Once you've determined who your main competitors are, it's time to start sleuthing. Your goal should be to know your key competitors inside and out. A thorough competitive analysis should include data from as many different sources as possible.
Begin at a large public or university library. Ask the reference librarian to direct you to business publications, directories and databases. Check back issues of your community newspaper for tidbits on local competitors. Where and how do they advertise? Are they hiring? Do their owners participate in local community associations? Even a seemingly trivial news item might provide an important clue about your competitor's strategies and plans.
If one of your competitors is a publicly held company, call their headquarters and ask for a copy of their annual report. This can provide you with important insights about new products, changes in strategies, and the company's financial standing.
Entrepreneurs with online connections may be able to uncover data through computer databases. Sign on to CompuServe, for example, and you can get credit reports, search trade publications, and access other data about competitors across the country. Many industry associations now have World Wide Web pages that often list information about their members.
Although sources like these can give you facts and figures, the most important step is to look at your competitors from the customer's point of view. The best way to do this is to go right to the source. If you can, identify your competitors' current and former customers through market research and informal contacts. Ask them about their experiences. Visit your rivals' stores or, as Rice does, place a phone order with them. Evaluate their customer service, product quality, marketing materials, and pricing to see if there are gaps your new business can fill.
Other possible sources of information include former employees, industry suppliers, local better business bureaus, and even professionals such as bankers, accountants and lawyers.
Surprisingly, your best source of information about a competitor might come from talking to the competitors themselves. Jane Reifer runs Clutter Control Organizing Services in Fullerton, California. When she started her business, she joined the local chapter of the National Association of Professional Organizers (NAPO). Through NAPO, she's been able to network with other professional organizers. "I've been pleasantly surprised about the amount of information shared through this group," Reifer says. "We work on jobs together, make referrals, and help new organizers."
Zobel also tries to keep in touch with her competitors. She's invited some of her competitors to lunch, where they exchanged ideas and information about their tax consultancies.