If you are you a small business owner you will need to make sure that you keep an eye on your competition and what they are doing. In the end, your competition and their success or failures will have an impact on your business.
Many times we come across small business owners who question why it is so important to know what their competitors are doing. Say for instance, that you and your competitors sell the same type of exercise equipment, and one of your competitors is having a 30% sale on their exercise equipment; this will have an effect on your sales unless you have some other factor that will make customers come to you other than the price.
You must be aware that if your business is run well and profitable that is most likely that your competitors are also keeping an eye on you and what you are doing.
We talked about sales above, and sales and advertising are the most common thing business owners do keep track of about their competition but you should take a little more interest and find out what has worked or has resulted in them losing clients and money, and learn from this.
One such case was a client of ours who had a small café that was doing a reasonable trade but seemed to have lost some of its returning customers and was spending a lot on advertising in order to attract new clients.
It was determined that the café was getting new customers, but had a low return rate. Even though the food, drinks and prices were great, not enough customers were returning. For the business to make sell enough every week meant that this business owner was stuck with spending more and more on marketing.
There should have been a percentage of return customers from his efforts each week, and if this was occurring there would not be a need to spend lots of money to bring in new customers each week.
The café owner was then asked about his competition. He admitted that he did not really know much about the ones he knew about, though he did not think that they would impact his business as he had the easiest place to park and was located on the main street in the area.
He was given a task to go out and be a customer to every café in 5 block radius.
On his return he had found some very interesting information about his competition. Firstly that there were more cafés in the area than he thought and that some were making good business.
There was another small café a few blocks away was doing a great trade and was so full that you could not get a seat at lunch time, and you had to either take away or wait.
The café had food, drinks, pricing and customer service seemed to be on the about the same level, though the real change was noticed in the layout and environment.
There was soft music playing in the background, and a distinct scent of coffee and vanilla beans that created a very fresh and enticing atmosphere.
The café owner learned a lot of things from this exercise, both in what to do to improve his business as well as things that he should make sure not to do.
Implementing a few changes did not take much time or money, and he started by introducing 2 ambient aroma diffusers with specific fragrances to entice the customers and make them not only feel welcome but want to buy more cakes and of course come back again. From there he added some music and changed the layouts of the tables to enable the customers to enjoy their time in his café.
Needless to say that business is doing much better now and the café now gets lots of customer referrals and is bringing in nearly double the revenue.
So you can see that keeping an eye on your competition is important for your business health, regardless of how big or small your business is. Make sure you know what your competition is doing.