How to Deal with a New Competitor in Business
Monday, September 15, 2014
Overcoming emotional stress to create competitive advantage
Running a business is a stressful job that puts an incredible strain on emotional wellbeing. Further strain is added when a competitor enters the market with new ways of doing business. While outwardly, you are the strong, brave entrepreneur that your clients and friends expect you to be, inwardly you are wondering how you are going to survive and what the consequences might be should your business fail. Emotional frailty that isn’t checked could lead to ruin. You need someone to use as a soundboard, to not only help you out of your emotional rut, but to also bounce new ideas off in order to stay competitive.
An article written by Jessica Brauder for Inc.com cites a poll by Gallup-Healthways dealing with the emotional wellbeing of entrepreneurs. As reported in the article, the Well-Being Index found that 34 percent of entrepreneurs – four percentage points more than other workers – reported they were worried. And 45 percent of entrepreneurs said they were stressed, three percentage points more than other workers.
The article makes another important point: in the face of stress we tend to neglect our health. Brauder writes, “Entrepreneurs often juggle many roles and face countless setbacks – lost customers, disputes with partners, increased competition, staffing problems – all while struggling to make payroll. ‘There are traumatic events all the way along the line,’ says psychiatrist and former entrepreneur Michael A. Freeman, who has researched mental health and entrepreneurship.
“Complicating matters, new entrepreneurs often make themselves less resilient by neglecting their health. They eat too much or too little. They don't get enough sleep. They fail to exercise. "You can get into a start-up mode, where you push yourself and abuse your body," Freeman says. "That can trigger mood vulnerability."
New competitors compound the stress. So how do you deal with it? Firstly don’t be afraid to share your troubles. Secondly, find a competitive advantage that puts you ahead of the game.
Ruslan Kogan wasn’t the first man in the world to enter the cut-price electronics market. In fact, he has probably been the cause of some competitive stress. He did however revolutionise the Australian online sector. He says, “Just as the Industrial Revolution brought hundreds of millions of people out of poverty, so too has the Internet already enhanced almost every element of our lives.”
There is no arguing with this point of view and Kogan, the business, has excelled because its founder was quick to recognise the power of online reach in relation to the provision of cut-price technologies. In 2013 Kogan showed revenues of over $200 million – not bad for a business that began in the back of his parents’ garage.
Earlier this year Ruslan Kogan made his debut at number 162 on the BRW rich list with an estimated wealth of $362 million. It comes on the back of the company’s expansion into sporting goods, hardware and homewares, which he sees as major growth areas.
It also comes because, emotionally, Kogan is not a man to rest on his laurels. Indeed, he feels if you do not undertake competitor analysis, complacency sets in and you as an industry sector leader will soon be overtaken by the competition.
Complacency is an attitude or emotion that no businessperson can afford to fall into.
“There are plenty of businesses that have enjoyed many years without effective competition, and are only now realising that they need to innovate to survive,” he says. “Whether it’s an online retailer like Kogan, a bricks and mortar retailer, a financial institution or your local pie store, every business will succeed if they do one thing: innovate. By constantly creating new ways of doing things in response to your customers’ desires and needs, your business will stay ahead of the game and profit greatly.”
Innovation over complacency is key to survival. Think strategy, strategic risk and then positively about ways to improve the business and you will find that your stress levels reduce and your profits increase.
Kogan cites Amazon as one organisation that created a market, listened to its customers and then developed a strategic business model that has kept it at the forefront of the online retail revolution.
When Amazon founder Jeff Bezos started his bookselling business, he built it on the tenet that, “If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.”
He also built it on the tenet that evolution is the key to growth. Remember this is a man that as a toddler used a screwdriver to dismantle his cot and as a teenager built a laboratory in his parents’ garage; it seems a lot of good comes out ‘the olds’ garages.
Amazon diversified beyond books into clothes, toys, music and homewares. They personalised the buyer experience. They launched Kindle and revolutionised the way people were reading its books. In 2012 Amazon launched Amazon Studios using a crowdsourcing model.
Bezos says, “You know, resilience – if you think of it in terms of the Gold Rush, then you’d be pretty depressed right now because the last nugget of gold would be gone. But the good thing is, with innovation, there isn’t a last nugget. Every new thing creates two new questions and two new opportunities.”
While this isn’t a feature about Kogan or Besoz, there is a great deal to be ascertained from their successes: to deal with new competitors and remain resilient it is important to look within and innovate.
Alex Pirouz is a business consultant and founder of Linkfluencer, a company specialising in the utilisation of LinkedIn as a marketing tool. Pirouz says, “Competition is fiercer than ever before and more and more industries are being flooded by upstarts. My advice to businesses is not to worry about competition, because your biggest competitor is actually yourself. The trick to staying ahead of the pack is to think about what you are offering and constantly evolve your business. Speak to the market, understand what the market wants and then find out how they want it delivered. Then seek their feedback to continuously improve that product.”
Failure to innovate puts negative impact on your bottom line and your emotional resilience and could mean a loss of market share if competitors take what you have done and do it better. Take Blockbuster for instance. They survived the transition from video to DVD, but didn’t follow through into the on-demand market. Blockbuster is now busted. Kodak, Motorola and Yahoo are just a few other examples whose bottom lines bottomed out because they couldn’t maintain competitive advantage.
Innovation will create competitive advantage. It will disqualify competition, redefine standards and change the decision criteria in the way customers buy. It will also keep you emotionally strong.
As Ruslan Kogan says, “It’s clear from websites like Amazon, that innovation is moving beyond just a matter of price. It shows that whether you’re B2B (business-to-business) or B2C (business-to-consumer) you need to continually focus on the customer or client while you’re carrying out change in your business… If Australian businesses want to survive and grow, we must embrace our ingenuity, adapt to the changing environment and ensure we deliver exactly what customers want.”
In other words, new competition has a positive impact on business and mind if you undergo competitor analysis, work out your strategic risk and approach competitors in a positive way.