Competition
I recently spoke to a prospective client about his business, and when I asked who his competition was he informed me he had none. Now, I don’t claim to know everything about business, but I do feel reasonably certain about some things. Here is a little tip, if you truly don’t have any competition, expect some soon.
Every industry with a company turning a profit demonstrates that there is money to be made. This goes without saying. The issue is that the only limiting factors to other people coming in and competing for that income are entry barriers. Some industries have larger barriers than others, and some barriers are pure illusions, but in any case, the only reason anyone can honestly claim they have no competition is because someone else hasn’t figured out a way in yet.
Let’s look at a couple of big examples I like to call, Mistakenly believing you have no competition:
1.) The Apple iPhone has become one of the most ubiquitous tech gadgets of recent years and because of the licensing and exclusivity agreements Apple and AT&T have only had competition with other phones and services. Within weeks of release people were “jailbreaking” (hacking the iPhone to allow applications from sources other than iTunes) and “unlocking” (allowing the iPhone to be used on the T-Mobile network, which uses the same GSM network for transmission). While these violate EULA (End User License Agreements) they also provide a new level of options for customers, i.e. Competition.
To make matters worse, Apple’s strict control over its App Store and AT&T’s lack of responding to customer desires has incited more and more people to use these avenues.
2.) Blockbuster was buying out or annihilating smaller video stores as it grew into the nation’s largest video rental company. They felt they had no real competition, or reason for concern from regional rental stores, since they owned so much of the market share. Then, a small upstart dot com comes along and allows users to create a queue of films they want to see online, and the movies are mailed both directions with no late fees. Later this company adds movies that stream to customer’s computers, and then directly to their televisions. Netflix also has competition from cable providers, legally, and torrents, illegally, but they realize this and work with that knowledge. That is the important lesson, knowing who or what your competition is can be more valuable to the long term success of your business than not have any. P.S. Replace Blockbuster with Circuit City, and make the lesson about electronics stores, and you have the success of Best Buy.
Who or what is your competition? Or where will it come from?
