Your competitors will spend much of their time trying to beat you to your target customers. And they can copy the same competitive advantages that your innovative product offers. Most business ideas are not spectacular world-beaters. ‘Step-by-step’ innovations in processes or organisation are much more common sources of competitive advantage. Each one may be quite easy to copy but the way you manage your company, the routines and systems that guide your operations and the climate you create to encourage people to discuss and try improvements, can be extremely difficult for another firm to imitate.
Existing competitors are usually from your industry or a similar one, where there are often common or widely understood ways of doing things. Entrepreneurial ideas that cut costs or develop more effective production and distribution processes, ways of marketing, using finance, or finding and retaining necessary skills often gain a short to medium term competitive advantage while competitors discover what has happened and catch up. New entrants to the market are doing much the same thing as they launch products which will appeal to your customers on price, prestige, quality, or novelty.
The trickiest forces to contend with are the entrepreneurial ideas that come out of the blue, offering customers completely new ways of doing things. It is important to be able to identify potential competitors of all types – those already there, those about to enter and, especially, those who may be able to offer a completely different product that can satisfy the same customer needs better than your product. It’s tough out there!