While our own internal issues are critical and should come first, it is important to pay attention to our industry and our competitors. By studying the competition and learning from our competitors, a small business can gain some serious competitive advantages.

To start with, it is important to map out exactly who the competition is and where they operate. If you are a small shop, your competition may include other small shops in your town and neighboring areas, but it also includes large retailers. In addition, the internet has made competition more global, and you should map out these players as well.

In addition to listing your direct competitors, it's crucial to understand who your indirect competitors are. Indirect competitors are those that carry substitute products. Substitute products are those products that can be used instead of your product. For example, if you produce cola, your direct competition would be Coke and Pepsi, but an indirect competitor would be orange juice.

Once you know who comprises your direct and indirect competitors, it is beneficial to understand the characteristics of your market. What percentage of the market does your company hold? What percentage of the market does your competition hold? What percentage of the market is dominated by large players? This information is usually available for free or for a fee at certain industrial report websites. In addition, if you have a competitor who is traded publicly, they will provide a good deal of this information in their 10-K filing, which can be accessed free of charge.

Reading a company's 10-K filing is foreign to many small business owners. Don't be afraid of the length of these filings and give them a perusing. They are required by all publicly traded companies and they provide a tremendous amount of information on the publicly traded company and their business strategy. If there is a publicly traded competitor in your industry, sift through their 10-K to find out what they think is happening in the industry and how they plan to generate returns for their investors. By accessing this public information, you can get free information on your industry as well as get "inside your competition's head".

For smaller companies or privately held companies, we don't have the luxury of accessing their 10-K filings. There is still a great deal we can learn from these competitors, however. A good place to start is your competition's website. Study their website and get a sense for their product, how much they are charging and how they are trying to market their product. In addition, you should feel free to email the competition with questions if you feel comfortable doing so. Obviously you would not want to use your corporate email address as a return.

You can also obtain a good deal of information about your competition by simply networking and using word of mouth. Chances are, you and your competitors share the same customers and suppliers. If either of these parties wishes to vent about your competitors, be sure to listen. You may be able to get a sense for their costs and pricing strategies. On the same note, remember that these same customers and suppliers might be talking about you as well!

With the information on the internet booming, learning about our competition is easier than ever. By learning about our competition, we can gain competitive advantages by being one step ahead. Take some time to study your competition and you'll find the results well worth the effort.