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Monday, November 15, 2010

Small business failure, a lack of appreciation for the competition

Many small businesses are started because of a dislike for the competition. But how many of those small business people actually think about the things their competition is doing right? It takes a thorough investigation into everything that is happening in the industry to succeed in business.

I just read an incredibly insightful article in Wired about Ticketmaster, aka: the evil empire that "everyone" hates. You know, that company that charges you $10-20 in fees for a $15 event ticket. I'm guessing that many small ticketing start-ups began because of their frustration with the extraordinary fees, and lack of creativity of the market giant. But how many of them appreciated what Ticketmaster can do better than anyone?

I'm not playing devil's advocate here, as I believe the cannibalistic nature of the excessive fees is long-term bad for both venues and performers. But what is true is that your small business will not succeed if you haven't evaluated the strengths and weaknesses of your competition. Will your upstart ticketing company be able to handle millions of tickets sold this week without system failure? Can you lock down 40,000+ seat venues in your market? Do you need to?

Not every business must be able to topple the giant in their industry, but there is a need to truly understand your competition, how you're similar, and different. You must know what your place is in the market, and understand what challenges your competition hands you. I worked with a small upstart recently who boasted the ways they were doing something no one else in the industry was focused on. Problem was, the positive things they were doing were indeed exactly the same as the rest, while the only unique elements of their business were not desired by their customers. They were preparing for a take-over of an industry, when in reality all they were equipped for was a small slice of a pie that was firmly controlled by their competition.

Get to know your competition. Discover what you can do better, and know what they do better than you. Learn from their expertise and hardships to get where they are.