Underestimating competitors could cost your firm dearly

Hardly a month passes without a business collapsing somewhere in the country, according to a recent study. This contributes to the more than half of all business start-ups that close shop within the first two to four years of operation mainly due to the harsh business environment and lack of entrepreneurship and managerial skills, as well as low innovation.So how does a firm survive in such a situation? Companies must treat competition (even from new entrants) as a real threat and also up their game to stay afloat. Stiff competition is especially hard to stand by small-and-medium enterprises (SMEs) because most of them are weak compared to the big market players.For example, in most African countries, 55.4 per cent of small businesses do not have good marketing opportunities, 44.4 per cent lack modern technology and skilled workers, 28.7 per cent do not have access to entrepreneurship news and 35.5 per cent struggle with bookkeeping. These figures show clearly why small enterprises’ chances of closing shop prematurely are high.However, a shrewd new competitor usually comes with enhanced innovation and skills, their size notwithstanding. They ensure high quality product and aggressive marketing, which can easily give existing brands a run for their money.Also, they could reduce prices to attract customers and, hence, build a strong foundation in the market.Such situation often poses a lot of challenges to existing firms since they could mean reduced profits and failure to meet operational costs. If the company does not rise up to the challenge and continues doing business as if nothing has happened, it could collapse as it will have lost most of its customers.But you can do something to thwart the new entrants efforts to make in-roads into your market base. You could, for example, make the competition irrelevant by fostering innovation and forging stronger links with business partners at the national, local and international levels.It’s unfortunate that some entrepreneurs take things for granted by thinking that being pioneers in a certain sector shields them from competition. This mentality is counterproductive and can lead to limited sales and dwindling profits.It’s also risky for any business and should never be allowed to happen. It’s never a good idea to underestimate your competitors’ potential as often times, new entrants employ similar or superior strategies that can easily make your brand invisible.Remember, each day a new company is aiming to penetrate your market while the existing ones are striving to re-establish themselves to conquer and expand their market share.Therefore, new entrants are potentially strong competitors capable of taking part or even your entire market share.Conversely, competition is imperative as far as boosting performance is concerned, but it is vital to outplay the competition if your business is to thrive.It doesn’t matter if your ability to influence customers is limited at the moment. All you have to do is stand out from the crowd by employing skills that will make your brand visible.This can be achieved through establishing a business that uses new technologies to produce a unique brand presence.This will make it difficult for others to replicate your brand if it is planned and executed well. It will also help your firm to keep its clientele base through improved customer relations and better service delivery that will boost sales and profits.Therefore, acquiring such distinct identity will enhance your firm’s visibility and keep you on top of the game. This is what is usually termed as having real competitive advantage over your business rivals.Unfortunately, most entrepreneurs fail to achieve this milestone because when they start a business, they think that no other business can innovate and out-match them.It is a fact that if you can innovate new ways of serving customers better, so can your competitor since innovation is not an exclusive right. So, always be on the lookout for mechanisms that can best serve your clients to cement their loyalty to your brand or business. Try and out-do yourself because only the best can survive in the cutthroat business world. By trying to outsmart yourself, you improve processes that in the end enhance service delivery. This will attract new clients and ensure that old customers think of you as their first option when they go shopping.The company also has to devise means to remain relevant and competitive by going that extra mile compared to its rivals.Are there some services you can give customers free of charge or at a minimal fee? Can you offer specialist advice to customers even when not asked? Such small things impress clients who in turn inform their friends about you.Therefore, if you are to boast of a successful business you must establish your own way of doing things that help create distinctive brand. You also need to build confidence in your supply chains.A supply chain represents the company’s performance and shows the competitive advantage you have over your competitors as it depicts consumer response or loyalty to your brand.When this happens, it helps you understand market segments you should concentrate on or those that you should leave.That’s why a business owner must listen to what their supply chain is saying lest they are outcompeted, which could lead to collapse of their enterprise.All in all, your business will grow and move to the top only when you avoid becoming any other entrepreneur. Build a distinct brand and ensure it’s visible. The author is an entrepreneur