Healthy Competition Among SMEs
We cannot discuss the idea of business without mentioning “competition.” Imagine an outdoor market in a developing country (a busy, bustling, lively, and noisy place). Customers move from one vendor to another, checking the price and quality of goods, haggling trying to get their money’s worth. Sellers trying their best to portray their goods in the best light, offering discounts and deals to get more customers. It’s a circle based on healthy and free competition; the seller with the best values gets great deals and customers benefit.
Imagine another scenario where everybody selling wears sells them at the same price and every week is higher than the last. As clothing is an essential commodity, customers can do nothing but buy.
Or imagine all vegetable oil producing factories become owned by one person (a classic monopoly), and they keep hiking the price as they deem fit. Also, there’s the transportation route to the market which is plied by hundreds of public and private vehicles, and suddenly only one bus company is allowed, and the price is tripled. What would consumers do without competition?
Competition is one of the most important elements of price and quality regulation. Government officials around the world depend on competition to improve the efficiency of the economy and fuel growth. They develop policies that allow them to monitor and contain competition and also apprehend those who might want to abuse it. Healthy competitions among small and medium-sized businesses are used to level the playing field amongst them, i.e. to regulate prices and ensure all goods and services are of standard quality.
Healthy competition comes from the marketplace’s interactions: the rivalry that businesses engage in for money from customers makes them offer higher quality or lower prices. This rivalry then pushes each business to question itself to ensure that it is using all its available resources in the most efficient way possible. This, therefore, reduces the inefficient use of resources and wastage also reduces the cost of production.
Benefits Of Healthy Competition Between SMEs
- It pushes each business owner to strive to be the absolute best. Therefore putting customer satisfaction first.
- It keeps business owners innovative. They keep thinking of new ideas to serve their customers better.
- It increases consumption. For example, decades ago, with the rise of washing machines, most people thought it irrelevant till more companies started producing it and the price drastically reduced. It went from being a luxury item to being an essential commodity in every home.
- Higher quality products. Once there is a competition every business owner tries to bring the best quality at the lowest price possible to curry favour from its customers.
- It leads to diversification. It pushes brands and small or medium-sized enterprises into trying out new ideas that make what they do seem different.
- Someone once said, “variety is the spice of life.” The competition gives customers a variety of options to choose from. This in turn, enhances market growth.
- Healthy competition shakes out laziness amongst business owners. They are always on edge to make sure their competition does not get ahead of them.
- It also helps SMEs know their core strengths and weaknesses. Healthy competition forces SMEs to take an in-depth evaluation of where they are doing well and areas they lack.
- Increased efficiency. Trying to be constantly ahead of competitors forces SMEs to work better, faster and stronger.
- Competition can also birth great collaborations. When two or more competitors are having similar issues, it is easy to come together to find a collective solution.
How To Deal With Competition As An SME
Identify Your Unique Selling Point:
This is what sets your brands apart from others; what pain point of your customers are you addressing that your competitors might have skipped. It could be in terms of customer service, lower prices, higher quality, etc. once you find it, make it the headline of your business.
Know Your Customer Base :
This is the part where you find who exactly are the type of people you want to market your goods to. Your aim is to gather as much information as possible on your potential clientele. What they like, their purchasing power, what motivates them to buy, etc.
Engage With Your Clientele:
Have an online presence and be active. Connect with your customers on a personal level. Find out platforms where your ideal customer base is and market your products there. Always ask for feedback and work on areas your customers do not like. We all know a happy customer is a paying customer.
Always Study Your Competition:
Once you understand your customer base, you will know how to serve them best. You need to understand your competition. You must analyse their strengths and weaknesses. How they are innovating, what new upgrades they have, forms of advertisement, what new deals and discounts are they giving, etc. These allow you to know how to use your resources to compete with them effectively.
Competition is not always a negative concept, and as a goal-oriented entrepreneur in Africa, healthy competition should be central to your thinking and business model.
