It would be tough to find a business owner that didn’t wish for a competitor-free market. Understandable really, who wouldn’t want to think they had a whole market to themselves. But when you are assessing a potential new market for your product or service, competition can actually be a good thing.
For starters, the existence of competitors validates that there is a market for your product or service. Imagine if you have a new product – what would it cost you to launch your business into an untested market? How much higher would the risks be? How less certain would your sales strategy be?
Competition also means that the market has been developed and educated for you. While being the first to release a product into a new category is an advantage, it is also more expensive. The first player in a market is the one that must educate potential customers on why they should care about your category, and what problem you solve. The companies that follow only need to spend money on marketing their product within that category, not the category itself.
Another consideration is the effect that competition has on the way you think about your business. It forces you to stay focused, to continually think about who your most profitable customers are and what they really want, and not get distracted with side opportunities that won’t serve you well over the long term.
So if you’re thinking about starting a new business, use the existence of competitors as a guiding light to the potential of a market. Then make sure you have a unique offering that better serves market niches to build the platform of your successful business.