|Posted by Ted Sehl on January 6, 2011 at 10:22 AM|
I am always surprised by the entrepreneur who does not think about his or her competition. I have been involved with projects that seem great in the boardroom but do not meet up to the test of the market place. One of the most common reasons for this lack of success is a poor choice of where to compete.
If you are offering a new product or service, the guiding questions have to be 1) is it within our competencies and aligned with the way we compete today? and 2) who else is in the market with the same offering? As Warren Buffett is attributed with saying: "I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over." Many companies fail because they are swinging for the fences rather than just trying to get a man on base. If you are a small player and the market is saturated with large players and lots of competition, then you need to find profitable niches rather than compete in the mainstream of the offerings.
I have a friend who once stated that he looked around for markets where the competition was small and that he knew that he could easily beat the products and services that were currently offered. A reporter who listened to his speech creating the tagline that he "enjoyed beating up on little guys". It sounds harsh, but let me ask you this and remember, it is your money that is on the line - would you rather beat up on the little guys or do you have a David complex and want to take on Goliath?
The successful companies I have seen take a portfolio approach to expansion. I recommend that you plan to fail often, fail cheaply and fail quickly. You will be surprised how often that your failures lead you to creating the winning combination down the road.