You know what you want to do and you are sure you are going to find plenty of customers and make plenty of money. Your idea is inherently better than what you have seen out there, so why bother looking into the competition? This is a common, and dangerous, attitude for many first-time entrepreneurs. The reality is that failing to scope out the competition is a mistake that is difficult to recover from, and one that can easily be remedied with a little time, a little effort, and a decent internet connection.

Direct and Indirect Competition
Competition in business comes in two broad categories — direct competitors who do exactly what you do and indirect competitors who fill the same need for consumers but in a different way. Gathering as much information about both types of competitors as possible is critical in developing the most likely road map to a successful venture. Learning all about direct competitors provides a benchmark for comparing your business idea to what is already available and finding opportunities to set your company apart from everyone else.

Shorten Your Learning Curve
Knowledge of competitors’ operations and marketing can dramatically reduce the learning curve for your venture, especially if the competitor has enjoyed relative success over time. Much can be learned from spending time in a competitor’s brick-and-mortar store, from expected traffic patterns to product placement. Well-developed business websites provide significant insight as well, such as the features that the competitor estimates are most important to their customer base. You may even be able to discuss your idea with a competitor that serves a different geographical market…people love to tell others what they know.

Unique Selling Proposition
An important step in developing a comprehensive marketing plan is identifying your product’s USP — unique selling proposition. This is the cut-and-dried reason that consumers will select your product. The only way to create a legitimate USP is to know the primary and secondary competition inside and out. Launching a new product in a crowded market means there must be a good reason to switch or to choose yours over the others. If you don’t know what’s out there, you won’t be able to establish your product as better, faster, or stronger than the other options.

If you are introducing a new or innovative product, knowledge of the indirect competition is essential. Whatever need or want your product is designed to fill, it is critical to know how consumers are filling it now. Indirect competitors offer products that meet the same or similar needs as yours. For example, if your product is an innovative smart phone application for managing time, your indirect competitors would be hard copy planners, standard time-management software, and even time-management consultants. Investigating these competitors will tell you why people choose these other options and what features help them sell.

Be Sure Your Research is Thorough
If you are unable to find any direct or indirect competitors, either your research is incomplete or your product has no market. The old adage “there is nothing new under the sun” is true…somebody is offering something that competes with your business idea. It is essential to find and acknowledge those competitors before you enter the market and to keep tabs on them once the business is up, running, and making money. Business is all about competition, and the more you know, the better your chances of success.

Researching the competition is not just a startup responsibility. Don’t just do it to fill in that section of the business plan. Rather, the more you know about the competition, the more you know about what works and what doesn’t, where they think the market is headed, how they respond to changes. Always stay on top of your competition and at least one step ahead. No need to be secretive about what you do, just be sure you do it right and better and at the right time. If your competitors will share with you, take it all in.

About the Author
K. MacKillop, a serial entrepreneur with a J.D. from Duke University, is co-founder of LaunchX and authors a blog focused on starting a business. The LaunchX System includes step-by-step instructions for starting a business, including how to research and learn from your direct and indirect competition. Visit LaunchX.com and learn more about our complete business startup kits.

If you are counting on outside investors to capitalize your startup idea, the details matter. Whether you are seeking an SBA loan, talking to venture capitalists, borrowing from friends or family, or entering yourself into Shark Tank, you absolutely have to know what you are talking about before you go for the capital.

Plan the Business
Simply filling in the spaces of a business plan template doesn’t cut it. It is critical to actually plan the business. That means applying the fundamentals of business to every aspect of your business idea. You must do the homework to ensure the idea is viable, the market has room for another competitor, and that your business model will actually turn a profit. No guessing is allowed, and any assumptions must be fully explained and justifiable. The details matter — they are what separates a good idea that is tossed around for years and a growing, profitable venture.

Know the Numbers
If you are going to talk to a potential investor, you had better know the numbers inside and out. Back-of-the-napkin estimates of sales and expenses are not enough. You need to know the standard ratios for your industry and how your projections compare. You need to know the break-even point under a variety of conditions and how the variable expenses will be affected under those conditions. You must have a reasonable target for how much it costs to gain a new customer…and your explanation must make sense. Throwing around ballpark figures is usually unacceptable. You must be able to discuss and explain the details of your financial projections.

Know the Competition
You also need to do your homework on the competition and market. Know the details of who they are, what they do, and how you are going to compete. If you can’t come up with a single direct or indirect competitor, you either have not done your homework or there is no market for your product. If you are entering a crowded industry, look for unexploited niches to fill and work through the details of how and why that will work. Study the target market to find out what they do, where they go, and what else they spend their money on.

Plan the Marketing
You will need a well-developed marketing plan for how you are going to get your customers to buy. Simply placing ads in the most convenient places doesn’t usually work. Rather, consumers are so inundated with advertising that you will need to find marketing opportunities that are targeted to exactly the right people. You will need details on the reach, expected response, and cost per sale of your planned marketing activities. You should have a plan for the initial wave of marketing and how it will be evaluated as well as some back up ideas in case the results are less than stellar.

The Details are Essential
If you are planning to approach outsiders for help in funding your startup, know the details before you ask. In fact, even those using their own resources to fund a startup would benefit from digging into the details before they launch…the failure rate would drop precipitously. But going in front of potential investors raises the stakes. Smart investors will expect you to know your idea top to bottom, inside and out. Get into the details — you will have a better chance of securing financing and a better chance to succeed.

About the Author
K. MacKillop, a serial entrepreneur with a J.D. from Duke University, is co-founder of LaunchX and authors a blog focused on starting a business. The LaunchX System walks you step-by-step through the complete planning process for starting a business, including extensive attention to finding business startup financing. Visit LaunchX.com to find out more about our approach to business startup.

The IRS has released IR-2010-6, which provides a revised Form 5405 to reflect the changes to the tax credit made in the extension and expansion legislation enacted in November 2009. The HUD-1 or evidence of the transaction must be filed with all returns claiming the credit (both the $8,000 and $6,500 credits). Read more on the IRS website http://www.irs.gov/newsroom/article/0,,id=218336,00.html

Increasingly aggressive mortgage lenders are seeking to collect deficiencies from former home owners who walked away from their properties or sold them in short sales.

Many states, including Florida, give mortgage holders as long as five years to seek a deficiency judgment. If granted, the bank gets up to 20 years to collect and the option to renew for another 20 years if the debt isn’t paid.

About one-third of U.S. states, including California and Arizona, prohibit collection efforts after foreclosure, but home owners usually waive that protection in a refinance.

Most states allow collection on unpaid home-equity loans.

Banks are most likely to try to collect from people who walk away from a property on which they are still making payments.

“The bank is going to pull your credit report, and if you’re current on your other bills they are going to come after you and potentially ruin you,” said Larry Tolchinsky, a Florida real estate attorney.

Source: Bloomberg, Kathleen M. Howley (01/28/2010)

The Treasury Department is announcing a plan Thursday to reduce the burdensome paperwork surrounding the foreclosure relief plan.

Two changes expected to make a big difference are: Lenders will be required to collect two pay stubs at the start of the process, and borrowers will be required to give the Internal Revenue Service permission to provide their most recent tax returns.

Participating mortgage service companies will be required to acknowledge that they have received a borrower’s application within 10 days and approve or deny the application within 30 days. Borrowers will still be required to make three months of trial payments before the modification is made permanent.

Treasury officials are also reportedly devising a plan to give unemployed borrowers a break on payments – probably for six months – but because the details aren’t decided, the announcement won’t be made this week.

Source: The Associated Press, Alan Zibel (01/27/2010)

Porsche SE, maker of the 911 sports car, was sued by short sellers in Volkswagen AG stock who claimed Porsche secretly cornered the market in Volkswagen shares and later caused them more than $1 billion in losses.

Case Western Reserve University School of Law professor Michael P. Scharf will be discussing his new book, “Shaping Foreign Policy in Times of Crisis,” Friday at California Western School of Law. The discussion will be held from 12:10-1:10 p.m.

The Federal Open Market Committee voted once again to keep a target range for the federal funds rate at 0 to 0.25 percent.

RADIO SHOW “SAVE MONEY SAN DIEGO”
1170 AM, “Intelligent Talk Radio”
Topics: Real Estate Law, Real Estate, Finance, Market Knowledge, Local Business Networking
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RADIO SHOW “SAVE MONEY SAN DIEGO”
1170 AM, “Intelligent Talk Radio”
Topics: Real Estate Law, Real Estate, Finance, Market Knowledge, Local Business Networking
Saturdays: 2:00 – 3:00 pm

http://www.savemoneysandiego.com/