Older readers in the UK may remember the classic Goons Show song:
“I’m walking backwards for Christmas,
It’s the only thing for me…”
It may seem the perfect antidote to the torrent of ‘Looking Forward to the New Year’ articles and programmes one has to endure around now: but I would like to propose a third way (if that option had not been tainted by one Mr. Blair).
Looking resolutely forwards in terms of business resolutions and plans has one essential flaw – it tends to focus your mind solely on what you intend to do. A list of intentions results, which reads as if your operation is operating in a vacuum and you just have to get out there and grab the new customers with your great new schemes. It encourages a blinkered mentality.
You Don’t Control Your Success
In fact, your success or failure is statistically more affected by what your competitors do than by your own actions. There are usually more of them than you, for a start. That is one of the reasons why you should always take the time and make the modest investment to research your competitors – and not just in marketing terms.
Get all their historical financial accounts and then analyse them:
• See how they are owned, who are the shareholders and directors.
• How strong is their balance sheet?
• Do they have positive cash flow?
• Are they growing?
• How many staff and managers do they have?
• Are they handing out big dividends or reinvesting capital in the business?
• How does their turnover split between different regions, countries and types of product or service?
Most businesses are small or medium sized and many B2B markets, including my own, have little published comparative data and are dominated by other SMEs that file modified accounts, excluding turnover and other details. But do not be put off. You can still glean a lot from the changes in their debtor and creditor levels year by year, their net worth and their credit rating.
If you are not a financial whizz then don’t despair. You can either get some training in the analysis of accounts, or you can hire some help at reasonable rates.
So let’s assume you have done this exercise and prepared a spreadsheet comparing your competition with your own on key financial metrics. What have you achieved?
The Sidelong View
You have refocused your market view. You are Looking Sideways – you are like the runner who has to check what the others in the race are all doing, where they are placed and whether they are moving faster or slower than you are.
The result is that next time you go up against a competitor for a contract or a competitive quotation, you have a better idea of how low they can afford to go and also what arguments you can use against them: you should now know a lot more about their strengths and weaknesses and be able to play those to your advantage in your dialogue with the customer.
All sorts of other analysis can be useful, of course, such as a SWOT exercise: but don’t fall into the trap of just getting your team into a room and dreaming the answers up. Get hold of competitor products and do comparative analyses to get good, solid data, or run customer research on how each service company performs and is viewed in the market at large.
Make 2015 the year that you really take a good look around you – and get the 3D picture that will put everything into a proper perspective.
Chris Ring has run businesses in many markets, and is now Director of Bojingles, a creative audio/video production company