Don't Let Competition Stop You
Q: I'm a homeschooling mother with an idea but no know-how! I could really use some advice. My idea is to start a nationwide babysitter/nanny referral service that can be maintained via the Internet. My vision is to have a Web site where people seeking child care can go and, for a minimal fee, have access to caregivers/services in their area. And on the flipside, caregivers would be able to advertise their services on the site. Does this sound like a doable idea? What do I need to do to bring it about?
A: I think it is a good idea, but I think it's already being done. Go out to one of the big search engines like Google or Yahoo! and search to see how many already exist. I went to Google and found several. But (and this is a big but) that doesn't mean you shouldn't pursue this.
You still need to do some homework and find out what already exists, how this potential competition stacks up to what you had in mind, and whether you can offer a better service. One of the biggest mistakes start-up entrepreneurs make is to get sidetracked by the thought of a little competition. Competition is healthy. It's much better to be part of a competitive set than to be the only business in the market, especially if it's a new market. Businesses with markets to themselves, especially new emerging markets, have the extra burden of having to define the market to consumers and customers. In addition to conducting your own business, you need to tell people why this type of business should even exist. Often it's easier to be number two or three in a market than number one.
That said, there is a limit to the number of competitors the market will bear. There are so many factors that make up this number that I can't tell you how many is too many. But considerations would include the type of business, the size of the target market, the number of competitors and how established they are in the market. Obviously it's harder to enter a market with an established dominant brand. That still doesn't mean it can't be done. Your focus there should be on your USP, unique selling proposition. What makes your business different than the others? What will you do to make your business stand out from the crowd? The answers can be complicated or they can be simple. Look at Domino's Pizza for instance. At the time Domino's came to market, not only were there dominant pizza brands, but pizza delivery was not a novelty. Domino's' USP was their 30-minute pledge. That billion-dollar-plus business was built on a time guarantee, something that made Dominos stand out from their crowd of competitors.
So I would say you should at least pursue your idea. Since, as a mom, you were not aware of the other services that exist, I would bet a great deal of others aren't either. That's your window. Remember, a little competition never hurt anyone. Just ask Burger King or Wendy's. Good luck.
Rieva Lesonsky is a small-business expert and a senior vice president and editorial director at Entrepreneur Media Inc.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.