Aaron Hoos

When I was in high school, my friend’s family owned the very first computer store in town. I was always sort of impressed that they had a lock on that market. I imagined a business without competition to be the highest level of business achievement – a sort of entrepreneurial nirvana.

Then, to my surprise, I learned that they were helping someone else start a computer store in the same town. In other words, they were helping to create their own competition! I didn’t understand it at all. When I asked my friend’s dad about it, he said that competition is good for business. Although he didn’t go into detail, it was a lesson I never forgot (I even remember the exact moment when he told me – it was in the kitchen of their house – it was a watershed moment for me).

It took me years to learn why competition is a good thing, but I now realize that it is essential to a strong, prosperous business. Here are my top 6 reasons why I embrace competition:

REASON #1: COMPETITORS DEFINE YOUR BUSINESS

Competitors help you to figure out what you do. If you are starting a business and you examine how your competitors define themselves, you can identify a point of difference that they are not addressing.

It’s like being lost and using a couple of fixed objects to help you figure out where you are. Your competitors are those fixed objects and you can easily find your way in the marketplace when you compare yourself to your competition.

Creating a business that has too much identical competition (everyone sells exactly the same thing at exactly the same price – real estate agents are a good example) will eventually result in a price war with your competitors. But if you look at your competitors as a starting point and then you define yourself carefully, strategically, and in a different way from the rest of the pack, you’ll help to attract the right people to your business (people who might not be attracted to your competitor). You won’t have to compete on price because your competitors are different from you.

For more information about differentiation and competition, read my blog posts: Equal is not good enough and Mine is bigger than yours — competitiveness and marketing content.

REASON #2: COMPETITORS KEEP YOU HUNGRY

A couple of years ago, I met someone who owned a business that was in-demand and the only kind like it in the entire state. The guy charged insanely high prices and 100% interest on unpaid debts. He could make his own schedule and he didn’t need to provide good customer service. Sounds awesome, at first – you can do what you want and you basically have a licence to print money. But eventually, some other entrepreneur will spot the opportunity in that market and see that he or she could make a financial killing while charging less AND providing exemplary service… and suddenly the first guy’s business is in trouble.

When I was a freelance writer, I would sometimes get frustrated at the low-priced freelancer writers who would charge next-to-nothing, undercutting my prices. On more than one occasion, it caused me to look at my prices and sometimes consider lowering them. (Fortunately, I never did). I realize now that those low-priced competitors kept me hungry and I worked harder to out-work and out-earn those competitors. I’m glad for them now.

REASON #3: COMPETITORS COMPEL INNOVATION

In economics, inflation is kind of like a swarm of termites. You don’t see them but they eat away at the stuff you own. Inflation causes upward pressure on prices so that $1.00 tomorrow is worth less than $1.00 today. In other words, if you’re standing still in your finances, you’re actually going backwards.

It’s the same in business. If you want to create a product or service, build a sales funnel, automate it, and then go sip margaritas on a beach, think again. Your business is “standing still” (not innovating) and your competition will outpace you with newer, faster, shinier products and services. While you’re asking the lifeguard to put sunscreen on the places where you can’t reach, your competitors will be inventing a better mousetrap. Before you know it, your business will sputter and die because no one wants your clumsy old offering.

Your competitors are innovating, so you need to as well. Their very existence forces you to get creative, invest in your business, and reach for more. That’s great for your customers and for your business’ longevity. Read more about innovation at my blog post: My best advice on innovation. And this blog post provides an interesting take on innovation: Want a competitive advantage? Offer the same products as everyone else!

REASON #4: COMPETITORS BECOME CASE STUDIES

In your own business, every interaction in your sales funnel is a piece of data that you can analyze to make your business better. You watch for patterns, for sudden changes, and for opportunities. You put all of these pieces together, you compare it with your metrics, and you can make huge, positive changes in your business.

But if you raise your head out of your sales funnel for a moment and glance across the street at your competition, you’ll learn quite a bit, too. Yes, you won’t have all of the facts or metrics, but you can put together an awful lot just by looking in their windows, browsing their website, mystery shopping them, and listening to both happy and disaffected customers.

Watch for competitors’ marketing campaigns that have a huge impact. Analyze the types of people going through your competitors’ doors. Find patterns among the disaffected customers who decide to switch providers and buy from you instead. By simply watching your competitor, you can learn so much from them to benefit your own business. They become a living, breathing MBA case study to make you a smarter entrepreneur.

Want a place to start? Why not do some really simple competitive research to figure out how to price your products or services. Learn more about it at this blog post: How to easily discover the best price for your product or service.

REASON #5: COMPETITORS RAISE MARKET AWARENESS

Imagine a town in which there are only two companies providing window cleaning services. They both market their services aggressively and have their own point of difference. Simply by advertising the benefit of cleaner windows, they highlight the problem of dirty windows in the market’s mind and the market will search for a window cleaning company – even if it’s not the one whose advertising initially prompted their awareness.

It’s the principle of 1+1=3. Competitors’ marketing will attract new Leads (and sometimes YOUR Leads) to the competitor, but it will also alert the general marketplace to the general problem or need. People from the marketplace will look for a solution or fulfillment and may end up in your sales funnel as a result (all because they became aware of the problem or need from your competitor’s ad). Note: I’m not suggesting that you don’t leave all of the marketing to your competition. However, I think that competitors who advertise in the same market will have a greater cumulative effect than if they each advertised in their own market).

REASON #6: COMPETITORS CAN BECOME COOPERATORS

I love motorsports, especially NASCAR. One of the things that makes the sport great is when two competitors will work together to push ahead of everyone else. Overall, they are still ruthless competitors, but for a brief moment they can put aside their differences to eliminate the rest of the competition.

The same thing can happen in business, too. You can work together with a few carefully chosen competitors to win more customers and outpace other competitors. Now, please note: There are laws about collusion and I’m not suggesting you circumvent those laws – you’re not doing this to raise prices across the board or to destroy a few competitors. There are ways to legally cooperate with your competitors for mutual benefit. For example, you can share the costs of joint advertising to reach different markets through the same channels. Or, you can send each other potential customers who may be a better fit for the other than for you. When I was a freelance writer, I competed against other freelance writers, of course. But when a Prospect wanted to buy from me and I discovered that they were not a good fit (perhaps I didn’t have the bandwidth to help them, or maybe they were in an industry I knew nothing about), I had a few carefully chosen competitors who I felt comfortable recommending them to. And the relationship worked both ways – those competitors knew who I was interested in working with and they would send people to me.

WHAT THIS MEANS FOR YOU

First, welcome competition. If there are no competitors in your marketplace, be wary. Dare to invite competitors to your marketplace! Get to know your competition as individuals, but also get to know their businesses. Use competitive analysis to learn as much as you can about them. Find out how you can help them (and take the first step to do so) and you may see some reciprocation. And always keep an eye on your competition to motivate you to stay hungry and stay innovative!

Hey, this blog post gives another reason to love competitors: 4 ways to insert yourself into your competitor’s sales funnel and steal their customers.

Successful businesses started with an idea. Somewhere between the idea and today’s success, an entrepreneur worked through the idea to create a business model, a brand, a sales funnel, a business plan… and then they implemented those things.

There are many people who want want to start a business but can’t seem to get their idea off of the runway. They have a vague, loosely-defined business idea but aren’t sure what to do next. (“I’d like to consult about marketing” or “I’d like to work on cars” or “I’d like to become a real estate investor”, etc.). These are good ideas, but they aren’t enough to move forward with.

Here’s a tool I developed a few years ago to help people solidify their idea into a strong foundation on which they can create a business. It’s called the Business Palette. The Business Palette is for people who have a business idea and now need to turn it into a business model, or who want to start a business but need help nailing down what they want to do.

I’ve used the Business Palette to help several clients who wanted to start a business but weren’t sure where to start.

THE BUSINESS PALETTE: AN INTRODUCTION
In painting, a palette is a tray that contains some basic colors, and you mix those colors to create unique colors to use on the canvas. The Business Palette works the same way: You start with some basic ideas and you mix and match to bring clarity and focus to a single business idea that you can move forward with. From there, starting a business is much easier.

I’ll show you how, and I’ll use a example of a business idea that I would start (if I wasn’t already swamped with work in my current business!)

STEP ONE: SET UP YOUR BUSINESS PALETTE
The first thing to do is to set up your Business Palette. Use a large posterboard or whiteboard. Write the following 4 sentences, one along each side of your Business Palette:

• What problems does my target market have?
• What do I know about solving those problems?
• What do I like to think about?
• What do I like to do?

You can see that I’ve done that, below, in red, and left lots of blank space in the middle of my palette.

STEP TWO: FILL OUT YOUR PALETTE WITH BASIC IDEAS
Now it’s time to fill out your palette with some basic ideas. Beside each of the sentences you wrote in the previous step, list as many relevant ideas as you can.

You’ll likely include your business idea in one of these four areas (in my experience, a vague, unrefined business idea consists of one or two of these elements). Be sure to fill out each of the 4 areas and exhaust your thinking in those areas. Do some research, if necessary, to answer the “What problems does my target market have?” question.

Notice that it’s very similar to a guided brainstorm. As you write down some of your ideas, subordinate ideas will come. Write them all down! And I should also point out: You don’t have to do one at a time. Just fill them in as they come to you. And you may find that you repeat an idea on a couple of different sides of the Business Palette.

You’ll see that I’ve filled out some ideas below (but I didn’t fill it to the level of detail I normally would… I didn’t want it to become overwhelmingly messy while I’m trying to introduce it!)

In my example (the business I would start if I wasn’t already doing what I’m doing), here are some of the things I’ve listed:

• Across the top, where I’ve written “What problems does my target market have?”, I list the problems that the average stock investor faces: “Knowing exactly when to buy and sell”, “Finding good stocks at affordable prices that turn into big winners”, “A desire for bragging rights”, and more.
• Across the bottom, where I’ve written “What do I know about solving those problems?”, I list some things that I can do (based on my previous experience as a stockbroker): “Fundamental analysis”, “How to spot trends”, “Buy and sell signals”, “Killer sectors to invest in”, and more.
• Across the left, where I’ve written “What do I like to think about?”, I list topics that I would love to get paid to ponder: “Ecomomics”, “Stock sectors”, “Fundamental Analysis”, and more.
• Across the right, where I’ve written “What do I like to do?”, I list the activities that I would love to get paid to perform: “Advise”, “Blog”, “Analyze”, and more.

STEP THREE: MIX THE IDEAS TO BRING CLARITY TO YOUR BUSINESS MODEL!
Now that you’ve put down the basic “colors”, you can now start mixing and matching.

Pick a few of the basic ideas and combine them together to see how they fit. Make sure you pull in elements from each side of the Business Palette to create a business that solves problems doing what you love to do. (That sounds like the perfect business!)

You’ll notice right away that many of the basic ideas tend to be related, and they can all theoretically mix together. In my example, there’s no reason why they won’t all somehow play a part in my business. But hopefully you listed more ideas in your real Business Palette (compared to my example) and you can discard some ideas. Other ideas that tend to be related should be considered but don’t have to be included. It’s likely that many of the related ideas will play a role in the future, but right now you’re looking to bring your business idea into focus, so don’t connect all of your ideas together. Connect some of them together and you’ll end up with something far more compelling.

Experiment with different combinations in the same way a painter would.

After a while, you’ll end up with a few good ideas and a bunch of mediocre ideas and a few bad ideas. That’s exactly what you want.

In my own example, I didn’t list all of the ideas, I just picked one (because I was running out of room — sorry about that).

From my example, you can see that I’ve combined a few of the ideas into one. If you can decipher my arrows, you’d read: “A blog about finding killer sectors to invest in for bragging rights through quality fundamental [stock] analysis.”

That’s a good starting point. It might require more tweaking. Or if I continued to connect ideas, I might find something better and more focused. But this is a good starting point because it brings together problems and solutions and my own expertise and interests. The idea I’ve listed above is definitely a business I would enjoy starting!

WAYS TO USE THE BUSINESS PALETTE
As mentioned, you can use the Business Palette to bring focus to vague ideas. That’s how I’ve most frequently used it in the past. But I’ve used it in other ways, too:

• To strengthen a brand that was floundering
• To reorient an existing brand that had started to stray from its original course
• To help monetize a blog that was growing in popularity but not making any money
• To help an aspiring (but directionless) entrepreneur come up with an idea for a business
• To develop products and services for a stronger brand that was looking to extend its offerings

NEXT STEPS
Once you’ve completed the Brand Palette, you essentially have a nicely defined business model! You know what problems you’re solving and how they’re getting solved. In most cases, you’ll know what you’ll actually be selling.

So now that you know this, I’d advise that you do the following:

1. Develop your brand. Create a strong brand that resonates with the elements you’ve included in your Business Palette. Check out this related blog post: When your product’s benefits just aren’t enough.
2. Create a sales funnel. Create a simple sales funnel that you can build, implement, automate, and scale. Check out these related blog posts: 3 tips to remember when building a sales funnel for your business and FAQ: I want to build a sales funnel. Where do I start?
3. Once you’ve done these three things — built a business model with the Brand Palette, developed your brand, and created a sales funnel — you have everything you need to write a business plan (in fact, most of your business plan is already created by these three pieces)… so you’re ready to start your business!

NOW IT’S YOUR TURN
If you have an unrefined business idea that needs some clarity, grab your markers, head to the nearest whiteboard or posterboard, and create a Business Palette. Bring some focus to that idea by mixing and matching Business Palette ideas to create a compelling business model!

If you tried it and it worked (or if you have questions), post a comment. I’d love to hear how it worked for you.

A sales funnel is a powerful way to start and grow a profitable business. Building a new business (or retrofitting an existing business) around a sales funnel is a great way to put the focus back on the right things.

If you’re working on your business’ sales funnel, here are 3 tips to remember:

SALES FUNNEL TIP #1: KEEP IT SIMPLE
It’s tempting to want to do everything. There are so many different marketing methods/tools/sites out there, and each of those methods/tools/sites has a multitude of successful “gurus” touting that particular method/tool/site as THE key to success. But taking on too much is part of the problem that a sales funnel solves!

So don’t take on so much at once. Start simply and use a few methods/tools/sites with excellence. When you have developed good habits and a great reputation, slowly expand outward. A sales funnel should not only create opportunities for you, it should also help you to manage your time!

SALES FUNNEL TIP #2.SOLVE PROBLEMS/FULFILL NEEDS
On Twitter, it’s easy to focus on getting followers and retweets. On Facebook, it’s easy to focus on building up a fanbase. On a blog, it’s easy to focus on traffic.

But what are you in business? To sell to people and to earn a profit… and the only way you’re going to do that is if you solve a problem or fulfill a need. A sales funnel is entirely focused on exactly that — moving contacts through your sales funnel to the point where they exchange their money for your solution.

Yes, followers, retweets, fans, and web traffic are important. We need those. But they’re just building blocks toward the most important thing: Helping other people (and earning an income from it). Get back to basics.

SALES FUNNEL TIP #3: MEASURE EVERYTHING
This is the one area where business owners fall short all the time. It’s fun to market, it’s hard to measure. However, when you measure, your marketing becomes exponentially more effective and you’ll earn more money.

A sales funnel helps you to measure by focusing your attention on specific marketing and sales efforts and the results from each of those efforts.