Your startup cannot neglect competitive analysisDec 17, 2022
It seems like every week I’m either on my podcast or here on the blog talking to you about yet another question or priority you need to focus on in the early days of your startup.
That’s probably because, well, that’s exactly what I’m doing. And with good reason. The foundational decisions and priorities that garner your attention in the early days, months and years of your startup are critical not only to your short-term growth, but to your long-term success.
Recently, I welcomed Brandon Mateika, Founder and CEO of Sales and Marketing Inc., back to Hardwired for Growth. In his first episode, Brandon and I dug into the concept of market fit, and how imperative it is for early-stage startups. Without focusing on market fit in the early days, you are sinking your ship before it even really gets a chance to sail.
In this most recent episode, Brandon and I examined another foundational piece that is so critical for early-stage startups. This foundational assessment and knowledge will help shape and define many important decisions that can propel or hinder your growth, or help you overcome obstacles and get “un-stuck.”
What am I talking about?
Why is competitive analysis so important?
Once you’ve established market fit and have determined what your customers want? What problems you’re solving, etcetera, understanding who else is trying to solve that problem (and how) provides critical insight. Competitive analysis is key because it influences your…
> Product/service offering. The product and service offerings of your competitors can have a major influence on what your company decides to offer. You may need to refine or tweak your own products/services to have a real shot at differentiation and to best focus on the next element, positioning.
> Positioning. Once you have potentially tweaked or refined your product/service offerings, you’ll need to focus on positioning. Without understanding where your competition sits in the marketplace, it’s nearly impossible to determine where you fit in. How do you stand out? What need do you fill that your competition doesn’t?
> Messaging. Of course without strong positioning, your messaging will ring hollow. In order to make that emotional connection that drives relationships and sales, you’ll need messaging that reinforces your positioning.
Where do you start with competitive analysis?
To be honest, I’m not sure why so many startups neglect giving competitive analysis its due diligence. At the onset, it really only takes a commitment of three or four hours. Perhaps its simply setting the time and making it a priority, or maybe it’s a sense of the unknown and not knowing where to start.
If it’s the latter, here are two pieces of advice to consider when you approach competitive analysis for your startup (for an even more complete rundown and more conversation on this topic, check out my full conversation with Brandon).
1. Don’t worry about getting fancy
Competitive analysis doesn’t require unique software or a convoluted process. It can — and often does — start with a simple Excel spreadsheet where you list out your top competitors. It could be 5 companies, 10, or 50. Don’t feel like you have to get into the thousands if that’s the state of your competition. That’s too overwhelming and you’ll get lost in the data points.
So start with that Excel spreadsheet, define the variables you’re measuring against, and start tracking. You’ll have all the information you need in one place.
2. Google like your customers
Most startups can rattle off at least 3 or 4 of their top competitors. That can actually be a hindrance of sorts, though. When you think you “know” your competition, it can be harder to look outside and think objectively.
While you should consider the competition you “know,” it’s time to bring in one of my biggest rules for startup success — become customer obsessed. Applying this to competitive analysis, it’s time to get into your customers’ heads. What are they Googling? What problems are they looking up? How are they finding your competitors? When you do this, whoever comes up listed ahead of you is a competitor. This will really open your eyes in many instances, and can be one of the most powerful exercises you perform.
Showing just how much market fit and competitive analysis are intertwined, you may get some different search results than you expected during this exercise. This often means the problem you thought you were solving may not be the one you’re actually solving. Or perhaps the problem you’re solving isn’t resonating because the customer is coming up with something entirely different.
Don’t underestimate a strong foundation
While it can be tempting to plow ahead at light speed, building a strong foundation for your startup sets you up for high growth in the long term. For more on competitive analysis, market fit and how to set up your startup for long-term growth, check out my full interview with Brandon here.