THE IMPORTANCE OF COMPETITION
Posted: Mon Dec 23, 2024 5:47 am
When I analyze a company to invest in or a business plan, one of the things that bothers me the most is an entrepreneur who says he has no competitors. This does not mean that I believe it is impossible for there to be no competition in certain activities, but that this possibility is extremely remote.
This answer worries me, because it may indicate that the entrepreneur, or his collaborators, are not paying attention to the market and its lessons and threats. Competitors are not only those who are offering competition at a given moment, but also those who have the potential to do so or who have even done so in the past (even if indirectly) and who may, through strategic repositioning, once again pose a risk to your business.
Likewise, we must be aware of those market players who are not direct competitors, but who may see their activity as strategic or complementary to their business and begin to carry it out extensively at a much faster rate than theirs.
For example, supermarkets that decide to invest in smaller stores, offering buy saudi arabia number snacks, competing directly with traditional neighborhood bakeries, or e-commerce solutions companies that, overnight, may see their businesses threatened by large retailers. Therefore, even if an entrepreneur does not identify a direct competitor at first, I recommend that they continue to look for such threats, especially the not so obvious ones.
Finding cases of failure or recovery is worth much more than any training or specialization at any top-tier university. Reading specialized newspapers, following news outlets on Twitter, among others, is an excellent source of news. When you come across interesting cases, create a discipline for you and your potential employees to discuss these cases of errors or failures and how you would deal with similar situations in your business.
It’s not about being negative or a prophet of the apocalypse, and much less about not having a positive and optimistic outlook regarding your business, but rather about having previously structured plans for any “accidents along the way”. Remember that, although no one wants a building to catch fire, it is important to periodically carry out evacuation simulation exercises and procedures for these cases, because in the event of accidents, people will be much more prepared to face them.
This answer worries me, because it may indicate that the entrepreneur, or his collaborators, are not paying attention to the market and its lessons and threats. Competitors are not only those who are offering competition at a given moment, but also those who have the potential to do so or who have even done so in the past (even if indirectly) and who may, through strategic repositioning, once again pose a risk to your business.
Likewise, we must be aware of those market players who are not direct competitors, but who may see their activity as strategic or complementary to their business and begin to carry it out extensively at a much faster rate than theirs.
For example, supermarkets that decide to invest in smaller stores, offering buy saudi arabia number snacks, competing directly with traditional neighborhood bakeries, or e-commerce solutions companies that, overnight, may see their businesses threatened by large retailers. Therefore, even if an entrepreneur does not identify a direct competitor at first, I recommend that they continue to look for such threats, especially the not so obvious ones.
Finding cases of failure or recovery is worth much more than any training or specialization at any top-tier university. Reading specialized newspapers, following news outlets on Twitter, among others, is an excellent source of news. When you come across interesting cases, create a discipline for you and your potential employees to discuss these cases of errors or failures and how you would deal with similar situations in your business.
It’s not about being negative or a prophet of the apocalypse, and much less about not having a positive and optimistic outlook regarding your business, but rather about having previously structured plans for any “accidents along the way”. Remember that, although no one wants a building to catch fire, it is important to periodically carry out evacuation simulation exercises and procedures for these cases, because in the event of accidents, people will be much more prepared to face them.