How To Remain In Business Despite Intense Competition

What do you do when competitors emerge in your business? Don’t panic, FOCUS!

Whether you like it or not, the world of business is a very highly competitive one. Business is a game and it takes a lot to eventually emerge as a winner. Winning however does require you find a way to remain in business irrespective of competition. Perhaps one of the most critical factor in determining who wins or lose in the game of business is knowing what not to do in the face of intense competition. It’s costing me a year without regular pay from one of the businesses I’m involved with as a partner to learn this lesson. So, permit me to share my story.

In March 2008 my friend and I took over the management of a defunct cybercafé. We had consulted for this cybercafé earlier in 2007, doing a total business process re-engineering including the hiring and training of new staff. That year everything seemed to work fine in the hands of the owner with us coming around from time to time to check up on things. As it turned out after almost a year, things started going sour because the owner wasn’t directly involved in the creation of the change we had handed over to them to now manage. As a result, the business towards the end of the year folded up, this time for the second time since they began operation.

This was when we got an offer from the owner to come in no longer as consultants but now as partners to resume complete management and turnaround of the business. How glad were we when this opportunity came. It was an opportunity for us to experiment all our ideas on how to build a SIGNIFICANT business. And a significant business we did build. At least several evidences showed. For example, in the first year of our operations the business recorded the highest sales so far since it came into existence, a whopping sum of 3.9million naira! Also, we successfully initiated a first of its kind membership program for a cyber café whereby browsers logged in with a personalized username and password of their choice. As a result, we have the highest customer retention rate in the whole industry with close to 1700 registered customers since March 2008 when we took over. We had the largest market share as far as the immediate community where we operate from is concerned. Our goal was very simple; redefine browsing from an activity (what people do) to an event/experience (what people enjoyed). We didn’t only succeed, we became an object of envy and just as its common with any enviable performance, then came along the wannabe’s -the so called copycats (competitors.)

Like a planned hostile takeover, in January 2010 a total of 9 new cybercafés sprang into existence (compared to only one at the time we took over the business) with two occupying the same business premises as we. We were about to be eaten up alive by all the new guys and so we panicked. Why? Because they didn’t just stop at copying all that we did, as is synonymous with competitors, they took the game a step further. They came with their flat screen (LCD) monitors, smaller number of systems in an air conditioned environment: talk about a total knock out! (TKO). There we were with our cathode ray tube (CRT) monitors, with more systems in a no air conditioned environment. I mean they had copied everything from our pricing model to the software we used as a timer. The only thing they couldn’t copy was our membership strategy. I guess it was more complicated and will demand more work from them. And that, my dear reader was and is still our saving grace. We never realized this until after we had panicked and reacted out of desperation in an attempt to remain competitive. What was our reaction?

We went head on and bought our own air conditions. I mean we bought four air conditions all at once in the month of January alone. Paid PHCN (the electricity company) to install a new business line to ensure a regular power supply since our big generator couldn’t power our four new air conditions. Mean while in our competitor’s case their small generator could carry their own air condition because they didn’t have as much computers as we did and they had only one air condition. We based the whole of our winning-strategy on stable power supply believing that we would match up with them on air conditions even though we didn’t get flat screen monitors. Instead of flat screen monitors, we decided to expand by taking up one more office suite in addition to the three we were previously occupying to make room for the growing demands from laptop owners.

In essence, we spent more than they probably did but still lost a part of the total market share. Why? Because we panicked and reacted out of desperation rather than being proactive. We ended up spending more but for the wrong things. We didn’t think through on our decision to buy those air conditions. Our singular strategy of constant power supply went up in smoke exactly two weeks after installation and the AC’s we bought were as good as useless since we didn’t have the regular power supply to operate them. So we were back to square one, only this time with more debts since we had to borrow some money from a bank to fund most of these reactive moves.

How can you remain in business despite intense competition?

How you respond to the competitions is the key determinant whether you’ll remain in business or not!

The entrance of new competitions into an existing market can be a blessing or a curse depending on how you respond to it. In the previous post, I shared a story of how the entrance of new competitions nearly drove us out of business because we didn’t choose our response carefully, we panicked and lost focus. This seemingly minor mistake in tactical planning is still costing us so much headache in the business even though we have began to take corrective measures. Choosing your response carefully after having strategically considered every alternative is the focus of this concluding part of the article.

Don’t Panic, Focus!

Competitions are very useful to businesses because they act as a source of feedback. Alone you might not be able to measure your strength or weaknesses objectively, but the emergence of competitions will help put your business in a better perspective. Take it or leave it, the entrance of new competitions will either make you or break you; these are the only two options available to you. Panicking will break you as it almost did to us but focusing will make you as we later found out. Like I said above, the entrance of new competitions is like a raging storm that sweeps everyone along its path off their feet if they aren’t standing firm or holding on to something strong and tangible.

As with every raging storm, no matter how turbulent it seems at first, there comes a period of perfect peace. This period can only be enjoyed by those who lived to see it and that would be those who held on firmly to what they believe in irrespective of external pressures. So don’t panic no matter how many your competitions are; don’t do anything in haste out of fear. Rather, calm down to study the dynamics of the new competitions and let your response be born out of understanding and not fear. Until you understand their game plan, don’t respond yet; focus on your business by leveraging on your areas of strength and seeking out better alternatives to manage your weaknesses.

So what was fundamentally wrong with our response to the competitions?

In our own case, we responded wrongly because we reacted early. How you respond to competitions is what really matters and not the entrance of new competitions. You see when competitions show up in your line of business it’s more like a raging storm that can sweep you off your feet if you are not standing firm. It is not the time for you to panic and start making frantic moves born out of fear rather than strategic planning. We realized this mistake only after the power company we had backed on for regular power supply to power our air conditions messed up. It’s funny thinking of it now in retrospect; how could we have been so lame to have imagined a regular power supply in a country like mine (Nigeria) where irregular power supply was the norm? In my country, the only way to ensure a regular power supply is to own a generator -an expensive, high cost of maintenance and fuel consuming machine that generates power and pollutes the environment. In our first year of business we spent over 1 million naira (almost $7000) on generator expenses alone. Imagine if such an amount of money had been ploughed back into the business.

Please don’t get me wrong here; I’m not at any point suggesting that the possibility of a steady power supply in Nigeria is unattainable. My point really is this; for now such a possibility is still far from reality. It’s the consciousness of this fact that made us to go as far as paying the power company extra for a dedicated commercial line which they claimed would be more regular than the residential line. If we had been more patient and not in our panic mode, we wouldn’t have spent so much on a dedicated but irregular power supply nor would we have gone ahead to buy and install four new air conditions. All of this money would have been diverted into some other strategic areas in the business such as getting a bigger and better generator that would have been able to power the air conditions when we are eventually ready to buy them.

Well, it’s no use crying over spilled milk. The good thing about the whole experience was the vital business lesson it taught me without which you wouldn’t be reading this today. The lesson learnt is costing me and my partner a whole year without pay. Not to even mention all other non financial cost such as stress, threat from creditors, loss of sleep etc. So for the singular fact that I’m saving you several months of headache not to even mention financial loss, I think it was worth it! The least you could do in appreciation for this free but expensive business lesson is to share this article with every Entrepreneur you know.

Entrepreneurship Is Not For Sissies (Book Excerpt – Business Jump School)

I feel compelled to say that right at the outset. So you have to be ready. I’m not going to coddle you and tell you that everything will go smoothly if you only do a few affirmations and write down your goals. You’ll need to do more than just visualize the intended outcomes. Meditation and visualization have their place, but starting a business takes work. Hard work. And it doesn’t get any easier just because you’ve started other businesses. This will be one of the most difficult things you’ve ever done in your life: more difficult than academics, more difficult than buying or building a house, even more difficult than having children, if you’re a woman. There will be times when you will wonder why you chose to start a business. There will be times when you will go to your room and cry like a baby because nothing seems to be going right in your business: your marketing efforts won’t work; you won’t have enough money; your suppliers will seem to be incompetent and your family will start asking about all those big profits you promised.

If you’ve already started a business, don’t you wish someone would have told you?

It’s a commonly accepted fact that approximately 50% of newly formed small businesses fail within the first five years of start up. Another bit of research often discussed is the number one reason most new companies fail: lack of sufficient funding. These often-quoted statistics have caused many would-be entrepreneurs to shy away from starting a business. “I don’t have an angel investor”, you might say. “And I certainly don’t want to be just another statistic.” But why do these businesses REALLY fail?

Most of them failed because they didn’t know what they were doing. They failed because it’s easy to start a business by filing paper work in a county clerk’s office somewhere and “putting the shingle out”. Largely, they failed because they didn’t get the proper guidance. Let me say this, you don’t need to write a business plan right now. You don’t need to seek funding sources. You don’t need to file paper work with the local jurisdiction to create a business entity. You will need to do all of those things eventually, but first you need some training. And you need it BEFORE you start your business, not afterward. That’s where Business Jump School comes in.

This school will train you how to recognize business opportunities. Your business needs to be based on sound principles and observation of what’s happening in the market place as well as being something you love to do. This school will train you how to deal with rejection; how to handle uncertainty, fear and doubt and how to deal with disappointment. In other words, you’ll learn how to become mentally tough. Why? Because you’re going to need it. This school will train you to how to analyze financial statements. I know you may think that figures are boring and that’s what accountants are for, but at any given time you need to know for yourself whether your business is profitable. This school will train you how to approach potential investors. You’ll learn what to say, how to say it and when to say it. You’ll learn things in this school and develop skills that will serve you throughout the life of your business.

And yes, you WILL sweat – literally. This process may not be comfortable, but it is necessary. These drills will make you stronger and help you to develop “entrepreneurial muscles”. The skills and habits that you develop will help you to start your business confidently AND competently. And you need to continue them throughout the life of your business. The principles set forth in this book and in this school are based on observation, participation and repetition. In this way, the concepts will be embedded in your psyche and will become second nature. You won’t be surprised when you encounter difficulty or competition.

You need to start a business BEFORE you actually start your business so that you know what you’re doing and are comfortable doing it. Architects and many other professionals need to “practice” before they are licensed. Doctors and nurses need to practice before they get start working with patients. Hell, even teenagers have to practice driving for a certain amount of time before they get their driver’s permit. Entrepreneurs/ business owners should be required to do the same before jumping behind the conference table of a new business and taking it out into the fast-moving economy!

The Business Jump School will give you drills and exercises that allow you to practice taking the leap into entrepreneurship, so you’ll hit the ground and dominate your market.

Are you ready to go? Let’s get started!

Until next time…Go Boldly!

Dino Herbert

“Passionate about helping people reach their entrepreneurial potential”

You Can Start Earning Immediately With These Home Based Business Ideas

In the present economy, people do not know when they will be shown the exit and when they will be out of employment. If such things happen, a home business is a great opportunity for them to begin a fresh lease of life. These people will welcome such an opportunity as a God-sent one. But, they should realize that they can not make money immediately in a home business. They need not worry. If they opt for a turnkey home business, they can start earning money immediately.

By a turnkey home business, it is meant that it is a business that is already running well. In other words, it is an established business. There is already a business plan and all the necessary items including appropriate strategies for advertising and marketing will have been put in place. There will also be an established customer base. Perhaps, when you hear of such an opportunity, you may be surprised about the concept and wonder if such a thing can be available. But, the truth is such opportunities are certainly available.

An owner may be running the business successfully but due to several extraneous reasons, the owner may be ready to sell the business. It may be due to age or poor health or moving to a different place and so on. The owner may have definitely struggled to build the business but due to the emotional attachment towards the business, he/she may not wish to wind it up. That is the reason he or she may be willing to sell it off if a suitable and competent person is ready to acquire it and run it. This is how you will be able to get such a business with a client base. The owner may not be your competitor since he or she is the person who is selling it. You can also seek guidance from him or her during the initial phase so that you can groom yourself to face the challenges that may arise in the business.

You can also explore the possibilities of running a franchise business. Franchise businesses have become quite popular in the recent times. Especially, for those who are interested in doing home businesses, home franchise businesses are a great opportunity. The greatest advantage in a franchise business is that it already has a reputation. You will get the required training to run the business. Apart from that, you get all the systems, processes and procedures for carrying out the day-to-day affairs of the business. But, for starting this franchise business, you will have to make a payment to the franchiser company and this is called the franchise amount. This amount is dependent upon the popularity of the business and the reputation of the franchiser. Once you acquire the franchise, you will be called the franchisee. Nowadays, you have a number of opportunities in this type of business. According to your tastes, skills, interests and preferences, you can choose the appropriate business. But, before zeroing in on a franchise business, you must spend some time and do the required research because by choosing a wrong line of business, you may end up losing your hard-earned money. Further, there may be some ill-intentioned companies that may try to allure you with their gift of the gab and you should not fall a prey to their nefarious designs.

Hence, by choosing a turnkey home business or a home franchise business, you can start earning immediately. Though you can not become rich overnight, you can definitely grow gradually in these businesses if you learn the right steps and run the business with acumen and astuteness.