I've always thought of competition as an opportunity for true differentiation. It's a validation of your good idea, further proof of your concept. It's a chance to do what you do well even better.
Now, that doesn't mean competition's not scary. If you're the first mover and suddenly someone else is in the market place, you're probably going to lose some market share. Unless the newcomer is truly awful, but that's not always the case. So accept the fact that there will be a dip in your sales -- then keep moving forward.
Too often, though, clients become paralyzed by competition. They're so worried about what it means that they take their eyes off the very things that made them successful prior to the new entrant's arrival. And that's the worst thing you can do. Because that creates an even bigger opening for the competition to beat you at your own game.
So what do I think you should do when you lose your first-mover advantage, or when another business enters your space? Here are some ideas:
1. Adopt, adapt and improve. We all have a list of things we could do to make our business perform better. But we don't always do them. New competitors can provide the motivation to stop waiting and start making those changes.
2. Differentiate. It can be tough to truly differentiate your offering when there are no others easily accessed by your customers. When new competitors arrive, they bring a set of criteria against which you can assess your business. Understanding and articulating those differences -- and figuring out which are of most value to your customers -- is a great way to establish your place in the market. And that leads to more effective marketing to the "right" customers. In the long run, it also equals less marketing spend.
3. Stay focused. You definitely need to pay attention to what your competition is doing, but don't let it consume you. And don't react to every move or decision they make. Instead, watch their activity and evaluate it to see if/how it truly warrants a response. Then you can develop a plan to defend your existing turf and/or colonize new ground. This more measured approach will keep you from making snap decisions that aren't good for your business.
4. Be a leader. New entrants into the market enable you to stake out and win a leadership position. Sometimes, you can lead in terms of revenues or sales. Other times, you lead in terms of quality, or customer service. Continue to look for the categories in which you can the front-runner and use them to your advantage.
5. Appeal to your base. There will always be people who choose another product or service over yours, no matter what you do. Competition allows you to figure out who your core customers are and work on finding more like them. It's also an opportunity to get these folks more involved in your business by creating things like a "tell your friends" campaign, referral rewards and other grass-rootsy kind of activities.
It's nice to be the only business in a marketplace, but if you are for too long, you're either have an incredible competitive advantage, or you're probably in a line of business that's not sustainable. Competition's a reality. And what counts is how you deal with it.