Competitors don’t matter – or do they?
I will never forget a conversation I had years ago when I was just starting my entrepreneurial journey with an excellent entrepreneur who runs a large online store for healthy food (update: she is leader in many EU markets).
She didn't check the competition...
She told me that when she started her business, she didn’t check the competition. It was only after a year or two, when she was already quite successful with a great team and substantial sales, that she conducted research and discovered that there were over 200 competitors—online stores selling healthy food in the same market.
This was despite her background in economics! In business school, it’s one of the fundamental principles to study the competition before entering a new venture.
It would have scared her so much...
She told me that if she had examined the competition at the beginning, it would have scared her so much that she probably wouldn’t have started at all.
It’s true. Often, excessive competition analysis can have the opposite effect. We start comparing ourselves so much with them that we lose our own identity. Or as she also mentioned, we might not even start in the first place.
Competition is a sign that the market really exists!
I, however, perceive competition somewhat differently—I see it as an indicator that the problem we are solving is real. When someone presents a new business idea to me, I quickly inquire about the competition. If the response is that there is no competition, I become skeptical. Because if there is no competition, it often indicates that there is no market for our solution. To put it directly, people won’t buy what we want to offer.
Some level of competition research when starting a business does make sense, primarily to replicate best practices. In business, there’s no point in reinventing the wheel for solutions that are already tried and tested. As the saying goes, “Don’t fix it if it’s not broken.” But, as I mentioned, there should be a limit to it. Excessive focus on competition will only take away courage and blur our own identity, making us too similar to others.
Only when significant investments are involved...
Very detailed competition research usually makes sense when significant investments are involved in complex and long-term development. If millions of our own or investor’s money is at stake, a thorough market analysis is, of course, conducted. However, for most startups, this isn’t the case. Here, speed and decisiveness are more important.
In conclusion, study the competition, but within limits, more for collecting good ideas and best practices. Be mindful that overwhelming yourself with competition doesn’t drain your courage, as that’s what you’ll need the most.
