Competitive Intelligence for Start-Ups:
Tips on How Entrepreneurs Can Use Competitive Intelligence
to Make Smarter Business Decisions & Thrive
Starting a company is an exciting adventure fraught with challenges that quickly change a dream into a nightmare.
It makes sense, therefore, for any entrepreneur to take the necessary steps to minimize the threats that can destroy a business, and to maximize and exploit opportunities that lead to business growth and profitability.
Competitive Intelligence Versus Market Research
Competitive Intelligence can provide key business insights economically and effectively. Unlike traditional market research, Competitive Intelligence is not dependent on representative samples, analytical software, focus group locations, moderators or honorariums – all of which cost a substantial amount of money.
Competitive Intelligence uses real world experience and information to provide an entrepreneur with an understanding of the world as it is, warts and all, and can expose risks and uncover opportunities that traditional market research cannot do.
Traditional market research can help to rank the quality of one company versus another, for example, one company is better than another.
Competitive Intelligence looks at the paradigms or set of beliefs within a business sector (that is, the assumptions of what can and cannot be done) and provides the imaginative entrepreneur with ideas to disrupt that paradigm and create business opportunities in which the established companies may not be able to compete.
In short, Competitive Intelligence can help entrepreneurs to “change the rules”.
Example: Organic Food Restaurant
In this article, we will take a look at how an entrepreneur planning to set up an organic food restaurant would go about using competitive intelligence. One way to gather information is to visit similar restaurants to see what they do and to see the world through their eyes.
Some of the key areas of the research will involve:
- Location and foot traffic
- Clientele (demographics)
- Typical amount spent
- Ambiance, lighting, and signage
- Quality of food/presentation
- Prepared on-site or ready-made?
- How long in business
- Single or multiple sites? Franchise?
- Brands used/suppliers/distributors
- Pricing specials
- Peak periods/slack periods
- Unique selling proposition
- How are customers treated?
- Thriving? Struggling?
- History or background of owner(s)
Other information to be gathered includes:
- Keys to success: what they do well that sets them apart
- Challenges: what they don’t do well that makes them vulnerable
- Barriers to entry: zoning laws and other legislation, initial investment. Can current legislation be changed or challenged or is there a gap or loophole that can create an opportunity?
- What can be learned from the success and failure of others?
Finally, it is essential to understand the mindset or paradigm in this business sector. A paradigm is an unspoken set of assumptions that influence what companies in the sector believe they can and cannot do.
Paradigms are ideas that form invisible barriers to action that are as formidable as any fortress or wall ever built. As an entrepreneur, your greatest task is to get around, under or through this barrier; disrupt the business sector, and gain an enduring advantage over your competitors.