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Indirect Competition

Most entrepreneurs completely forget to uncover their indirect competitors. Watch Ken Burke explain how to identify them.
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Now let’s take a look at defining your competition. And most entrepreneurs only think about direct competitors. They really don’t like to think about indirect competitors. And so your competitive set is very, very small. But we’ve got to look at alternatives. We’ve got to look at who are those other folks out there that really can compete with me that I might not have thought of initially. And that’s what we’re going to drill down in on now and really understand a little bit more about that. So I like to think of that in terms of a circle. First of all, I have kind of the inner circle. The inner circle are where I plot my direct competitors.
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And then I draw another circle around that. And that’s a circle I plot my indirect competitors on. And anybody outside those two circles I just ignore. But I like to draw this because I get a visual representation and kind of plot my competitors in these two circles. Now, let’s take a look at the direct competitors first. Those are the people that do exactly what you do. There might be slight variations, but they basically do the core of what you do. Now, they could be local brands. They could be local businesses. They could be national brands, or even international brands for that matter. So you have to look at the entire market when you’re looking at your direct competitors as well.
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So indirect competitors are also very important to your overall competitive set, and indirect competitors provide alternatives. They might provide similar products and services to what you do, but they’re not exact. And they can even be around the edges. This can be a little bit harder to get to these indirect competitors because the edges tend to be a little bit more fuzzy, if you will. The first thing that I always think about when I think of indirect competitors is the free option. The free option is there’s always an option that says, you know, I can get either a product or service or very, very low cost or no costs at all. I can get a friend to do it.
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I can do an alternative to something else. There’s always a free option that you’ll always have to consider. And I always put that as part of my indirect competitors. Now the last one I would just say is look at Amazon. Amazon’s into so many different businesses, you also might want to consider them as a direct or indirect competitor. I just wanted to throw that out there for you. Well, who would be the direct competitors to a catering business? I’m a boutique catering business, let’s say. So other boutique caterers would certainly be my direct competitors. But how about corporate caterers, which might be slightly different. But they also can cater typical events.
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They can cater corporate events as well and vise versa. Boutique caterers can also cater corporate events. So that sounds pretty much like direct competitors. And then personal chefs. While personal chefs, you might not think of caterers directly, they provide the exact same service. It’s just kind of slightly different in terms of how they market themselves. So that would all be part of what I call my direct competitors. Now, let’s take a look at our example again of our boutique catering business. And let’s see some indirect competitors to a boutique caterer.
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Well, first of all, grocery stores– grocery stores provide similar service in that they’re going to provide food and prepared food that you can come in and take away and take to your event. But you have to actually come in and get it. So it’s similar. But it’s a little bit different than what a caterer would do and actually come and do the entire presentation right on site for you. So another one would be restaurants. Now, restaurants have gotten into the catering business. Again, it’s a slightly different alternative than having a caterer come to your house, but still an alternative where they’ll prepare all the food for you and maybe even deliver it in that case.
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Another one is barbecue on wheels. They pull up a big flatbed with a barbecue on the back of it, open it up, and your party is good to go. How about a food truck? That’s kind of a new and hip way of catering an event as well. So some different alternatives that you have to think about. And they don’t come top of mind, so you really have to kind of think through these things in order to nail it down. And the last option is your friends coming over and doing the catering for you, and the good thing is they don’t charge anything. [LOGO SOUNDS]

Most entrepreneurs completely forget to uncover their indirect competitors but we will make sure you know exactly how to identify these important competitors.

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Crushing your Competition: Competitive Strategies to Make your Business Stand Out

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