Football teams study an opponent’s offense to build their defensive schemes, we should do the same for our competition.
The first step is to identify the competitor or all competitors in your market you want to model. Unless you know which one you want to emulate, you can perform a Google search, review the Yellow Pages or the local Chamber of Commerce.
If the company has a website, research extensively. Search the local newspaper’s online version for any news. Save all advertisements, whether online or mailings from the company. Jot down notes if a radio or TV advertisement and create a folder for all of this information. Your main goal is to learn all of the company’s product offerings, pricing and their unique selling point.
If a physical product, buy it in order to evaluate. Ask your trusted customers their opinion of the company and their offerings. If you know of the competition’s customers, ask them what they like about the competition and anything that can be approved upon (if you get the latter, you now know how to structure your selling point.)
The next step is to do a SWOT Analysis:
Using a local tax service that performs over 1,000 returns annually as a guide:
- Strengths – In business over 13 years and experience with H & R Block prior. Offers a good service at a great price (average returns are $120, which is slightly below what a CPA firm would charge for the same level of service and about 45% of what H & R Block would charge for the same return.) Unlike a CPA firm, they are better setup to perform the return on demand.
- Weaknesses – Owners are not CPAs, nor do they have one on staff. They have limited experience in complex corporate tax returns and they cannot perform assurance services if needed.
- Opportunities – They could increase seasonal staff and handle more simple returns. They could advertise their experience more. If the consumer is price sensitive, they have a distinct advantage over H & R Block, Liberty Tax and Jackson Hewitt at the same time having more experience at the preparer position. Due to the Earned Income and Child Tax Credits, there is a large demand for quick service tax preparers in the area.
- Threats – Many companies that cater to the simple returns offer 50% discounts for switching to their service and refund anticipation loans at a fee.
Lastly, if the competitor is a public company, buy stock in it. As a shareholder you will have access to forward-looking statements and they may be required to allow you access to certain records on site if requested.
Model your competition’s best practices and improve on their worst practices!