How to Conduct a Competitive Analysis for a Small Business Franchise
Every small business franchise has competition, and those businesses that ignore their competitors do so at their own peril. Conducting an in-depth analysis of your competition enables you to evaluate their strengths and weaknesses and helps you more effectively position yourself and your business in the marketplace. To conduct a competitive analysis, follow these four steps:
- Define your competitors. The first step in establishing a competitive analysis for your small business franchise is to define your competitors. Generate a list of every company that offers a similar product or service to your own, including companies that sell products that can be used as a substitute for yours. For example, an eyeglass vendor would need to include businesses that sold both eyeglasses and contact lenses in their competitive analysis.
- Gather data. Once you have identified your competitors, it’s time to gather data on them. Sign up for any mailing lists they offer, and subscribe to any RSS or Twitter feeds they have. Obtain copies of their advertising, such as brochures and flyers. Keep track of any news or articles that mention the company, so you have an idea of what they’re doing. Google alerts are an effective tool for keeping tabs on a company’s news. Lastly, visit the businesses as a potential customer so you can learn about their selection and service first-hand.
- Identify strengths and weaknesses. Now that you have information on your competitors, it’s time to analyze it. It’s important to be objective when making your assessment of both your company and your competition. Where does the competition excel in their marketing or business plan? What are their weaknesses? What can you learn from them?
- Determine your position. After you have identified the strengths and weaknesses of your competitor, it’s time to put the information into action. Create an action plan that addresses both areas of improvement for your company and niches where you have an advantage. By emphasizing your advantages and improving on your weak spots, you can turn your franchise opportunity into a more successful business.
Competitive analyses should be a constantly evolving part of your business practice. Just as your business is constantly evolving, so is your competition. By understanding your competition, you can use their weaknesses to your competitive advantage and simultaneously improve your market position.
What are some other tips you’ve gathered for assessing your competitors?
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