Do you know who your competitors are? On today’s Small Business show, we’re joined by George Deeb, managing partner at Red Rocket Ventures, Forbes contributor, and author, to tell us why knowing and understanding the competitive marketplace is essential.
Deeb notes that the first place to start looking for who your competitors may be is through your product research. However, there are two avenues in which you can identify who your competitors are.
- Industry research reports and professionally produced analyses specified for specific industries. They often speak to the prominent players or your larger competitors.
- Go to Google. Type in the keywords for your industry, and discover what businesses come up as a result, simply because that is what your customers are doing.
Deeb emphasizes that “whatever you are up against in the search engine is a perfect example of what your competition looks like.” He also emphasizes that knowing what and who you’re up against is essential before spending your first cent. However, identifying competition that has yet to generate money comes down to just following the money. Venture capitalists are investing in the next generation of businesses, especially those that have yet to raise capital. To illustrate, vendors like PitchBook and CrunchBase are helping small companies identify their competitors.
"Cash is King."
So, speaking with your current customers about other competitors’ insights is essential. Deeb suggests, “Your competition is probably talking to your competition anyway.” He continues, “I believe that if people are out there asking for help, others will too.”
It’s imperative to understand that Deeb underlines not to think of your competitors’ analysis as a one-and-done kind of thing when it comes to mergers and acquisitions. He encourages companies to look at their competitor list at least once a year. “Every year, reiterate your research process and review your list again. This way, you can see who the new players are, see what mergers and acquisitions have taken place within the year, and look at where your competitor’s marketing has transitioned to.”
“I don’t think your competition only includes your direct competition because of the media marketing against your customer.” For example, the more they compete for the same targeted audience, the more money people will spend in competition for viewers.
After identifying who your competitors are, your intended marketing strategy, and how to proceed, Deeb suggests the next step is to self-audit. “You can’t be the best of the best until you understand what you’re up against,” he implies. Ultimately, you want to take a deep dive to understand who your competitors are, how they will capitalize, what target audiences are, what you do if you don’t have more robust marketing than them, and how to fix what was needed to spend on marketing.
"Don't waste money until you've done you're homework."
Overall, he suggests that you should proceed in today’s economy, knowing there will be headwinds. Understand that there is a potential for everything and investments to double. You’ll need to know how to raise venture capital and understand that it will be more challenging this year than others, especially since money isn’t flowing like the last couple of years. He adds not to assume the venture capitalist will give you the money you need to have enough before you ask for lenders to understand who your current resources are. For example, Silicon Valley Bank collapsed because they didn’t consider any of these accounts. “Lending will be more difficult, especially since cash is king.”