Competition is present in almost every business. Competitors are other businesses, often with similar products or services, which are trying to acquire customers from your market. Competition between businesses is what pushes them to innovate, as to not lose business. Going into a market with lots of competition can be very difficult, as customers will be more comfortable going to a business they are familiar with. Competition isn’t always with other businesses, however. Sometimes people will acquire the goods and services your business provides by doing it themselves. For example, someone might choose to wash their own car if the car was is too expensive.
There are two main types of competition in business, direct competition, and indirect competition. Direct competitors are businesses that sell a similar product or service as you. Indirect competitors are businesses that sell a different product or service than you, but still have the potential to take your customers. For example, two companies that sell phones would be direct competitors, but a phone repair company may be an indirect competitor if it is cheaper to repair your phone than buy a new one. Not all competition is an equal threat to a business. Most of the time, direct competition is more relevant to a business’s success than the indirect competition.
A good way to determine the success of a business against competition is market share. Market share is the percentage of a market, which is buying from a business. For example, a business with a 10% market share in the soda market means 10% of people are buying soda from that particular business. In markets with lots of competition, each business’s market share is naturally going to be lower. It is challenging to acquire market share, especially in the infancy of your business, so work on expanding your business instead of trying to capture market share. Competition and market share are issues that are relevant to a growing business, and shouldn’t be overlooked.