There has never been a worse time to try to start a business.
Why, you ask? Because there has never been a time in history where there has been more business competition. Ever.
We have come off one of the most innovative centuries in all of time. Virtually everything imaginable, useful or not, has been thought of, as well as at least a dozen derivative products or services for each innovation.
We have more choices for every product and service you can think of than we will ever need. From hamburger joints to toothpaste to child care options, we have myriad choices for everything we want, everything we need and even for things we don’t give a crap about. Plus, because historically there has been no screening process for entrepreneurship, all kinds of people jump into business.
For anyone legitimately trying to start a business, the competition faced by entrepreneurs today creates all sorts of issues. For one, novelty isn’t going to carry your business the way it did 50 years ago.
With the perceived ease of trying to start a business, even if you come up with a somewhat novel idea, the chances are that there are dozens of people working on the same thing or something that is similar. If not, the moment you launch your business, there will be dozens of imitators – and, if there is any hint of success, hundreds more.
Your business competes for customers’ time, attention and money against indirect competition as well. If you come up with a new food product, you are still competing against the tens of thousands of existing food products out there. Even if your food product is slightly different, it is still food and has to compete with all of the other food choices, because there are only so many occasions each day that people eat and only so much money they will allocate to food.
If the companies you are competing against are good competition, this is bad for you. They will be slugging it out with you for market share on a daily basis. You will have to innovate at lightning speed in every aspect of your business, because there will always be at least one business right there (and likely multiple businesses) trying to steal your customers and your market share.
This may include larger businesses that have more capital, more resources, and a better brand name than you. You may think that a larger company wouldn’t bother competing with a smaller player; however, this happens all of the time and is happening more frequently as competition has increased. Instead of just competing with their larger competitors, big companies will sometimes go “down market” and compete against small competitors.
You will face a lot of strife from good competition. However, bad competitors can be even worse.
Bad competitors can screw up a market opportunity for you as much as, if not more than, good competitors. Bad competitors can give consumers such a bad experience that they never want to try a similar good or service again. Customers will trade to an indirect competitor’s product or service simply because you are guilty by association of serving the same niche as your bad competitor. Bad competitors poison the well, which can spell real trouble for you. With the ease of starting businesses, this is a growing concern for aspiring entrepreneurs.
Competition is so fierce that it has become very difficult to reach your target customers. The amount of business products in any given market is staggering. Whether you are targeting end consumers or businesses, mass market or a niche, people are hard to find, and it is even harder to get their attention once you do find them. There is so much noise in the marketplace that every business competing for your customers’ attention makes it that much harder for you to get your message across.
Think about your daily life and how many marketing messages you see every day. You get flyers in the mail. You see billboards on the sides of roads, on buses, and at train stations. There are commercials on the radio and television, and in magazines and periodicals.
If you have an email account, no doubt you have received email from companies you have done business with, as well as those who are spamming you, peddling everything from advanced degrees to penis enlargements. Online, banner ads, pop-up ads and advertorials litter the web.
Now, for all those advertisements and marketing pieces you have seen, how many do you remember, and how many have encouraged you to try a product or service? The answer is probably a tiny fraction of what you have been exposed to. In fact, you and I see so many marketing pieces each day that we are starting to become desensitized to marketing in general.
And on top of the noise in the market, your potential customers are more fragmented than ever, so it is hard to target them in the first place.
It may have been obvious 20 years ago to target a certain business group through an industry conference. Now there are dozens of smaller conferences servicing the same industry. Instead of going to one big event, there is an event in every major city twice a year.
Consumer products companies used the television for advertising when there were only a few channels and few distractions. Now people are spending less time watching television, and their viewership is split among hundreds of channels. Finding the customers is a challenge, and then, if you do find them, you may not be able to get their attention. Not exactly what you would call “fun,” right?
Many aspiring entrepreneurs don’t think through the issues regarding competition and reaching customers before starting a business.
For example, one entrepreneur (I will call her Katy) who was referred to me made custom purses. I asked her how she was planning to sell them. Katy told me she’d do it through websites like eBay and on “the internet.” I then asked her how the customer was going to find the purses on eBay and the internet.
To make my point, I went straight to eBay. When I typed “purse” into eBay’s search box, there were 229,888 listings that included the word “purse.” I then narrowed the eBay search by putting the more descriptive “black purse” in the search box and that narrowed it to a mere 34,067 black purses available on eBay. Switching from using the search function to the category function, there were 195,978 listings in eBay’s purse-equivalent category called “handbags and bags.”
Going to Google was even worse. The word “purse” returned 32.7 million results and “black purse” returned 1.13 million results. Katy could put the purses on eBay or on her website all day long, but how the heck was anyone going to find them?
So, if you like the idea of never-ending competition with major competitors with tons of resources and bad competitors who could damage your reputation, all to gain the attention of customers who are hard to find and even when you do find them they are so overloaded with information that they ignore you anyways, you are going to love being in business.
If that doesn’t sound fun, start heading in another direction.