If you are running or working at a moderately successful company, you will face challenges when new competitors enter your space.

Rest assured, enter they will. Any vertical where you can make money has copycats and late entrants.

Instead of asking “what if a competitor enters my space?” you should ask “what happens when a competitor enters my space?”

A great read on this topic is Playing to Win. The David Sirlin book digs deep into the psychology behind gameplay (both 1:1 as well as multiplayer).

The book covers things like sportsmanship, the art of war, and different attack styles. It is worth a read if you really, genuinely want to win in business.

And to win at business, you need to have an answer to this question:

What do you do to prepare for when a new competitor enters your space?

Before Competitors Enter Your Market

When you carve out a new niche or come up with a new twist on a classic business model, you have an opportunity.

As stated above, it’s not a matter of if someone enters your space to take you on as a competitor, but when.

When you’re first starting, the best way to guard against future competitors is to:

  1. Move to build a recognized brand in your space as quickly as possible;
  2. Move to get the best in the market as brand ambassadors, not just customers;
  3. Build systems that work behind the scenes that are hard for your future competitors to mimic;
  4. Highlight your USP (unique selling proposition) so that it plays to your unique strengths.

That last point is especially salient. If you are copying what others have done simply to make a buck, then you are not really differentiating and you’re not innovating. You can still make money, but you don’t get the first two.

This also applies when you are scaling. If you are growing quickly because you have a lot of resources or it is a severely underserved market, you can be positive that new competitors will enter soon.

Just look at the app HQ, which already has copycats (via ProductHunt’s HQ for X collection):

Another book of note on this the subject is Seth Godin’s “The Big Squeeze“, quoted here in its entirety:

There are more truck drivers in the US than just about any other occupation.

For a long time, unionized truck drivers benefitted from work rules, healthcare, vacations, etc. It wasn’t an easy job to get, but it was a career.

Companies started to realize that if they offloaded the work to freelance truckers, people with their own rigs, they could take advantage of a free market. As a result, more and more of the work ended up with independent operators, who got to be their own boss, paying for their own equipment, finding their own work.

The problem, exacerbated by the speed and power of the internet, is that there’s always someone cheaper and hungrier than you are. That if you do undifferentiated work, the market will squeeze you to do it cheaper.

We get (slightly) cheaper trucking. The millions of drivers get exhausted while living right on the edge. They work too many hours, carry too much weight, burn themselves out.

And the same thing is true for anyone who signs up to be a cog in a digital marketplace. Uber drivers, freelance bottom-fishers, hard-working people cranking things out by the pound…

Any market that seems to offer an easy in to the undifferentiated will eventually squeeze them.

How To Insulate Yourself From Competitors

The only way to really protect yourself against competitors moving in and eating your breakfast, lunch, and dinner is to offer something that is truly unique and undifferentiated.

If you are not offering this and are simply building new features that others do not yet have, it will be necessary to iterate and offer new features at a breakneck pace to try to stay ahead of the competition.

And when that happens, you build an unfocused machine.

Offer what differentiates you from the crowd, as that is your best competitive moat.

Unique Selling Proposition

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Play to your unique strengths and USPs.

When You Know They’re Coming

Sometimes you get lucky and know that a competitor will be entering your space in the coming months.

Whether you came across this on a forum, in a conversation with another, or they tipped their hand on a social channel, you’ve been given a gift.

You likely will not know exactly how long you have until they enter, but the fact that you know they’re interested and making strides gives you an advantage.

1. Don’t Panic, K.I.S.S.

First, don’t panic. As the age-old saying goes, keep it simple stupid (the wisemens’ words, not ours).

You built and weatherproofed your company. It will survive this. You’ve built a competitive moat and brand that is the industry leader and will be very hard for them to overcome.

After all, your brand is associated with the thought leaders or industry pioneers in your space. Thus, you have an advantage. Brands are not built in a day, but years of consistent, expected quality.

2. Secure Your Brand Ambassadors

Second, make sure your brand ambassadors are actually your ambassadors. Do what you need to in order to make sure they won’t just jump ship at any competitive deal.

Bargain hunters are not ambassadors. I recommend taking your best customers (a.k.a. your ambassadors) and figuring out ways to make them feel special.

Some interesting things that I’ve seen done are Customer Advisory Boards and special Facebook pages.

3. Identify Gaps in Your Strategy

Third, push on your strategy harder and see where it may have gaps. Try to break it and find seams.

Market Gap Analysis

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If you’ve been a bit lazy because you’re the only player in your space, you may have to step on the gas a bit harder.

Spend a bit more, and expand your competitive moat to truly have a defensible business model.

4. Perform Competitor Analysis

Fourth, try to get a deep understanding of your soon-to-be competitor’s business and how they work.

You should know:

  1. What size is their business and customer base?
  2. Do they have more resources to solve your customer’s problem at a greater scale than you?
  3. How might they solve the same problem you solve, but better?

You might argue that you should be doing number 3 already. But in reality, we put off thinking like this because we are so committed to solving things our way.

Competitor Analysis

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Use the new competitor to spark a competitive fire in you. Let it force you to think outside the box. To think about your business in new ways to set and achieve key OKRs.

Use it to make sure you continue staying ahead.

Once Competitors Penetrate the Market

Once your new competitors enter your space, it’s game on.

Luckily, you’ve already done your research. You understand how they are going to enter your space, what their positioning might be, and what they plan to do in order to eat away at your market share.

Above all, don’t panic. Please don’t, no matter how much you want to turn heel and run, stand your ground.

If you are the market leader, don’t spend time worrying about what they are doing.

Because are the market leader, you already have a solid strategy that gets tangible results.

Just remember, at this point, it’s not a better strategy that will let you win.

You need speed and quality of execution.

1. Consider New People

If you’re running your business alone, you might need to consider adding people to your team in order to increase the speed at which you are able to execute your strategy.

Building out your team to execute at a higher rate is often the single highest leverage thing you can do to increase velocity, as long as you hire the right people or agencies.

2. Consider New Investment or Raising Prices

If your competitor has a lot more money to put towards the problem than you do, you may need to consider two options.

The first is to bring on outside investment so you can hire and scale. More budget to spend means you can move faster, and if you’ve already identified some repeatable growth channels then doubling down in this way will help.

The other is to increase your prices if you are able to (i.e. underpriced right now). This will also give you more budget with which to grow, and may even squeeze out lower-value and higher-maintenance customers who are distracting you.

3. Execute, Execute, Execute

Third, execute like hell.

Speed up that pace of innovation, test new products and features, and if they enter with the same offering then try to differentiate yourself – fast.

Don’t go downstream though – remember what Seth Godin says:

Any market that seems to offer an easy in to the undifferentiated will eventually squeeze them.

Differentiate and continue to offer as much outsized value as you can.

That’s how you win and survive new competitors.

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