).
If you’d like to dig deeper into this topic, check out Inc. Magazine’s guide on conducting competitive research.
Now that you know what the best competitors are already doing, it’s time to look at the overall profile of the target consumer-base. The following activities greatly aid in the market scoping process:
- Reviewing Fiscal Reports
Most large corporations issue quarterly and/or annual fiscal reports that reflect growth and income statistics. These documents typically contain data pertaining to the company’s profits, losses, investments, major developments, offerings, short-term and long-term goals, assets, and liabilities. All of this information can help you understand what it will take to compete, and what the most mission-critical challenges are.
- Gauging Free Interest
In this context, the term “free interest” refers to the amount of people who are currently interested in a niche but have not yet made a buying decision. Have competitors already cornered most of the market, or is there room for an innovative new presence? Is there a way to create a sub-niche within the niche? You don’t want to be battling established companies for their customers as a startup. Examining search engine query data is a good way to determine how many people are interested in buying a particular product/service. Pay-per-click, pay-per-lead, and banner advertising techniques are also ideal ways to test conversion rates and mass interest.
- Evaluating Growth Potential
Investment opportunities with the most growth potential tend to pop up in newer niches that have not yet been monopolized by larger companies. Startups should be weary of committing to compete in hostile industries, and should be realistic about expansion capabilities. Once you know exactly how big a company is capable of becoming you’ll be able to keep a goal-oriented mindset and formulate a practical agenda.