Startups: Never Say “I Do Not Have Competition”
One of my responsibilities as an Executive Coach is helping founders their “competition” is and what threat level they have. Sadly, about 1 or 2 out of every 10 startup and small business presentations I see state “I don’t have competition”. Another 3 or 4 out of 10 do not fully state who all their competitors are. When I challenge them on either claim, I get a variety of responses. Some state “That company is in another space”. Others state “They’re not doing the same thing we are”. Another will state “They’re using Excel spreadsheets to do what we do”. My advice: Startups: Never Say “I Do Not Have Competition”.
Even if you’ve developed “Teleportation”, you still have serious competition. Jet aircraft are your competition. Cars and trucks are your competition. Heck, even those two appendages at the bottom of your legs – your own feet – are your competition. Your competition are proven, inexpensive, multi-sourced and “trusted”. Your teleportation technology is none of those. So please, no matter what you make, or service you provide, “NEVER” say “I Do Not Have Competition”!
Startups: You Do Have Competition!
Well, teleportation is an extreme example, but I hope I got my point across. No matter how big an advance you “widget” is, folks are “getting by” somehow. That “somehow” is “proven”. It is of “known reliability”. The “Cost” is well understood. Anything “new” is going to be met with a certain level of “skepticism”. You solution you may believe is the “best thing since sliced bread”, but you’re going to have to convince your buying public!
People are Creatures of Habit
When I was in China 20 years ago I travelled between two provinces with one of the “governors”. As we passed through the mountains, I saw thousands of workers with pick axes, shovels and carts. I did not see a single piece of mechanized equipment being used to build the roadway. I asked the governor why heavy earth moving equipment wasn’t being used to build the road through the mountains. The governor replied “We’ve built roads this way for a thousand years and it works”.
The moral of this story is, don’t assume just because you’ve built a better widget that a customer wants to buy it. If they have a solution that works solving their problem, they may not be looking for any solution.
I Want to Buy a “Hole”
I went to Home Depot and told to the salesperson that my wife wanted I needed to hang a large, heavy picture. He told me a list of things I would need. A 3/8″ Drill, a 1/4″ drill bit. 12 foot extension cord. A box of heavy duty picture hooks. 10 feet of multistrand picture wire. A pair of wire cutters. A pair of safety glasses. An aluminum bubble level. Total cost? About $100 USD! All I wanted was a “hole”! I went back home and with my hammer and a small nail to make two “holes” and hung the picture.
The message of this story. Your competition is sometimes not “elegant” or “fancy” or “techie”. If your customer is only challenged infrequently with the problem your “widget” is solving, and it costs lots of money, they’ll stick with a simpler “competitive” solution. Proven, simple and cheap often “wins the day”.
I hope I have convinced you that regardless of how “awesome” your widget or solution is, you “always” have competition. The analysis that you will go through by just writing down what the competing solutions are will be eye opening. When you’re thinking of starting a business, writing down the competing solutions is where you must start. Then for each competing solution, write down next to them a list of providers and prices. Then look at the list and be honest with yourself about the “value” of “your solution”. How much cheaper is it ? How many “man-hours” does it save? Your answer to these questions often might tell you news you don’t want to face. But, it is better to face it down and go back to the drawing board, than to waste time and money chasing the wrong horse.
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Next time …
In the next blog post, I will write about “Startups: Pros and Cons of Friends and Family Financing“.
Read a Previous Post: “Startups: Why You Need an MVP (Minimum Viable Product)“
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