What do you do when competitors emerge in your business? Don’t panic, FOCUS!
Whether you like it or not, the world of business is a very highly competitive one. Business is a game and it takes a lot to eventually emerge as a winner. Winning however does require you find a way to remain in business irrespective of competition.
Perhaps one of the most critical factor in determining who wins or lose in the game of business is knowing what not to do in the face of intense competition. It’s costing me a year without regular pay from one of the businesses I’m involved with as a partner to learn this lesson.
So, permit me to share my story.
In March 2008 my vision partner, Tolulope Oyebola and I took over the management of a defunct cybercafé. We had consulted for this cybercafé earlier in 2007, doing a total business process re-engineering including the hiring and training of new staff. That year everything seemed to work fine in the hands of the owner with us coming around from time to time to check up on things.
As it turned out after almost a year, things started going sour because the owner wasn’t directly involved in the creation of the change we had handed over to them to now manage. As a result, the business towards the end of the year folded up, this time for the second time since they began operation.
This was when we got an offer from the owner to come in no longer as consultants but now as partners to resume complete management and turnaround of the business. How glad were we when this opportunity came. It was an opportunity for us to experiment all our ideas on how to build a SIGNIFICANT business. And a significant business we did build. At least several evidences showed.
For example, in the first year of our operations the business recorded the highest sales so far since it came into existence, a whopping sum of 3.9million naira! ($26,000) We also successfully initiated a first of its kind membership program for a cybercafé whereby browsers logged in with a personalized username and password of their choice.
As a result, we have the highest customer retention rate in the whole industry with close to 1700 registered customers since March 2008 when we took over. We had the largest market share as far as the immediate community where we operate from is concerned. Our goal was very simple; redefine browsing from an activity (what people do) to an event/experience (what people enjoyed).
We didn’t only succeed, we became an object of envy and just as its common with any enviable performance, then came along the wannabe’s –the so called copycats (competitors.)
Enter the Competition
Like a planned hostile takeover, in January 2010 a total of 9 new cybercafés sprang into existence (compared to only one at the time we took over the business) with two occupying the same business premises as we. We were about to be eaten up alive by all the new guys and so we panicked. Why? Because they didn’t just stop at copying all that we did, as is synonymous with competitors, they took the game a step further.
They came with their flat screen (LCD) monitors, smaller number of systems in an air conditioned environment: talk about a total knock out! (TKO). There we were with our cathode ray tube (CRT) monitors, with more systems in a no air conditioned environment.
I mean they had copied everything from our pricing model to the software we used as a timer. The only thing they couldn’t copy was our membership strategy. I guess it was more complicated and will demand more work from them. And that, my dear reader was and still is our saving grace. We never realized this until after we had panicked and reacted out of desperation in an attempt to remain competitive. What was our reaction?
We went head on and bought our own air conditions. I mean we bought four air conditions all at once in the month of January alone. Paid PHCN (the electricity company) to install a new business line to ensure a regular power supply since our big generator couldn’t power our four new air conditions. Mean while in our competitor’s case their small generator could carry their own air condition because they didn’t have as much computers as we did and they had only one air condition.
We based the whole of our winning-strategy on stable power supply believing that we would match up with them on air conditions even though we didn’t get flat screen monitors. Instead of flat screen monitors, we decided to expand by taking up one more office suite in addition to the three we were previously occupying to make room for the growing demands from laptop owners.
In essence, we spent more than they probably did but still lost a part of the total market share. Why? Because we panicked and reacted out of desperation rather than being proactive. We ended up spending more but for the wrong things. We didn’t think through on our decision to buy those air conditions.
Our singular strategy of constant power supply went up in smoke exactly two weeks after installation and the AC’s we bought were as good as useless since we didn’t have the regular power supply to operate them. So we were back to square one, only this time with more debts since we had to borrow some money from a bank to fund most of these reactive moves.
So what was fundamentally wrong with our response to the competitions?
Find out in the concluding part of this article where I will be sharing some insights on how we learnt from our mistake, how we’ve been able to remain in business despite the intense competition and how you too can do the same. You don’t wanna miss out on this and there’s only ONE way to be sure you’ll know when the concluding article will be ready –by subscribing to naijapreneur!
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Watch out for part two! In the mean time, share your thoughts and comments below on how you’ve been coping with competition in your own line of business.
Has your business IQ increased as a result of reading this article?