By Mandy Maas, Your Front eOffice
While most businesses have a clear understanding of where they sit compared to their competitors in their target markets, it is easy for even the best-run organizations to lose sight of their competitors, as they become too focused on internal matters.
DO YOU KNOW YOUR BUSINESS’ SCORE CARD?
What we mean by that is:
- Do you know where your business stands?
- Do you know what your competitors are doing?
- Do you even know who your competitors are?
- Do you know what your market and or industry is and how you can size them up?
- Do you know your company’s SWOT (Strengths, Weaknesses, Opportunities, Threats)?
Getting to know your competition is as easy as going to your public library, and it’s free. (If you are a Public Library card holder from the Chicagoland suburbs, they now cross over so you can use the Chicago Public System that has more robust resource centers.
SIC (AND NAICS CODES)
First you will need to identify your Standard Industrial Classification (SIC) Code. SIC Codes were created by the U.S. Government, and they are four-digit numerical codes assigned to businesses to easily identify the primary business of an individual business location. This system is divided into 11 divisions that are comprised of major groups and industries.
You might be more familiar with hearing North American Industry Classification System (NAICS) Code. The NAICS Code is a six-digit used by governments and businesses to measure and classify economic activity in the USA, Canada, and Mexico. NAICS is the current standard for federal statistical agencies, and it groups establishments into industries according to the similarity of production of produce goods or services.
Although SIC and NAICS Codes are two closely related business classification systems used by both the public and private sectors to classify businesses, SIC Codes are less standardized and used more often by the public sector. NAICS Codes are more accurate and used by the U.S. government and internationally. Once you know your business’ SIC Code, you can size up your competition and ultimately find your ideal customer.
Businesses use SIC Codes to:
- Find customers by specific industries.
- Segment markets for marketing campaigns and customer research.
- Identify public and private competitors.
- Fill out State and Federal Registrations, Tax Forms, and other business applications.
- Gain eligibility for government contracts.
HOW TO FIND YOUR COMPETITIVE ADVANTAGE
The definition of competitive advantage is defined as the ability to stay ahead of present or potential competition. This is typically done by evaluating strengths and weaknesses of competitors and seeing where you can fill in the gap or step up and improve.
Competitive advantages include geographic location, skilled workers, low-cost energy, natural resources, and new technology. By analyzing your competitors, you will learn if a there are ideal clients worth servicing, if there are enough of those clients, if they actually need your service, and if it is profitable.
Always keep in mind, if they aren’t using a service like yours, you can’t force it. It is best to move on to better markets and opportunities that compliment your strengths.
Knowing your competition and competitive advantage will only get you so far if you do not know your businesses strengths. The best way to determine your business’ strengths is to perform a SWOT analysis, which will not only define your strengths, but your Weaknesses, Opportunities, and Threats.
- Strengths –Internal, positive attributes of your company.
- Weaknesses- Internal factors that prevent an organization from meeting its mission and achieving full potential.
- Opportunities -External factors in your business environment that are likely to contribute to your success.
- Threats- External factors that are not beneficial for the business.
Even if you think that you already know everything that you need to do to succeed, a SWOT can force you to look at your business in new ways and from new analytical directions.
If you are looking for a simple way to write a business plan or SWOT, another great resource is LivePlan.com. LivePlan, will get a step-by-step process to follow. LivePlan will ask you questions about your business, and you plug in your answers. From your answers, LivePlan gives you access to essential business and legal form templates, insights on how your company can grow, and information on how you stack up against your competitors.
With research, you can easily identify key characteristics of your business that will help you grow. Through market analysis, your business has the potential to identify new geographic locations or markets to engage in, shift priorities, address possible threats, and prepare your business’ operations to engage your desired client and market growth.
Do you know how your business stacks up and do you have a growth plan?
Do you know your competitive advantage and what type of manpower, financial workflows, and processes you need?
YFeO offers advisory and support services. We can not only assist with the financial workflows and processes of your business, but we can also help you do a SWOT, analysis your business, and identify what your business needs for a sustainable growth plan.