THE FIVE DEADLY MISTAKES - #3

#3 - Failure to Address the Competition

Inevitably, and almost without fail, when we are talking with a new entrepreneur he/she will tell us that their new product/service offers something so innovative that they don't have any competition. CALLING ALL ENTREPRENEURS...CALLING ALL ENTREPRENEURS! BE ON THE LOOK OUT FOR A BUSINESS WITHOUT COMPETITION...

I hate to break it to you, but there is no such thing. Even if you're new product or service is very innovative your customers still have a choice to spend money on your offering versus spending it on someone else's. Her's an example:

We work closely with a start-up called TriTowels, LLC. The creator has "invented" a towel that triathletes use when racing in a triathlon. Apparently, triathletes all use a towel of some sort in their race transition area. This towel is used to sort their gear such as running shoes, hat, sunscreen, etc. It is also used to wipe off their sandy, wet feet when they come out of the water after the swim to get on their bikes. Until TriTowels came along a triathlete just used an old beach towel for this purpose. Now, with TriTowels, they can have a unique towel with fun and cool designs on it, as well as quotes from legendary athletes such as Lance Armstrong. There is currently no other product on the market, so one might think they don't have any competition. However, a triathlete still makes the choice to drop the cash on the towel versus using their old beach towel. They could then spend that extra money on some other piece of gear they might need. So, there-in lies the rub. The creator of TriTowels has to constantly create a message to the triathlete community that intices them to want their unique product.

So, whether or not you have direct competition, your business idea still has to pass the "Wallet Test." I encourage entrepreneurs to make a list of several reasons why a customer would take money out of their wallet and buy their product or service. I also recommend they make a similar list of some things the customer could spend money on instead of buying their product or service. In other words, there is ALWAYS competition. The key to creating sustainability is to ensure your idea is compelling enough to get customers to take money out of their wallets.

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