I have seen many wanna be entrepreneurs come and go. They tinker around with new ideas, claim it does not work and then go back to getting a job. One common thread I find amongst wanna be entrepreneurs is they do not know how to effectively compete. For any entrepreneur to succeed, they need to compete in a market.
Market versus Industry
A market is a place where buyers and sellers connect to sell goods and services. In a market, you have a variety of industries. An industry is a group of businesses that sell similar products. A market wants to satisfy the total needs of the customer while an industry aims to satisfy a particular need. The utmost difference between a market and an industry is a market has a “connector“. For instance, in a physical market like a mall, you have different stores buying and selling to customers. Customers come into the mall because they know they can find what they want. The physical mall is the connector of buyers and sellers. Moreover, on the internet, the search engines and social media platforms act as connectors between buyers and sellers. To exist in the internet market, you need the ability to be found by search engines or social media platforms.
Competing in a market
No business is an island. What happens in your business is closely tied to what is going on in your market and industry. Wanna be entrepreneurs do not understand what industry they are part of, or what markets they compete in. You cannot claim to be in business and not compete in a market. Customers go to the market because they know they can find what they need and buyers exist because they know customers are looking for them. If your business does not exist in a defined market, customers are not going to find you as customers will always flock to where they can find a variety of products and services. The best way for customers to find you is to exist in a space where they already exist.
Competition is rooted in the underlying economics of the industry. Depending on your industry, your product or service is viewed as a commodity or specialized product when brought to the market. Knowing the underlying economics that affects your industry allows you to effectively compete in the market. Your industry is defined by what your customers pay for. For example, customers pay to eat out in the restaurant industry. Once you know your industry, you can formulate your strategy accordingly; factors that affects your industry also affects you. Your industry will impact your strategy. Whether or not you are a fit or misfit is highly depended on what your competitors are doing.
A market fit occurs when the products offered by the entrepreneur matches the unmet needs of customers in the industry. Given that your potential customers have alternatives, you need to clearly state what makes you different. Doing this requires, knowledge of the industry in which you compete.
Summary
In summary, you cannot produce a product or service in a vacuum. If you are competing in a certain market you need to do the following:
- Define the market
- Understand how customers in the market are currently being served.
- Know what industries are currently competing in that market
- What meets are unmet in that market: The more you understand your customer the more likely you will earn their business
- Think differently: Brainstorm to see if you can you come in with a support strategy rather than directly compete with the industry leaders. This is achieved by complimenting services or products already provided.
Lastly, do not try to recreate the wheel, look at what is going on and then develop your strategy around existing markets.