There’s no healthy market without competition. Competition indicates you have a business with high potential.

Competition can create an industry-wide network effect, in which the addition of a new player increases the value of the market. For instance, there are four major mobile telecommunication companies in Nigeria. The dynamics of the competition has expanded the market, increasing the rate of mobile phone penetration in the region. More cell phone users mean telcos have a larger market to play in.

But competition can also be dangerous.. Your competition can kill off your business. So it’s important to know how to manage this double-edged sword.

The first thing you need to do is define your competition. Jason Njoku, CEO of IrokoTV, put it succinctly:

“As a founder, the more disciplined you are in identifying your competition, the better you are at charting your own course and avoiding stupid, costly mistakes with phantom competition. The more conservative you are with your cash, the more runway you have to build the company you truly want to build.”

Who’s your competition? Your competitors are those who can take your customers away from you. This includes businesses that fill the gap that you’re trying to fill, companies offering the same or similar products as you, companies that offer products that are a substitute for yours and companies selling accessories to your products – because eventually, they may start offering complete packages.

After defining your competitors, you need to observe them.

While you shouldn’t let your competition keep you from running your business optimally, you want to keep an eye on what they’re doing. Look for aspects of their business that you could adopt and those that could be improved. Where do they advertise? How often? What kind of pricing packages do they offer?

Sometimes, competitors will lower their prices. When this happens, you need to do your homework. Why did they lower prices? Is it to undercut you and steal your customers? Or perhaps they’ve created a lower range product and are positioning it accordingly? You need to understand the “why” before responding.

If your competitors are trying to undercut your business with lower prices, then you may need to match them. But always keep an eye on your margins. Severe price cuts may hurt your business in the long term. One trick is to offer the price cuts as limited time discounts or as part of a package.

Positioning is also important. Apple sells phones in the premium range and has refused to reduce it for any reason. If you cut your prices, it may present your products as inferior or cheaply made. So think well before making such decisions.

Try to predict how your competitors would respond to your own strategic pricing decisions. Think of it like you’re playing chess. You always want to be three moves ahead.

Communicate your unique selling point to your customers, all the time. Remind them why you’re still the best choice for the services you render.

The best way to beat the competition is to focus on creating 10x more value to your customers. That will have your competitors playing catch up while you zoom off with their customers.

Growth is the only essential thing you need to be a startup. Startups are created to grow fast. Everything else that happens within a startup is a derivative of growth.

Everything – ideation, product validation, product management, team building, fundraising – follows from growth. Without growth, early stage startup is just a small business losing money.

That is why founders are encouraged to focus on one metric – the one that matters. This is because, as a startup, your limited resources are a deterrent to wasting your time trying different things.

Depending on your type of business, growth will mean different things to different startups. And your one metric that matter changes over time. Getting rid of distractions enables you to focus your already limited resources – people, time, and money – on the one thing that moves the needle.

What is the one thing that signifies that your business is growing at a particular point in time?

In the beginning, growth for a lot of startups has more to do with user acquisition and engagement than revenue. The advantage of defining your growth metric is it tells you the most important thing about your startup and how should drive it.

You need to consider the followings when choosing your growth parameter.

1. Your business model

The way you monetize your product is an indication of the value that will be created by your business. It’s not always about the money, but revenue metrics provides a standard benchmark for growth metrics.

2. How you acquire your customers

The rate at which your products gets into the hands of users is a substantial measure of how scalable and successful your product can be. Inherent in the DNA of startups is the ability to build products that have the potential of being ubiquitous and viral within a short time frame.

That is why most startups are tech-enabled companies because technology enables innovation not just in the way products are made, but how they are distributed. You can measure your growth based on metrics such as unique web visits, page views, app downloads, partner signups, user signups, conversion rate, churn rate, etc.

3. The stage of your business

The stage of your company will determine what to focus on. Early stage business should be obsessed about metrics that validates their product-market fit more than mid or late stage companies.

In the beginning, your growth metric is based on time-based milestones you need to reach such as partnerships, signup at a particular time, user signup rate, number of feature releases, etc. It is important that you wrap this with specific numbers as much as possible to measure progress.

4. How you measure growth

Answering this question will help you make right decisions. Let’s assume you decide to measure your growth by the number of subscribers to your email list. First, you’ll have to optimise your product, website, app, content and every potential user interactions to grow this list.

You then measure the results of all your actions on a regular basis against this metric. You hold yourself and your team accountable with data and see whether you are making progress or not. You deep dive into all your acquisition channels to identify where you are getting the most number of subscribers. You look at the numbers every day and experiment with various tactics and tools to see how you can grow the subscription rate.

As you focus on a particular growth metric and optimise your products accordingly, magic happens. You identify particular big hairy destinations to drive your startup towards and you can measure the how and the rate at which you are getting there. And as you grow, your goal may change, and you redefine your growth metric.

You build, you measure, you learn.  And you continue the cycle until you reach your true north.

Bitnami