How to make a viable company even before launching it – in 5 easy steps

So… how should you get it started?

#0. Have a startup, a new product or anything that needs a competitor analysis

My example in this article will be a restaurant called The Brew that I am about to open in a small town called CompetiTown.

#1. List your competitors

Be careful!
You need to sit down and think about this for a while. Two types of competitors can be distinguished: direct and indirect.

Direct competitors can be other restaurants in CompetiTown, especially those which are in your given area (however, those outside the area can be important too). These competitors sell the same things that you intend to.

Indirect competitors don’t sell the same products, but substitutes of yours. In this given situation, even the old man selling hotdogs in front of your restaurant can be considered as a competition of your business.

My list has 4 competitors:

• Italia, an Italian restaurant in the downtown
• Ratatouille, a fancy French restaurant in the outer parts of the town
• Cafe Mania, a coffee shop near our restaurant
• Carl, ‘the wingman’, selling chicken wings from his mobile buffet

#2. List the criteria

Okay, so now you have your competitors listed. The next (and almost certainly the most problematic) part is having a list with the criteria. Then you have to define the scale on which you want to give points to your competitors.

The scale can be tricky. There’s no use creating a scale with a wide range, but you will need at least 3 points in order for it to be effective. In this particular example I will use a 5 scale range. It is sufficient, but diverse enough to show the differences between the competitors. (The higher the point is, the better it is for the customer.)

After having a brainstorming session, you should have all your relevant criteria on a piece of paper.

My list consists of 8 criteria:

1. Location (Is it close to the center or is it in the worst part of the town?)
2. Prices (Do you need 3 credit cards to buy an appetizer or you can have a decent meal for a couple of bucks?)
3. Places (How many seats and tables does the place have? Does it have seats at all?)
4. Time (How long does it take to have your meal on the table? Hours? Minutes?)
5. Quality (Have you been waiting for that delicious shrimp pasta for over a month? Or you just bolted down that greasy hamburger?)
6. Online presence (Do they have advertisements, a Facebook page, a website or an application?)
7. Special foods, orders (Can you have a pizza made from gluten-free flour? Can you order a smaller portion or a kid menu?)
8. Children, handicapped (Do they have a special place and programs for children? How easy it is for a handicapped person to get into the building and have a night out?)

#3.Research

So how will you know how many points each competitor is worth? The best way is to see it for yourself. If you have a chance to really try the given product or service, do it.

If you don’t, then ask somebody (somebody you can trust) to try it for you. If you don’t have the possibility of conducting those, the third option is for you. Ask the customers of your niche via interviewing, surveys etc.

After a long hypothetical analysis tour, I sat down with a full belly and started giving points to each competitor.

The hardest part was giving points to myself. You have to be honest, and give points to yourself according to the points of the others.
Giving unrealistic values to yourself will cause you problems later on.

The result was this table:

#4.The competitors

Now you have your list with the points. It’s time to summarize your observations and lay down your conclusions. Write down every important information (later on you can choose which ones to keep).

Italia

Italia (the town’s only Italian restaurant) has several strengths and only one outstanding weakness.

Its biggest weakness is time. However they have freshly made pizza and pastas, it takes relatively much time to be done.

Italia compensates this with having the most seats from all of the available restaurants. The other criteria are not so outstanding: they are fairly similar to The Brew.