Competitive Intelligence For Startups

One of the key questions in the business planning process is determining what’s happening in your market.   Trying to determine who your real competition is and what their strengths and weaknesses are can be a real challenge.  Where you stack-up against your competition will be a key to your success in the market.  Competitive intelligence is the process of defining, gathering and distributing information about the products, services, customers, strategies and capabilities of your customers and the market environment in which you operate.  Once collected, this information must be compiled and presented to management to make strategic dedicions for your organization.  Just collecting the information isn’t enough.  If you file the data away in a folder on the server or in a file drawer never to see the light of day, you’ve wasted your time and efforts.  The information is only valuable when used as a tool to better manage your own organizations strategic efforts.

Competitive intelligence is about comparing your company to that of your competitors.  You are trying to collect actionable data that identifies risks and opportunities before they become common knowledge.  Positioning your company to act first or react quicker to changing market conditions may be the edge you need to succeed.  Keep in mind that some of the information you gather may not be true.   Just because you find something in print on the internet, does not mean it’s factual.  Evaluate the source of the data and don’t let your group chase a single piece of bad data down a path or no return.

Competititve intelligence has been used by the largest companys for many years.  It’s thought to be an expensive proposition not available for small business and startups.  In fact, I teach C.I. to every would-be entrepreneur and startup class, we just call it by another name; market research.  So exactly what should a startup or small business look for in the way of market research or C.I.?

Define Yourself – Before you can realistically hope to gleen information about your competitors and their strategic operations, you need to understand your own goals and objectives in the market.  Have a well defined business model with goals and financial projections.  If you don’t have a baseline on yourself, how will you know what kind of information to collect and what will you measure against?

  

Define the Who – Which competitors are really directly involved in your market?  Which indirect ones pose a real threat to your plan?  Pick a small group of competitors to watch.  You can only watch a limited number of competitors, so pick carefully.  And don’t spend all your efforts on the largest competitors and miss the new startups that may take your industry by storm.

  

Define the What – Determine on what to focus your intelligence gathering efforts; goals, management team members, growth objectives and direction, available resources, technological advances.  You can’t watch everything.  Most companies focus on strategic and capability oriented activities.  Most information is just noise.  Focus your attention on the few things that really matter in your industry.  The data you collect must be useful to your management team in making strategic decisions for your company.  If the information is not actionable, it’s not going to be very useful.

  

Define the How – The growing on-line world makes much of the data gathering effort easier than ever before.  Using news services to search for articles and news releases that contain certain keywords can automate the process.  Fee providers like Dunn and Bradstreet, or First Call collect data on physical location, management, history and financial performance.  Other data sources can typically be accessed from your larger public libraries or university libraries which carry subscriptions to fee based databases and services.  Discussion groups and message boards will entertain discussions about every topic you can think of relative to a company’s products, service and customer service habits.  While you have to take some of this data with a grain of salt, the boards will serve as an indication of how they operate and respond to customer compalints.

And then there’s the old-fashioned method of actually talking to people.  Networking and industry trade associations and trade shows can be an excellent source of the most current information.  Companies tend to send their best people to trade association meetings and shows to speak.  In addition, the job boards will reveal the kinds of talent a company needs or holes in their organization that must be filled in order to head out in a new direction.  Good talent is hard to find so companies must be aggressive in touting their vacancies and needs.  Some reading between the lines will be very useful for analyzing a growing company. 

   

Define the Process – Who will collect the data?  Where will you store the information?  Which employees and departments can access and add to the database?  Most importantly, how will you use the information to better manage your own business?  The data should be used to further your understanding of the competitive landscape and to drive strategic action.  Collecting data just to fill a database is a waste of time.  Have a plan for management to regularly review the information.  Change what you collect and how you collect it over time to fine tune the kind of information that your management needs to make strategic decisions. 

Business moves a breakneck speed and a nimble company can change direction on a dime.  How will you respond and more importantly, how long will it take you to figure out what they’ve done?  While this type of information is especially important in the business planning stage as you try to determine the feasibility of a business model, don’t forget to keep at it once you’re in business.  The business world doesn’t stop once your business gets it initial funding.

Weathering the Economic Storm - Part 5 - Business Relationships

This is the fifth and final entry in the series.  To review, we’ve covered:

1. Corporate Dashboards

2. Review Profitability

3. Review Costs

4. Cash

5. Business Relationships

Now in part five, I’ll discuss improving your business relationships and why you should care.

Work on Your Relationships

During difficult economic times, it’s especially important to try to improve your business relationships.  Pay attention to the needs of your larger customers.  Schedule face-to-face meetings to review their needs and your ability to solve their problems.  If you can find ways to cut costs on your side and serve them more efficiently, you both win and they’ll appreciate your being proactive in the relationship.  Your customers are probably doing the same kinds of analysis and reviews of their situations as you are doing in your business.  They want to find ways to cut costs and improve cash flow.  Don’t let them go away because you didn’t take the time to talk with them.  Even if you only have a face-to-face status update or take them to lunch for a friendly chat.  They’ll appreciate your concern and attention.   

But don’t stop with your customers, talk with your vendors.  Letting your vendors know that you’re looking for ways to improve delivery reliability and reduce on-hand inventory and costs will open up discussions for way to improve your working relationships.  It could be that they’re doing all they can do with what they have to work with.  However, maybe a slight change in the rules by which you operate give them flexibility to work with you on some items that are important for your business in exchange for your helping them with items that help them in their business.  You’ll never know where there are even possibilities unless you talk.  Don’t assume that they aren’t interested in working with you to find way to be more efficient together.  On the other hand, if they’re not interested in finding way to work together more efficiently, you probably need to look for another vendor.  

 Finally, talk with your financial partners.  Banker, insurance brokers, regulatory agencies and other business partners are all interested in your long-term survival.  Most of these groups will share information about the industry and ways to improve your operations to achieve more profitability, lower costs and higher efficiencies and safety ratings.  A higher quality business is a more profitable business.

Summary

Running a business is tough, even more so during harsh economic times.  Engage your employees and management to look at every aspect of your operations to make improvements, increase efficiencies and raise quality.  Measure your progress as you make changes to achieve continuous improvement.  Focus your financial eyes towards the cash and constantly strive to bring your customer and vendors closer by adding value to your relationships.

If you need help in any of these areas, give me a call.

Weathering the Economic Storm - Part 3 - Review Costs

In part one of the series on Weathering the Economic Storm, I discussed using dashboards to identify the most important performance measures of your business and keeping them in front of you and your management team.  In part two, I spoke about managing your business to improve profitability.  While you should be doing these things all the time, you should pay even more attention to them during a period of economic distress.  Here in part three, I'll discuss reviewing your costs.  Yes, I know it's another 'Duh', but....

Review Costs

The small business owner should review cost structures and operating efficiencies and make improvement plans.  Start with your product costs.  Look for ways to reduce costs in every phase of operations.  If you can save a few pennies of cost in each operation, you’ll make your whole business more profitable.  Some of the more obvious ways to reduce your product costs are:

Inventory Management:

• Better manage your inventories
• Improve your purchasing efficiencies
• Review your min-max order points to reduce costs
• Work with vendors to improve delivery lead times
• Consider bulk purchase contracts to reduce costs
• Use vendors to warehouse raw material inventories
• Use just in time deliveries where possible
• Evaluate employee counts and efficiencies

Review Operating Costs of:

• Employee workloads and counts
• Benefits coverage and costs with your insurance agent and make changes as appropriate
• Your energy usage; on plant equipment, warehouses, offices - everywhere you use it
• Operating costs of in-plant vehicles
• Fleet efficiencies; track # of deliveries, % of truck full, speed, idling

Review Costs of Services:

• Telephone
• Internet 
• Waste disposal
• Electricity, natural gas, water
• Confidential shredding
• Temp employee contracts
• Office equipment service contracts

Financial Costs:

• Insurance coverages
• Bank line interest rates
• Credit card fees
• Merchant account fees

The lists can go on and on, but I think you get the picture.  With your management team, divide and conquer.  Split the company operating costs in to categories and assign each to the manager most able to attack costs in that part of the company.  Take each category and apply a simple Pareto analysis to the costs and start with the biggest.  Don't be afraid to think outside the box either.  If the only way to decrease fleet costs is to design and implement a fleet safety policy, then do it.  Generally speaking, the safer and more well trained your fleet, the less accidents they'll have.  Fewer accidents mean lower insurance cost, lower deductible costs and lower damage to leased delivery vehicles.  You win all around, plus your employees behave more safely, and that's always a good thing.

Once you've reduced costs as far as possible on the first item, start working on the second item.  On the other hand, if you find that you can save money on an item further down the list by making a simple change, do it.  Take whatever approach works for you and your company.  As those shoe guys say, "Just Do It!"

NEXT:  It's the Cash!