Editor’s Note: This post was originally published in October 2017 and has been updated for accuracy and comprehensiveness.
As we’ve seen, there are a ton of fantastic, low-cost franchise opportunities out there that will give you a lot of advantages in starting up your new business. As a franchisee, you’ll still have the independence of owning your own business and being your own boss, but you’ll gain the name recognition, volume pricing agreements, and support services of an established brand. It’s the best of both worlds, and over 795,000 business owners in the United States have chosen this path. But as much as a good franchise can boost your chances of success, there is one threat to your new franchise which will always be present—your business competition.
No matter the type or location of your business, whether restaurant, child care center, gym, or staffing agency, you will always have to know how to overcome competitors. Even if you start out in a niche that you have all to yourself in the beginning, you will soon get some competitors because success always breeds imitators. For every McDonald’s franchise out there, there is almost always a Burger King franchise across the street. If there isn’t, there soon will be.
So how do you stay ahead of your peers in this horse race? Here are a few things you can do to outperform your business’s competition.
Know your business competition
If you don’t know all about your competitors, you can’t know how to overcome your competitors in business. The reality is that a lot of business owners don’t know as much about their competitors as they should. Make a list and call it “My Local Competitors Are….” Write down who you think your strongest competitors are, and then mystery shop them. If you sell widgets, buy a widget from your competitor and compare it to yours. Were the prices comparable? Is the quality as good as yours? Maybe even a little better? Does it have any features that yours doesn’t?
If your business is a restaurant, go and eat at the restaurant across the street. Pay attention to the cleanliness, the service, the food quality, etc. If your competitor is a hotel, spend the night and take a walk through their parking lot at night to look for fleet vehicles that can tell you which companies to make sales calls on. Now you know where you stand in comparison and what you need to do to win customers away from the competition.
Perform a SWOT analysis
If you’ve never heard of a SWOT analysis, it stands for Strengths, Weaknesses, Opportunities, and Threats. In it, you draw a map with four quadrants using those labels and compile a list in each quadrant. First, define clearly and honestly what you believe the biggest strengths and weaknesses of your business are in relation to your competitors. What do they have that you don’t? What gives you an edge over them? Knowing that, you next identify the top opportunities you have to steal business away from your competitors, and which of your competitor’s strengths pose the biggest threat to your business. A SWOT analysis is essentially a high-level business plan because now you know which holes to patch in your ship and which to exploit in your competitors.
Solicit feedback from your customers
The most successful companies ask their customers to give them feedback about their experience. Have you ever eaten at a restaurant and received a code printed on your receipt for a free drink if you take a survey? Stayed in a hotel and received a survey? Visited a business and seen a sign that says “Tell Us What you Think!” with a QR code that you can scan? The ways to solicit feedback are endless, and you’re only limited by your creativity. You need to know what your customers like and don’t like about your business, and the only way to know is to ask.
Listen to your customers
Soliciting feedback is only half the job. The other half is what you do with it. When receiving negative feedback, many business owners instinctively become defensive and dismiss it as untrue, unreasonable, or uninformed. Sure, there are professional complainers out there and we’ve all run into them at one point or another, but they’re few in number and easy to spot. The vast majority of your customers are being sincere. If you don’t already, be sure to take the time to review and respond to your social media accounts for your business. These may be the first channels that your customers use to voice a complaint or offer a compliment.
A complaint is a gift and should be treated as such because the customer is giving you an opportunity to fix a problem before going to a competitor. The worst complaint is the one you never hear because that customer just starts going to your competition and you’ll never know why.
Create a service culture around your customers
Do you know who your customers are? Be a “lobby lizard” and spend some time in the front meeting and shaking hands with your customers and getting to know them. It’s important to create a service culture around your customers because they are generally not as loyal to brands or products, as they are intensely loyal to people and relationships where they feel valued. Even in the face of fierce competition, customers are attracted to and will be loyal to companies that put them first.
Sell the product, not the price
Try to avoid price wars with your business competition whenever possible, because that’s just a race to the bottom. Somebody else will always be able to absorb more loss than you until one of you is forced out of business. Instead, focus on creating value for your customer by providing a good product at a fair price combined with great customer service. Cheap isn’t always a bargain, and customers are often willing to pay a slightly higher price if they see a strong value proposition for their money. You don’t necessarily need to be the cheapest, you just need to create the most value.
Know your numbers
We’ve already established the benefits of outsourcing your bookkeeping and accounting to a professional accounting firm, and one of the most important is that you will receive professionally prepared financial statements that will give you an accurate and complete picture of what’s going on with your business.
Do you know exactly what your margin is? Do you know your year-over-year performance in each category? If you don’t have that information at your fingertips, you’re flying blind. This is where Xendoo can help because we offer a complete suite of affordable bookkeeping and consulting services that can keep you on top of your business competition and help you make the right choices.
Prioritize your time
There are dozens of ways time gets away from us because it seems like there’s always a fire that needs to be put out. Being a business owner means everyone wants a piece of you, and you have to figure out how to balance everything and keep the wheels on the wagon. Start each day by taking five minutes to write down all the tasks that need to be done that day, and then prioritize them. In fact, studies have shown that just writing a to-do list can help reduce your anxiety.
Go down your list by priority and scratch them off as they get done. Additionally, by using technology, cloud software, and business automation, you can eliminate some time-consuming tasks, allowing you to focus on the big picture and beat the competition.
Only do what only you can do
In addition to prioritizing your time so that the most important things get done first, you need to spend it as efficiently as possible so that you can complete the maximum number of tasks on your list. If you feel like you have to do everything in your business yourself, that means you’re a great employee but a terrible manager. Effective management is about delegation. There are some things that only the owner can tend to, but a lot of things – like accounting – can be either outsourced or delegated to someone else to allow the owner to focus on staying ahead of the competition instead of cleaning windows.
Business competition is a guarantee, but it doesn’t have to be a problem. Did you notice how many of these tips revolve around customers? That’s because, without them, you’re out of business. You may be the business owner, but you work for them because they can fire you at a moment’s notice and go to your competitor. Just remember that as a franchise business owner, you can choose your own destiny by focusing on your customers, creating value for them, and building relationships with them.
Do that, and you will always stay one step ahead of the competition.