“A ship in the harbor is safe, but that’s not what ships are made for.”
Many startup founders are aching for the ocean, but if you set sail before you understand your route and the possible obstacles you’ll encounter, you’re setting yourself up for failure. Instead, take the time to know the ocean before you leave shore.
What does that mean? It involves understanding your timing, your competition, and doing a thorough market analysis. Only then will you know if this is the right time to launch.
Let’s take a look at each element of this planning stage.
Is now the time?
Understanding your market well enough to understand the right time to launch your product or service takes wisdom and patience. Some founders have an “immediately to market” mentality where they think the sooner they move, the better.
That isn’t the case. In reality, there can be favorable and unfavorable market conditions that impact your decision. Do you really want to launch 24 hours after a major competitor goes public? Are investors interested in your industry right now? Is consumer demand where it needs to be?
Sometimes a down economy is a poor time to launch a company, and other times it’s perfect. The only way to know is to look at your market and whether your company can thrive if you run lean.
By understanding the time, you can go to market at the right moment to capture ideal customers and move forward.
What is your competition?
If you’ve decided now is the time to move forward, it’s time to understand the “pirates on the sea” — your competitors. Many businesses feel like they know their competition but haven’t taken a very deep look.
A startup competitor analysis isn’t something that you do once and then keep in your pitch deck. It’s important to keep an eye on the competition every day. Things change quickly and you need to be able to react.
First, identify your competition. There are direct competitors in the same industry that offer the same products and services. Then there are indirect competitors who offer an alternative to using your industry’s offering at all. For instance, a bus company is an indirect competitor to a vehicle manufacturer.
Note competitors’ features
Next compare product or service features between your competitors. Make a list of competitors and features they mention on their website. Put a checkmark for each competitor under the features they use.
Then compare that map to your own features. Are you missing something everyone else has? Are you trying to stand out based on features everyone offers? What features are important to customers that only one or two businesses are offering? Are there any gaps?
Finally, review these features in relation to the price point of the competition.
This analysis can help you design your product roadmap and maximize your competitive advantage.
Review competitor marketing
Take a look at how your competitors are trying to stand out in the marketplace. Review social media, search engine optimization (SEO), and digital advertising.
When you look at social media, notice what platforms your competition use and whether they get interaction on their posts. How often do they post? If you can stand out on social media compared to others in your industry, you can gain traction quickly.
Your SEO and digital ads, notice what phrases your competitors rank for and how competitive they are. If you find that you are years late to the SEO game in this industry, you’ll want to find long-tail or local keywords to focus your own website and ads on.
What is your unique selling proposition?
Your USP is one of the most important ways you catch the attention of an investor or a customer. You need to know what sets you apart.
Once you’ve fully analyzed your competition, you’ll have a great idea of whether your USP is unique enough to stand out. If you’re trying to make a splash based on a feature everyone offers, you may need to pivot or have very creative marketing.
Are you competing with extremely large companies? If so, does it make sense to do that? Will you be able to capture funding? How can you disrupt the way your industry does business?
Without a proper moat, you won’t be able to attract investors or grow your business. You do not want to launch until you are not only clear on your USP, but you’ve verified that it isn’t easy to copy and that your competitors aren’t right on your trail.
What are your key performance indicators?
Finally, you’ll need to decide how you’re going to measure your growth as you sail this ocean of opportunities. It’s not just about your own revenue and customer growth, it’s about how your progress compares to your competition.
What KPIs show that you have an edge over other companies that do what you do? Market share is a good start. Pay attention to your customer service ratings compared to competitors, and your ability to attract and retain key talent in your company.
You might also measure your use of technology compared to others in your industry along with your time-to-market and other metrics.
Are you ready to set sail?
As a startup, it’s very tempting to put your ship out in the ocean as quickly as possible. As we’ve seen, that’s often not a good idea.
You need to understand the timing of the market. It’s essential to fully understand your competitors, both direct and indirect. Make sure your features aren’t duplicated across the market and that you truly stand out from the crowd. Take a look at competitor marketing and notice how you can do it better.
Finally, once you understand your competitors you can assess your own USP and define metrics for measuring your ongoing competitiveness. Only then are you ready to brave the ocean!