Business Survival - Competing in an Ant-Heap

I have written this series of posts on dealing with competition because I want to give you a framework and procedure for dealing with your competitors. I have  been helping businesses deal with the competition for the last 5 years and I hope this series provides you with some insights.

In my last post, I looked at  the complexities of dealing with your competition (https://www.linkedin.com/pulse/article/compete-fail-dan-travis). The  principle  that I worked with was that it  is your response to the competitive situation that will determine the outcome and not what the competition does or does not do. I looked at the danger of lowering your prices.  In today's post, I will look at a type of competitive scenario that most business owners will find themselves in at some point in their careers and how I think you should respond to it.  I call this scenario 'The Ant-Heap'.

What is The Ant-Heap?

Your competition will probably consist of one or more of the following:

1. Contemporary or peer rival

2. Chain or  corporate rival

3. Copy cat or pop-up rival

The Ant-Heap consists of 1 & 3. The Ant-Heap develops when a market that hitherto has been occupied with a single supplier of products or  services, is joined by similar businesses. The Ant-Heap builds quickly, almost spontaneously.  The appearance of  an Ant-Heap will mean your market share will fall and a drop in profits will occur.

It is more than likely that your potential new clients will become less able to distinguish between you and the new competition. 

This will make it  more difficult  to obtain more clients. Some of your existing clients will be prone to moving to your competition. Movement will occur in the Ant-Heap regardless of  how good your product or service is or the nature of your existing relationship.

The psychological effects of  the Ant-Heap

If you have not  experienced an Ant-Heap before, you are going to feel angry, betrayed and fearful. You will be prone to reacting from a sense of panic.  There will be a sense that you have lost the battle and may well experience a feeling of inferiority. You could well feel that the future of your business is in doubt. Although we may not like the idea, thoughts of  revenge will inevitably occur. Understandably, you will be tempted to 'bad mouth' your competition in front of clients. You have to accept that these emotions are part of the Ant-Heap experience. It is imperative, however, that you follow a plan and do not succumb to temptation.  

A counterpart to the  psychological  effects of  the Ant-Heap is the advice that is given when you are facing competition. From what I hear and read, the advice normally consists of platitudes such as "Be the best you can be and the rest will take care of itself." or "Believe in yourself and your product and others will to". This advice will not  help you and will probably do more  harm than good because it will blind you to the very real action that you have to take. You have to understand the critical features of the Ant-Heap and how to respond to them.

The Critical Features  of the Ant-Heap that should Determine your Response

1) Temporary and Unstable

The Ant-Heap could collapse very quickly.  There is a reason for this.  If  you were first in your market, someone else in the Ant-Heap would be competing for your existing and potential new clients. Other people in the Ant-heap will normally be forced to compete on price (normally your prices) to enter the market.  The clients they attract initially will be those who are 'price sensitive'.  These are the lowest quality clients and puts the business that depends on them in a  precarious position.

The inherent weakness of your rivals, particularly the pop-up and copy-cat variety is often overlooked, especially when it is first encountered. 

2) Disappears as quickly as it appears

Because of 1), your competition is prone to disappearing very quickly.

3) Clients can be left High and Dry

When the Ant-heap  begins  to disintegrate, clients and suppliers are left high and dry.  It  is at this point you will experience a rise in new business.

4) The Ant-Heap will eventually disappear

Because they are inherently unstable, Ant-Heaps do disappear.  Some will take longer than others.  Often, when the Ant-Heap stops growing, this is a sign that it is about to disintegrate.

What you can choose to do when you are in an Ant-Heap

1) You can choose to Leave or you can Stay and Battle it out

Choosing to leave is  an option but you should not choose to do so out of initial panic. If you choose to stay or to leave you need to set the following limits:

a) How  much of a percentage drop in profits you are prepared to take

b) How much of a  percentage drop in market share you are prepared to take

c)  Guess, in the most objective way possible, how long the  Ant-Heap will last.

2) Work on your USP

You need to look critically at what in your business at what cannot be copied and do more of it. This exercise will  need to be done whether you decide to stay or leave. 

This is not some limp advice or an afterthought. In terms of a response to the competition, it is the counterpart to not dropping your prices.

What I think can't be copied

I normally decide to remain in the ant-heap, sometimes I leave, but mostly I stay. Once I have decided to stay, I respond, I very quickly make a list. This is the 'what cannot be copied in this business' list. This is the critical strategy for outlasting an ant-heap and helping yourself to the rich pickings that are available once the ant-heap has gone. This is the essence of Seth Godin's Purple Cow. It is more than just 'you' or your 'unique voice'.

When looking at the services your business provides, they will fall into 4 categories.

1. What can be copied and people don't care about

2. What can be copied and people do care about

3. What can't be copied and people care about

4. What can't be copied and people don't care about

The bold zone is where businesses aim for, however the difference between 2 and 3 is quite subtle. Your business will need some 2's but it is the 3's that will earn you the most money.

I have prepared a list of things that cannot be copied. Here are some ideas about what cannot be copied and won't be copied. 
If you want a more extensive list of how to combat the ant-heap please go to my blog here (you will need to join as a member - for free).

Writing

Public speaking

Relationships

Art

A particular marketing strategy

A charismatic personality

Highly trained sales people

Results

Press coverage

Good experience

Easy and clear payment structure

Good accounting

Good organisation and communication

Attention to detail

The next post will look at the Battle grounds of competition and what to expect when you enter them.

I would very much appreciate a comment, Like and Share below

If you have enjoyed  reading this post,  please look at others in the series:

•  Compete or Fail?
•  Are Children Born Naughty?
• Lift the limits on Productivity
• Why are we Risk Averse?
• My thanks to Tesco
• Why I hate 'Emotional Intelligence'
• Where have all the writers gone?
• How did everyone become a marathon runner?
• How to keep your clients

Follow on Twitter - @DanTravis

See my Website - www.marketingclinic.org