Tuesday, October 26, 2004

CHOOSING YOUR COMPETITION: A good article posted by Eric Sink on his weblog Eric.Weblog(). In an older post, Eric expounds on evaluating a new business idea and has some very good points about pursuing new business opportunities:

One of the first steps in evaluating a new business idea is to find out who else is already doing it. Do some Google searches. Find out who your competition will be. Find people who are doing something similar or related.

The next step is where a lot of would-be entrepreneurs make a wrong turn: The strong tendency is to drop an idea as soon as we find somebody else is already doing it. We somehow convince ourselves that we have to keep searching for ideas until we find something completely new. Innovation is glamorous. We love to hear stories about the guy who makes a fortune by inventing something completely new. And besides, there's no sense starting with established competition from day one, right?

To be fair, I'll concede that competition should not be taken lightly. Entrenched competition can be tough to beat. Picking the wrong competitor as your goliath can be suicide. However, avoiding competition altogether is usually not a good strategy for getting a business going.

The big problem with avoiding competition is that you are also avoiding customers. The existence of a competitor indicates the existence of paying customers. If you can't find anyone who is making money with your idea, you really need to wonder if there is any money to be made there at all.

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