While thoughts of aggressive or sizeable competitors can evoke feelings of anxiety in even the most seasoned professional, competition can actually be good for your business. Taking proactive steps in a competitive environment lets you realize potential that positively influences your organization’s longevity and beefs up its bottom line. Even without a direct strategy, independent operators and smaller organizations often benefit by maintaining a healthy response to a little healthy competition.

Following the leader isn’t all bad

It’s been said that a rising tide raises all boats, and competitors, particularly larger players, can help grow the overall market for your products or services. With deep resources, they work to cultivate market demand, and in return, you reap new sales and acquire new customers.

You can also use their marketing momentum to your advantage. They’ll invest significantly in finding new markets, locations, or products. You can then quickly capitalize on their aggressive efforts by closely following their lead. Let your competitors do the expensive validation work, then match or top their offers or promotions, and add something that makes you different or better. This approach provides the added benefit of allowing your competitors to take the initial risks while letting you learn from their mistakes. 

Competition in your area of business or expertise can also give your company additional credibility and enhanced visibility. It offers a sense of justification to your business concept, that it’s viable and important, especially in the customer‘s eyes. In addition, it offers a basis for comparison that may not have previously existed. Because most customers like to, and even need to comparison-shop, a competitive environment will result in more customers comparing your products or service features. And comparison is good—the existence of choice helps to trigger purchases. It then becomes your challenge to provide them with the better choice.

Competition forces you to differentiate

Organizations may sincerely believe their performance is first-rate, but competition will challenge those perceptions, and often for the better. Faced with competition, companies begin to more closely scrutinize their services or products, more clearly recognize their shortcomings and limitations, and more urgently develop points of differentiation. Competition provides a strong incentive to define your unique selling proposition (USP).

While it is important to be cognizant of what the competition is doing, you should not pay exclusive attention to their positioning. If you do, you will end up competing only with the features they consider important. Instead, determine and define your own.

Competition forces you to focus

It’s easy to fall into the trap of offering something to everyone. In reality, your organization may be spread too thin and is not dedicating adequate resources to your “best“ customers or to the most promising product opportunities. Without competition, your company may never stop to consider these issues.

Competition forces you to rediscover the needs of relevant customer segments. It allows you to assess and determine the best opportunities to deliver superior value. This exercise will not only help you determine your best customer segments, but also focus on higher-margin areas you may have been neglecting.

Competition forces you to find new and cost-effective solutions

Competitors give companies an incentive to work harder to keep their customers. Firms face downward pressure on price and upward pressure on the quality of the goods and services they provide. Competition gives your organization an additional incentive to improve productivity, leading to greater prosperity.

For example, how efficient is your operational or manufacturing practices? Without competition to stimulate an assessment, you may not fully realize hidden inefficiencies that could then prompt the introduction of enhanced technologies and better returns.

Innovation is also a byproduct of a competitive arena. Companies are compelled to develop new products or improved services to win customer loyalty. These “betterments” ultimately benefit the bottom line.

Competition strengthens your business base

Ultimately, competition can grow the market for your products or services by making your organization more customer-oriented. It can spur a self-assessment that can result in operational efficiencies and a more focused business strategy that pays dividends. These outgrowths will strengthen your market share and your business’ longevity. Long live competition!