Wyoming Business Tips for Jan. 25-31
January 16, 2009 — A weekly look at Wyoming business questions from the Wyoming Small Business Development Center, part of WyomingEntrepreneur.Biz a collection of business assistance programs at the University of Wyoming.
By Michael Lambert, Wyoming Market Research Center manager
"I have just invented a new method for securing shoes using zip ties. There is nothing else like it out there, so I don't think I have any competition. My bank doesn't agree -- what gives?" Zip, Lander
One of the most common statements I hear from business owners, especially those who have invented a product ,is that they have no competition. Sometimes they are right, but most of the time, folks need to adjust the way they think about their product and the benefits it provides to the consumer.
Consumers will look at your product and try to determine what needs it meets for them. In the case of the shoe zip ties, consumers are going to look at other methods they can use to accomplish the same goal.
Even though there may not be another shoe zip tie on the market, there are numerous shoe strings available, from cloth to woven to leather. In addition, some shoes use zippers or Velcro to secure them on the user's feet. These are all competition to the zip tie shoe tie -- and your business plan needs to address how your product fits in this competitive landscape.
Investors, like your bank, generally define competition as any service or product a customer can use to fulfill the same needs the company fulfills. This can include similar products or substitute products, and other options, such as homemade alternatives. When planning for the success of a business, consider all possible competitors.
When you determine who else provides the same or similar benefit to that which the product provides, the next step is to carefully and rationally look at the strengths and weaknesses of both the product and the competition.
Be honest. Just because you spent hundreds of hours inventing the zip shoe tie, do people really think it's better than a shoe string? Check with consumers (and not family, but people who will give you an honest opinion). Compare pricing, ease of use and make a list of where you excel and where you fall short. An honest look at both the product and the competition will help you understand how viable the invention will be in the marketplace and will help guide in selling the product to consumers.
Having competition is not necessarily bad. In fact, an investor may view a statement of "I have no competition" with some concern. It may mean there is no demand for what is being offered. If there are few or no competitors, a sufficient customer base to sustain the company may not be available. However, if there are competitors and you can show the product or service has significant advantages in design, usability or price, then investors are more likely to want to fund you.
A little competition is a good thing -- make sure you do a good job of understanding yours.
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The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, e-mail firstname.lastname@example.org or write 1000 E. University Ave., Dept. 3922, Laramie, WY 82071-3922. Additional help is available at the WSBDC Web page at www.wyomingentrepreneur.biz.
Posted on Friday, January 16, 2009