Thursday, November 6, 2014

How to Survive the Competition Faced by Your Business

I have a close friend right now who has way more experience in business than I do and whenever we get together I like to listen to her business experiences closely because I learn more from her by listening than by talking.

One day she told me about her experience setting up a food cart at the MRT. The MRT food cart sold siomai which is actually very easy to prepare and cook and lends itself well to the fast food business model. Nowadays there are so many siomai food carts all over Manila but back then her family was the first to do so at that MRT station.

Everything was okay for some time. The siomai product was a bestseller and they were making profits from the business. However, problems arose when five (yes, you read that right – FIVE) other siomai food carts set up shop at the same MRT station. Having that many competitors meant that my friend had to share the same market with her rivals, which cut into her own profits. Even though MRT stations are usually crowded with passengers, apparently the smaller profits of my friend meant that she could not sustain the business anymore. So she had to give up the siomai food cart business and her business folded.

In any business (not just siomai sales) you have to contend with competitors. However, it doesn’t mean automatically that you would have to shut down your business just because competitors are raring to enter the same market you are in. There are some ways you can protect yourself so that your business has a fighting chance of surviving a highly competitive market and even attaining a high degree of profitability. Let’s check out these ways, shall we?

1) Make sure your product and/or service adheres to 100% quality standards. Just because you have competitors breathing down your neck doesn’t mean they offer the same quality product and/or service that you do. Although you cannot be sure what kind of quality your competitors are offering, you can be sure of yours. So always set high quality standards for your business to follow so that customers will be pleased with you.

2) Try to locate your business in a market where the management won’t let too many competitors enter. Some places, like schools for example, make sure that their area will not get saturated by businesses that are all alike or too similar to each other. You may need to look a bit further than usual to find such a market but this is important for your long-term survival. Such places often stipulate in their contract that they will not let rival companies/businesses set up shop in the location you have chosen – this is good for them as the landlord because it means the rent/lease you have to pay them will be uninterrupted because your business will survive and thrive. It guarantees a long term business relationship between you and the landlord and naturally you want that.

3) Be prepared for dirty tricks by the competition. Business can be a cut-throat competitive world so don’t assume that your rivals are angels. Some dirty tricks that you might come to expect are a) badmouthing of your business by the staff of your competitor; b) annoyances like garbage dumped right beside your location; and even c) downright sabotage like cockroaches released in the vicinity of your food cart. Yes, such things do happen and it’s not all in my imagination. So if your rivals resort to such dirty tricks, your best action plan is to approach the management of your landlord and ask them to correct the situation. Be sure to document these dirty tricks so that you have grounds for a complaint if your rivals resort to worse things.

4) Be sure that your pricing is fair and that your ideal customers can afford it. In the case of my friend, they did price their siomai fairly and they were pretty sure that their customers could afford it. So at first, this business strategy worked. However, their five other rivals seemed to have resorted to the same pricing tier which then meant that they were all offering the same siomai at the same price. So this leads us to number 5 which is…

5) Have something special to offer to your customers that your rivals can’t offer. In the siomai business this could mean offering an extra piece of siomai for every order of regular siomai or offering a free drink maybe per order. Or you could create an extra special type of siomai that your competitors could only dream of creating themselves. In the world of business it is very important to have something unique to offer because customers like variety and offering variety means that your competitors have to work extra hard to offer something unique also.

Naturally, the winner in all this is actually the customer because your target customer will have something great to buy from you or your rivals at any given time. But if you follow these tips your business may last for a longer time than it would if you simply sit back complacently. So look forward to the survival of your business if you keep innovating this way.

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