how to start a business plan (Chapter-6)
Chapter 6 – Analyzing Your Competition
Analyzing your competition is an essential step in choosing your niche. Almost every business has competition, either indirect or direct. Some competitors are ruthless, so make sure that you are careful when you are examining the competitors in your niche before you enter it. While it is true that you need to be aware of your competition, you shouldn’t feel intimidated by them.
Determining How Many Competitors There Are in The Niche
The first step to analyzing your competition is to figure out how many competitors are currently in your potential niche. To do this, you can use a simple Google Search to calculate, which websites are targeting the same keywords as you. If you find sites that are using the same keywords in their site’s URL, title, and anchor text, then you know that there is some serious competition for those keywords. You can also use Google Search with your key phrases in quotes to find out how many competing web pages there are online. You can use website resources like SEOmoz (https://moz.com), to find out how many backlinks the competition has.Your biggest competitors will be those sites which show up at the top of the search engines for the top three most competitive keywords in your niche.
Researching the Competition
The difficulty of ranking higher than your competitors will depend mainly on the Page Rank (PR) of their websites and relevant web pages. If the average PR of the top ten sites is below PR3, then it should take you under three months to rank for the keyword. Using SEO Quake (https://seoquake.com), you can find out the average PR of the top ten websites for each of your keywords.To analyze your competitors PR, you can create a spreadsheet that is divided into two sheets, with one labeled “Preliminary,” and one marked “Market Competition.” Place the top ten keywords in the “Preliminary” sheet. On the other sheet, create ten columns, labeling them; “Site1PR,” “Site2PR,” etc., up to “Site10PR.”
Next, take the best three to five different search terms and put them in the “Market Competition” sheet. Then search Google using the top three keywords. Note the PR of the top ten websites for each of the three to five keywords that you listed. Then remove the highest and lowest PRs and calculate the average PR for each row, as well as overall. After you’ve conducted as many searches as you think are necessary, make a shortlist of all the keywords for which you believe you can rank highly.
Evaluating the Competition
When you feel like you’ve found a niche to test, and you know the niche’s subject matter well enough, you can create a report, eBook, short article, or white paper that provides some vital information about the benefits of your new business products or services without compromising any of your intellectual property. You can use this free information as bait to acquire responses from your potential customers.
Over the last several decades, internet marketers have proven that people respond best to ethical bribes, where you offer potential customers something in return for their email address or personal details. This is why publishers of informational products provide free giveaways in return for email subscriptions. Many larger brands haven’t discovered this tactic yet, which means you can get a leg up on the competition by utilizing this strategy.
Consider Your Competition’s Pricing
If you discover your niche has serious competition during your research, subscribe to their email list to see what they’re doing. Look to see if they are selling higher priced products and services, or are all their products and services discounted? If you uncover higher prices, then you know that there is a market. If they’ve continued to offer high priced goods for many years, then you know that there is definitely a market that is sustainable.
If you discover that the average price for a product in the niche has a reasonable profit margin, then it will allow for smaller players to enter the market and co-exist with the larger, established brands. However, if the market competes on price alone, and the profit margins have been squeezed until they are paper thin, then you might be better off looking at a less competitive niche with better profit margins.
You also want to be aware of competitors discounting each other in a small market. When this happens, you could end up struggling just to get your business off the ground. However, when there are several tiers of pricing in a niche, it can be a lot easier to not only get into the market but slowly increase your prices as well. Generally, when it comes to search engine competition, the lower the number of competitors, the better. However, if you discover a niche that has no competition, you need to be cautious because this could mean that there is no money to be made in the niche.
