5 Ways to See How Your Business Measures Up
by Will Yakowicz, Inc. Magazine
It’s essential for any successful entrepreneur to know what its rivals are up to. But how do you go about such benchmarking without hiring a team of pricey consultants?
Here’s some advice from the management vaults at Inc. magazine:
Do-It-Yourself, In-House
Start with basic research on your competitors — click through their Web sites, call them to get sales quotes, test out their customer service, and stop by their stores and take notes. Maybe even place an order. Get in the habit of knowing what your competition is doing every step of the way. "Ideally, this will become an organized thing where you're on their mailing lists, you're following them on Twitter, and you mystery shop them every six to 12 months," Michele Levy, an independent brand strategy consultant, told Inc.
Create a Framework
After your target is in the scope, build a structure that’s easy to read and analyze. Levy’s advice? Create an Excel spreadsheet with the following columns: Name, URL, Elevator pitch (what the company does), Mission, Products/services with pricing, Strengths, Weaknesses and Key brand characteristics (what differentiates it from other brands). After you fill out these fields, assess the economic forces that affect the businesses. This information will give you a full view of why your competitors are succeeding. Or, better yet, why they will fail.
Discover the Secret Sauce
Every brand promises its customers something. It could be the best coffee or the most secure data storage servers. Find out how well your competitors fulfill those promises. For example, as you research your competitors as outlined above, also become a customer and look at the pricing, floor plan, Web site and more through that lens. Another way to get at your competitor’s secret sauce? Ask the rival’s customers what they actually like about the company’s product or service — and how it compares to yours.
Use the Tools in Your Toolkit
You can use competitive research tools on the Internet and in public records. First, set up Google Alerts for your competitors’ names and the names of their executives — and read every piece of news and information that comes in. Comb through Twitter, Facebook, Pinterest, and Instagram for any mention of the companies you are researching — that’s a good way to figure any firm’s social media strategy. Then dig up public records, like court filings, real estate records and Uniform Commercial Code filings, as well as financial filings, which you can look up for free on the U.S. Securities and Exchange Commission's EDGAR database. Third, buy industry reviews from research firms like Forrester Research, company reports from Dun & Bradstreet, and Hoover's industry reports.
Look Within
After analyzing your competitors, it’s time to turn the microscope around and take a good look at your own company. Philip Campbell, finance expert and author of Never Run Out of Cash, says pricing is one of the most important aspects of a business, one that could be the difference between success and failure. Campbell says pricing should be set (or reset) after careful thought, analysis, and testing. He says you have to consider what you want to achieve with pricing, evaluate what you’re charging now compared to competitor’s prices, understand how your product is perceived in the market — and be prepared to increase or decrease.
It may sound obvious, but many businesses stumble when it comes to setting the right price. You need to cover costs, create a return on your investment and fuel growth. A simple way to find that perfect price is to figure out your overall revenue target and divide it by the number of units you have.
Will Yakowicz is a reporter for Inc. magazine and Inc.com. Follow him on Twitter: @WillYakowicz.
