Have you ever heard a startup or entrepreneur say that their idea, product, or service has no competition? Hopefully you were not the one making such a statement.

Thinking you have no competition is harmful in several ways. The first issue is that you may be blindsided by competition you initially did not identify. The second issue is other entrepreneurs and potential investors will react with skepticism thinking your research is incomplete, or that you are naive.

Before we get into ways of identifying competition, I want to open your mind. Have you ever heard, "You can't compare apples and oranges" or some variant of that? Let's examine why using this logic causes blind spots in competition recognition.

Apples & Oranges Both:

• Grow on trees
• Come in many varieties
• Have an outer skin protecting the fruit
• Have seeds
• Have many uses (whole fruit, juice, cooking, etc)

What are Apples and Oranges considered in business terms? Indirect Competition.

Different varieties of apples such as Granny Smith and Red Delicious would be direct competitors as apples. An orange would be considered an indirect competitor because if you want an apple it doesn't fill your needs. Purchasing a cucumber instead of an apple would be a replacement competitor because it isn't even a fruit, but you could still eat it instead of an apple.

The main types of business competition are direct, indirect and replacement.

• Direct Competition - You can think of this type of competition as someone trying to compete with you for the same demographics with a similar product or service. This could be rival super markets or mobile phone carriers. The point is they are essentially trying to sell the same type of products or services at similar prices.

• Indirect Competition - Your indirect competition may be in your industry with a different focus, so think about what other businesses are similar to yours. You may have a food truck business, so your indirect competition would include fast food restaurants and sit-down restaurants.

• Replacement Competition - Replacement competitors are essentially any other ways a potential customer could spend their time and money instead of coming to your venture. These competitors are not as easy to identify, but it is well worth the time to research all your potential competitors. If we continue comparing the food truck venture, we'll see that grocery stores, butcher shops, farmer's markets, and even fishing could be competing for your customers' resources.

There is a great way to work with potential competitors to help you define your understanding of competitors. Contact a similar business in a different geographic area. The other business could be a state away, on the opposite coast or even on the other side of the globe.

Reach out to them and let them know you have no intention of entering the market in their area. Ask for some insightful advice and be open to sharing information back with them if they have any questions for you. You will strengthen your focus and understanding of competitors as a result.

Competitive analysis isn't a one time shot. Yes, it is greatly important to get it right as you are launching your venture, but it is a process that must happen on a recurring basis. I would suggest at least once a year, but based on your industry or new competition emerging you may need to revisit every several months. So focus on getting a process in place to make this task easy to revisit in the future.

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