Entrepreneurs dream of an industry wherein they face no competition, direct or indirect. But as always, people should be careful what they wish for. There are plenty of reasons competition is good. It can serve as a proof of concept; there are so many entrepreneurs in the world, an industry with little to no competition should be considered suspect.
Don’t be so eager to see the competition swept under the rug. There are plenty of reasons you, as an entrepreneur, should welcome the challenge they represent.
Competition Sharpens Your Focus
Your target market may consist of thousands, if not millions, of potential customers. Competition gives you something against which to base your start-up, which will help determine your true niche. Without competition, you may have to try capture the entire market. While that seems like a dream, it’s not entirely feasible for many ventures. Since you can’t please all of the people all of the time, you may end up doing worse than you would with a competitor.
Having a competitor narrows the field significantly enough to allow you to find the right audience for your product and means. There’s no need to try to capture the market, and no temptation or demand from your investors to do so.
You are Forced to Innovate
The problem with monopolies or similar situations is the resulting lack of innovation. There’s no financial reason to innovate if the customer has no choice but to buy your product. Stagnation can spell trouble for the company.
Competition keeps you on your toes. It justifies constant innovation and development. Every day you don’t spend improving your product is a day the competition can use to either catch up to you or even leave you in the dust.
This isn’t limited to your products. Your customer service, for example, may be forced to improve. The best products in the world may find its market reach stymied if your customer service is severely flawed. Great customer service creates consumer loyalty. If customers are greeted properly when they arrive at the store and if their questions are answered sufficiently, they’ll have little reason to consider going to the competition.
Competition can Make You Credible
Most people judge something by comparing and contrasting it to similar items. When you’re alone in the industry, the consumers have nothing by which to base their judgment. The more options a consumer has, the more informed they’ll be, and the more accurately they’ll be able to judge products.
If you’re the only company on the field, people will wonder if you’re solving a problem or just introducing something nobody really wants or needs. While many were convinced that the iPad was going to be amazing, there were more than a few people who thought it would flop, simply because there didn’t seem to be a point. But once other companies got into the act, people were able to compare and contrast their products, which resulted in a greater understanding of what the devices could offer.
Competition Destroys Complacency
Competition is good for business because it keeps you from resting on your laurels; it forces you to face your product’s flaws and make every effort to fix it. Every achievement the competition makes lights a fire under you and your employees. There is nothing like a challenge to make people try harder. You are forced to adapt and grow.
Complacency can destroy creative thinking, because there’s no reason to push the bar. Competition can push you to do great things, to think outside the box. It’s a constant reminder that someone is out there fighting for space you want to take.
This is especially important if you manage to hit the market before anyone else. You’re excited — you don’t see any competition. You capture most of the market and become complacent and stagnant, largely because there’s no reason to push yourself. You set yourself up for being beaten at your own game by someone who can see what you’re doing, and who will hit the market with something better than you have. This can doom your company if you don’t have procedures and practices in place for continual product development.
You don’t have to fear your competition or even wish them gone; use them to light a fire under your employees. Let their performance help you become a successful entrepreneur.