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Small Business Development Center
Member, Texas Tech University System The Princeton Review - 373 Best Colleges, 2011 Edition

Keep your competitors close

October 14, 2013

Keep your friends close and your enemies closer.” - Michael Corleone, The Godfather II. 

 I have never seen any of The Godfather movies, but find a lot of the quotes interesting and sometimes applicable to business.  The business version of that quote might be “keep your customers close and your competitors closer.”  What does that mean?  For obvious reasons you want to take care of your customers’ needs and in order to do that you have get close to them and learn what their needs are.  Likewise, as you learn your customers’ needs, you must keep a vigilant eye on your competitors. 

 I have never seen any of The Godfather movies, but find a lot of the quotes interesting and sometimes applicable to business.  The business version of that quote might be “keep your customers close and your competitors closer.”  What does that mean?  For obvious reasons you want to take care of your customers’ needs and in order to do that you have get close to them and learn what their needs are.  Likewise, as you learn your customers’ needs, you must keep a vigilant eye on your competitors.

Prior to entering into business, you did some market analysis and discovered who your direct and indirect competitors were.  Maybe you learned what percentage of market share each one had.  Perhaps you also learned more about the products and/or services offered by these businesses so that you could do a comparison to your planned offerings.  In addition, hopefully, you learned about their pricing strategy so you could formulate your own.

These were and are very important actions to prepare a business owner to know what to expect and how to plan.  Having opened your doors to business, have you stayed up to date with your competitors?

All the questions you asked, or were asked, prior to opening, are just as relevant now that you are open as they were when you were formulating your business plan.  The business owner needs to stay aware of what his competition is doing and planning.  Business is not a static environment.  It is dynamic.  The business that treats it as if it is static will stagnate and eventually die.

How does a business keep tabs on its competitors?  There many ways.  One of the most unobtrusive is to monitor the competitors advertising campaigns.  Over time, a pattern may develop for when certain items are put on special.  Or, you may learn that your competitor is rolling out that newest widget you passed on. 

If your competitor doesn’t have a large advertising budget, you may not learn much this way.  You may then need to take on a more direct approach and visit the business directly.  This may not be desirable if you are known to your competitors and they make your presence in their business unwelcome.  In this case, you need to utilize family and friends to scout out your competition for you.  Your own customers can be sources of valuable information regarding your competition.

Additionally, each business owner needs to be aware of any new or potential competitors to the market.  Established businesses will typically have an advantage over new businesses, but this should never be an assumption made by any business.  You need to be proactive in establishing, and growing your market share.  If you become complacent in monitoring your competitors, you are setting yourself up for failure.

Remember, keep your customers close and your competitors closer!

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    James Leavelle, ASU-SBDC Business Development Specialist

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