How do you find out how your competitors are doing?

[theduchess]

Hi all,
I'm very new to all this so if this is a very basic question then please forgive me!! I'm starting up my own business and very much in the early stages of business planning. I'm trying to find out how my competitors are doing to help me in forecasting sales. Only trouble is (which I hope is a good thing...) is that there aren't any people in the area doing exactly what I want to do ( a gift shop with a cafe in as well). I keep being told to "look on Companies house" which I've done but I just don't know how to interpret the findings. It doesn't really make sense to me! I know I should be braver and talk to businesses in the area but surely they won't give me the kind of info I need?! (and I need to find a business model like mine)

Finding the whole forecasting business really difficult as just feels so inexact!

Has anyone got any advice for me / suggestions where to look?

Thank you so much!

 

[mhall]

First of all Companies House figures will be well out of date most of the time. You should ask the Retailers around you but bear in mind they have their own agenda - if they are quiet they may want to encourage another Retailer to help them rather than advise you.

The best possible thing to do is concentrate on your own business and your potential customers. By all means take a cursory glance at your other competitors selling similar stuff but your real competitors are everywhere - you are competing for someones cash so ANYBODY selling ANYTHING to your target market are competitors. You must know your customers. If they have £30 to spend, what do they spend it on? Will they come to you or go for a meal? - now the local restaurant is your competitor. Will they have a coffee with you or buy a magazine? - now WH Smiths are your competitor. I could go on but hopefully you get my drift.

 

[Banned]

What mhall says.

I've tried everything over the past 18 months, and what I have found out - without doubt - is that there is now only £x pounds available for people to spend. We introduced new lines, specials etc - but if people only have £20 to spend that's it. Everyone is your competition. Expand your product range and you are just competing with yourself, DON'T COMPETE - COMPLIMENT.

Concentrate on what YOU do and and make that work, keep an eye on the rest but beyond that forget them.

 

[LuckyNo8]

You can always go and spend a few hours somewhere near your competitors cafe. As long as you can see who's going in and out, and you do it over a period of time, you can probably get "some" ballpark numbers with some educated guessing.

My only worry is that the footfall etc might be quite unstable, so you'd need alot of data points.

 

I'd agree with LuckyNo8. Even if your competitors have to file with Companies House abbreviated accounts hardly tell you anything you can find out all sorts of things by going and having a look at what your competitors are doing and selling.

There are things you can keep in mind when you go that will help you work out how and what your competitors are doing. For example:

Lots of retailers give more shelf space and put out more stock of things that sell well.

Look to see if there is a reduced section - that might be stock that doesn't shift well. For seasonal stock reduced items also show that stocks of certain items have shifted slowly (for example, I was very surprised that my local Sainsburys still had Christmas branded Coke a couple a few days ago).

Look to see if items have multiple price labels on them.. Some retails stick new prices over old but it's a dead giveaway that they are having to adjust their prices a lot.

Look for dusty stock.. that's not moving quickly.

Similarly.. check a few sell by dates on foods .. Depending on the item, if the sell by dates are close it can indicate that those products aren't shifting.

If you go in with your eyes really open you can learn such a lot from a little recon..

p.

 

[Talay]

If you subscribe to the theory proposed by Banned above that people only have £X to spend, then you need to consider not only the price elasticity of demand for your product but also the cross price elasticity in relation to your goods and of your business relative to the actions of other businesses.

Not easy to grasp I know if unfamiliar with economics but it does try to show the impact of internal and external changes on your potential sales.

I often think about it in the context of smokers, whose addiction must be fed irrespective of the price and that from a fixed income, other necessities must compete for the limited funds available. Looking at the whole basket of goods including cigarettes, one may think it was the interaction of all prices which affected demand in an equal manner but that is not so because the individual elasticities of demand are different. As the demand for cigarettes is largely inelastic, whereby demand remains largely the same irrespective of any price increase, any rise in prices of cigarettes impacts on the demand for other products through cross elasticity as, given a fixed income, their demand decreases as the price of cigarettes rises.

Another example would be gas and electric, which people need and can only marginally reduce consumption of in the short term. If prices rise and wages do not, then people have less money to buy other items which are not as essential as heating and power.

An advertising blitz or closing down sale by a competitor could adversely affect your business. It could also benefit your trade after they closed down. How this affects you is determined by the cross elasticity of demand for your product vis-à-vis their product and how you react to the changes they make.

It is not an exact science and does not really help you with initial forecasting but it does help to predict what could happen to your business if you or your fellow businesses, both competitor and complementary, make changes. That you are a new business seeking to enter the fray, your very start up may affect their business and potentially provoke a reaction, good or bad. Understanding this can give you grounds for thought prior to making a decision.

Best of luck.

 

[Rhodes100]

A business transfer agent will not thank me for saying this but perhaps the best way is to try to look for a similar business for sale and go and view it and talk to the seller. You can then see whether they will provide details of their turnover.

Look on www.businessesforsale.com and www.daltonsbusiness.com

 

[PrestonLad]

Good advice above. In addition, a simple thing you can do, is to go and visit 2 or 3 similar, but non-competing businesses, and strike up a conversation with the proprietor. Unless they're busy, I expect many would be happy to chat, if you are open with them. And it's not too difficult to start... just begin by complimenting them on their lovely premises and tasteful stock!

For you, I guess that means finding a similar cafe/gift shop, with a similar 'profile' (touristiness, size of premises, size of town, town-centredness - sorry about the made-up words there ) - But... choose ones that are perhaps 20 miles or more from home. You lose the 'local' feel (which you pick up using the other advice above), but there's a lot you can gain by an interactive conversation with someone who's trying to do the same as you.

I've done this.

 

[theduchess]

Thanks everybody - some great advice and lots to get working on! Really really appreciate the time you've taken and hopefully when I'm a bit more down the line (and dare I say it successful) I can give others pointers too!
Ha Ha !

Better get out there and asking some questions!

 

[raineshoe]

As someone else said concentrate on your own business. Yes its wise to keep an eye on what competitors are doing, but you can get too wrapped up in the competition and lose the race if you are not careful.

If also find that knowing your market ie the products your selling really well also helps. I see my competitors posting things on their Facebook pages which quite often I can be almost certain is bluff and bluster to make things sound better than they are.

 

[adam20johnson12]

You want to quickly and ethically gather competitive intelligence about your competitors to give you hard facts on which to base decisions about marketing tactics, R&D investments, product launches and overall business strategy. Here are some resources and advice for gathering competitive intelligence to help you protect your market position and move ahead of your competitors. Buy a competitor's product; Online Sources, Company Web Sites, Online Publications ,Ads