The Hidden Benefits of Competition

The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time.

—HENRY FORD, FOUNDER OF THE FORD MOTOR COMPANY AND ASSEMBLY-LINE PIONEER

One of the most common experiences of a first-time entrepreneur is discovering that your brilliant business idea isn’t as original as you’d thought: other businesses are already offering similar products or services.

This would shake anyone’s confidence—after all, why bother when someone else is doing what you want to do?

Cheer up: there are Hidden Benefits of Competition.

When any two markets are equally attractive in other respects, you’re better off choosing to enter the one with competition.

Here’s why: it means you know from the start there’s a market of paying customers for this idea, eliminating your biggest risk.

The existence of a market means you’re already on the right side of the Iron Law of the Market, so you can spend more time developing your offer instead of proving a market exists. If there are several successful businesses serving a market, you don’t have to worry so much about investing in a dead end, since you already know that people are buying.

The best way to observe what your potential competitors are doing is to become a customer. Buy as much as you can of what they offer.

Observing your competition from the inside can teach you an enormous amount about the market: what value the competitor provides, how they attract attention, what they charge, how they close sales, how they make customers happy, how they deal with issues, and what needs they aren’t yet serving. As a paying customer, you get to observe what works and what doesn’t before you commit to a particular strategy.

Learn everything you can from your competition, and then create something even more valuable.