So what exactly do you need to know about your competitors?

The questions below will give you some ideas for gathering information about your competitors and help you understand how they may relate your own business.

1. How do your competitors’ products or services compare to yours, and how can you make yours differ from theirs?
2. How do their prices compare with yours? Do they offer any special offers, discounts, guarantees or services?
3. How does the quality of their products or services compare to yours is it / are they better (or worse) than yours?
4. Do they offer any add-on features to their product or service that increase its attractiveness or value to their customers?
5. Are they undertaking any research and development that would affect the future positioning of their products?
6. How large is their customer base?
7. Who are their customers? What are their demographic characteristics? E.g. where do they live? How old are they? What gender are they? What are their occupations? How much do they earn? What sort of things do they spend their money on?
8. What share of the market does each of your competitors have?
9. How do they promote / advertise? Where? What strategies are they using?
10. How much are they paying their staff? What other benefits do they offer them?

Consider your objectives well before you start looking for a business to buy. Ask these questions:

• Do you want to buy so that you can run your own business?

• Is buying a means of expanding an existing enterprise?

• Are you hoping to build up a business and sell it on for a significant amount of money?

Things to consider when choosing a business to buy

The type of business you buy will depend a number of key factors:

1. Your own knowledge and skills

• Do you and/or any prospective business partners have any experience, knowledge or skills relevant to your target business? Consider If you (or they) do not have experience, is it relatively easy to acquire?

• Will it continue to exist within the business after you have bought it?

2. How you will fund the purchase?

• What financial resources do you need to buy a business?

• Besides the initial purchase price you may have to make further investments in the company for continued success.

• There will also be costs, such as professional fees, when the buying the business. These can amount to thousands of pounds depending on the nature and size of the business being bought.

Most people cannot afford to buy a business outright and will need a loan from the bank. You may be expected to contribute 25-50% of the purchase price and the bank will want to look closely at your background and personal resources, as well as the target business’ finances.

• Before agreeing to a loan. Speak to your bank in general terms about buying a business to get a feel for how much you may be able to borrow.

• Alternatively, you could look for others who will invest their money in return for part-ownership of the business. Family or friends might consider getting involved when the purchase is a small business. With a larger purchase it could involve business angels or equity from venture capital firms. You’ll need to be clear about what is expected from investors and whether they want to have some sort of control in the management of the business. See BIF 40 A Summary of Sources of Finance for Starting a Business for related information.

3. Business location

• Can you be flexible about the location of the business?

• Is it practible for you / or would you be prepared to travel long distances or even relocate your home to buy the right business?

• Or are you only interested in looking at a businesses very close to where you live?

• If the business is based from home, would you be happy with this?

4. Timescales of a purchase

• Be prepared for the buying process to take some time, but also, ensure you’re not pushed or pressurised into completing the sale before all of the checks you or your adviser consider necessary are carried out. You may, though be able to achieve a discounted price if you are in a position to complete the purchase quickly.

5. Existing staff

• You’ll need to develop a good relationship with your future employees because you’ll rely on them in the early days of ownership, be aware that the staff employed by a business can be crusial to its ongoing success. Talk to staff before you complete the purchase so that you can assess how they feel about the change of ownership.

• Conversely, poorly motivated or badly trained staff can contribute to business failure. Are you capable of addressing these issues? And if you decide to buy a business that is not profitable but has good growth potential, consider that you might have to make redundancies. Make sure that you understand your responsibilities under employment law and redundancy legislation

Scares and rumours can raise public concern about the way in which our food is produced or prepared. Customer attitudes constantly change: people are becoming more interested in naturally produced and organic food which can be traced back to the suppliers, ‘green goods’  and ‘low carbon footprint’ issues have changed the public attitude. Farmers’ markets are becoming ever more popular and offer a wide range of natural products.

Some people are also questioning the benefits of traditional medicine and are turning to complimentary therapies instead.

Business opportunities resulting from these trends could include: selling naturally produced or organic food; or offering complimentary medicine services, such as aromatherapy or homeopathy. 

Consumers’ tastes and needs also change regularly, these are influenced by many factors such as the media, current fashions, changing demographics and advertising. These changes in attitude can often lead to new business ideas and in recent years sushi  bars, lifestyle consultants and raw food cafés, to name just a few, have all provided new opportunities.

Keep up with these and other current consumer trends at www.trendwatching.com and see www.springwise.com for more inspiration.

For example, if you are a joiner you could concentrate on manufacturing a limited range of quality furnishings instead of competing against well-established tradespeople doing joinery work in people’s homes. A mobile beautician could specialise in preparing brides and bridesmaids in their homes so that they don’t have to rush into town to get their hair done on their wedding day.

• Do you like gardening? Could you set up a landscape gardening firm?
• Do you enjoy cooking? What about a catering service for people having parties at home or a specialist cake making business?

Don’t discard your hobby as a business idea just because you do it for fun; somebody will probably be willing to pay for it. Besides, a lot of your business’ success will come down to the amount of work and enthusiasm you put into it, so it helps to base your idea around something you enjoy doing already.

For example, more people are starting social enterprises with a community focus to improve the quality of life for people in their area.

Organisations in sectors including the arts, education and healthcare often operate in this way and funding for these kinds of organisations is growing.

• If you have persistence, persuasive skills and the gift of the gab you might be good at sales. There are always openings for self-employed salespeople or agents to sell other people’s products and services. If you are good at dealing with people, you might wan to consider starting up a retail franchise, party planning opportunity or multi-level marketing scheme.
• If you are one of the thousands of people who enjoys selling items at car boot sales, you could start a legitimate business trading over the Internet by opening your own online shop perhaps by using ebay. Specialist suppliers such as businesses selling to a niche market are often particularly popular. See www.ebay.co.uk for ideas and products to specialise in.

• What problems could cause you most inconvenience or cost you most to correct?
• What type of services were not available locally when you most needed them?
• Which spare parts, or items, were hard or impossible to obtain locally to you?
• What do you and your neighbours, friends and familymost frequently complain about?
• What service or product could you offer to local businesses – for example, a sandwich round to isolated industrial estates?

Listen to people talking in the pub or club, the supermarket checkout queue or cafe. Find out what they have difficulty getting. Is there any way of fulfilling their needs by providing a local service or product for any of these markets, which somebody will pay for?

You can research local businesses by checking out directories like Yellow Pages (www.yell.com), as well as your local Chamber of Commerce (http://www.britishchambers.org.uk/).

A business like a tea shop or gift shop, for example, may thrive in an area with a high population of pensioners and a high influx of tourists. You could consider opening an activity centre in a rural area. Try contacting the local authority, Tourist Board or Regional Development Agency, as they may be able to suggest ideas or even run support schemes for businesses setting up in particular rural areas.

For more information go to www.visitbritain.com. and www.enjoyengland.com to find contact details for local Tourist Information Centres  in England. To find local Tourist Information Centres in Wales see www.visitwales.co.uk and to find TICs in Northern Ireland see www.discovernorthernireland.com To find Visitor Information Centres in Scotland, see www.visitscotland.com

To find your Regional Development Agency look at www.englandsrdas.com  www.wales.gov.uk  www.scottish-enterprise.com  or www.investni.com

Blogging (like this one) is also growing very fast and can be used to launch new ideas or get yourself noticed. A blog is a website maintained by an individual with regular entries on a particular subject.

Go to www.direct.gov.uk  to get the contact details of your local authority, and see www.supply2.gov.uk  for an overview of the purchasing procedure of public authorities and details of contracts and tenders issued by the Government.

Chambers of Commerce also publish regular listings of businesses seeking partners willing to manufacture under licence or to act as sole distributors. See www.britishchambers.org.uk Also see sites like www.alibaba.com for more information on distribution, import and export opportunities.

You may even want to consider dropshipping. This is where a customer buys a product from you, but you then purchase the item from a company who sends it direct to the customer using your labeling. The difference between what the customer paid for the item and what you purchased it for is your profit.

• To search for local, regional and national newspapers and magazines in the UK see www.mediauk.com  and www.newspapersoc.org.uk  
• To find online discussion forums on a variety of business and general interest topics see www.ukbusinessforums.co.uk