How to Learn About Your Competition
Apply now to be an Entrepreneur 360™ company. Let us tell the world your success story. Get Started »
Q: I want to start a business based on an idea I received from a former co-worker whom I will call Jane. Jane and I planned to go into business together using what she learned when she worked for a company that has no known competitors. But Jane has passed away.
The company she worked for is for sale, but I think the owner is asking too much. I still believe I could run it bigger and better, so how do I find out about his business without asking him outright? If I act like I am interested in purchasing it only to find out how he operates, well, that would be unethical.
A: Businesses without competitors are either monopolies or serving small, niche markets in which reputation can be very important, so your ethical sensitivity to not ripping off the owner may be quite meaningful to your ultimate success in this business. At the same time, you obviously need to get the technical know-how necessary to operate it.
Here are several ways you might go about learning about the business:
- Consider using a business broker to negotiate on your behalf what may prove to be a more flexible sales price than you now think possible. If negotiations result, you will be able to examine the business and learn about it that way, though you must be alert to signing a non-disclosure agreement that would limit your use of what you learn if you do not purchase the business. Perhaps you can negotiate a purchase agreement on terms that will enable you to pay a reasonable price over time, where you would get the benefit of the existing owner's expertise yet have an agreement that he not compete with you for a period of time. You can find links to business brokers at www.bbn-net.com/offices.html.
- Consider asking to buy his expertise as a consultant. It's not uncommon for people in established businesses to get paid for advising "wannabes" and new people in a field. Some even make a business of franchising their expertise.
- Unless you already have too much experience to be interested in learning the trade as an apprentice employed by the business, this would be a third option for obtaining the information you need. Other than these three choices, you seem to be left with "reinventing the wheel."