Business Growth Inhibitor: Changing Competitive Landscape
In my previous post, I touched briefly on some of the common inhibitors to business growth I see when working with clients and speaking with fellow executives.
One of the more common growth inhibitors that transcend industry and business size is the change in your competitive landscape.
A business is started for a reason. Generally, someone sees a need they can address with a product or service, and then develops a business model around meeting the needs of a target market set. Over the life of the business, clients and competitors evolve, yet many businesses neglect to take into account how that might affect the way they sell or deliver their offering.
Consider for a moment that you own a car dealership your father started in 1955. Not only has the competition increased exponentially between then and now, the way people shop for cars has completely changed. People became self-serving, doing research before ever entering a dealership and often arriving at their Top 3 choices before ever driving a car. If you still attempted to operate in the same way as your father, could your business survive in this new reality?
Chances are, probably not.
The same can be said for many businesses, and while the evolution in client and competitor may not be as apparent as in the car dealership example, it happens to everyone eventually.
If you haven’t evaluated your competitive landscape in the last few years and you’re thinking about business growth, it makes sense to think about the way things might have changed. You need to understand the market you’re currently in if you want to think about how to increase your competitive advantage and grow.
Here are some questions to consider about your business:
- Who are your competitors today? This should include thinking about both standard direct competitors, such as businesses providing the same products and services as you, as well as non-standard competition, such as businesses that make your product or service obsolete.
- How can we re-evaluate the competitive landscape, now that we’ve evolved? While most businesses zero in on a specific set of competitors as their benchmark, you should be exploring, in depth, all the components that make-up your market.
- Are our competitors evolving or are they being pushed out of the market? If your competitors are suffering, chances are there is a bigger change ahead.
- What is the risk of commoditization? Most businesses face the risk of commoditization. And once your product or service is commoditized, it is devalued. If people think they can get your product or service anywhere, the same quality at a lower price, your margins shrink and you start to lose the cash flow you need to grow.
- What makes you different? Thinking about commoditization should lead you to the realization that you need to stand out. Consider why your business exists, what you’re about and why you do what you do. Train your sales people and other staff on the why in your business, and not just the what, and align your business strategy with your business values.
Competition isn’t just about who else is doing what you do. There are economic factors to consider that reach beyond your direct competition. Cash flow drives business growth, and without it, you will stagnate. If you lose sales to the competition, it will start to erode your bottom line, but if you haven’t stopped to really think about what competition means in today’s competitive landscape, you won’t know how to effectively compete.
Any executive contemplating inhibitors to the growth of their business should consider the impact of the current competitive landscape, taking into consideration how that landscape has changed since it was last evaluated it. To effectively compete and win in today’s business world, you need to not only focus on what your competitors are doing, but also on how the world in general is impacting your competitive footing. Be aware of the advances, changes and opportunities your buyers face, and reconsider how your message resonates with today’s market.
Changes in the competitive landscape aren’t the only issues that stifle growth.
In my next post on the topic of business growth inhibitors, I will discuss the issue of compliance.
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