Most businesses think they know their competition. They keep an eye on the biggest names, glance at a few headlines, maybe check a website or two. But does it help?
The truth is, your true competition often isn’t the market leader — it’s the company that looks just like yours, operates in the same geography, serves the same customers, and is quietly winning deals you didn’t even know you lost.
So how do you really know where you stand?
In this blog, we’ll break down how to analyse your competitors or peers — to understand how well they’re really doing and uncover areas where you can improve and get ahead. When done well, competitor analysis should answer – where are they strong? where are they vulnerable? where do you stand in comparison?
What Should You Really Be Looking At? Key Areas for Competitor Analysis
A. Financials: Growth
- Revenue and Growth Trends: Are your competitors growing steadily year on year? Are they volatile, or showing consistent upward momentum?
- Profitability: A topline increase doesn’t always mean a healthy business. Are they generating profits, or is growth coming at the cost of sustainability?
- Cashflows: Check if the business is generating healthy cash flows from operations, in line with its net profits. At times, a company may show strong revenue growth — but if it’s not backed by real cash generation, it could signal risky or unsustainable growth.
- Charges and Loans: It gives you insight into which banks they are working with. You can also access detailed charge documents to get a snapshot of their loan terms and financing arrangements.
B. Efficiency: How Well Are They Running Their Business?
- Major Expenses Comparison: Study the major expenses of your peers – raw materials, employee costs, marketing, or other areas. This will depend on your industry. This will help you benchmark your major expenses to revenue ratios against theirs. This helps you spot where you may be over- or under-spending and highlights efficiency gaps compared to the industry standard.
- Operational Efficiency: How efficiently are your competitors running their business? You can get a clear sense by looking at key metrics like working capital days, receivables and payables cycles, inventory turnover, and asset turnover ratios. Compare these across your peer group to understand the industry benchmark. These numbers reveal how well competitors are managing their operations — and where you might be falling behind. This is often where the biggest operational improvement ideas lie for your own business.
- Days Payables (Industry Standard): Are you aligned with how the industry handles supplier payments? See what are the days payables of your peers and compare it with yours. Paying too quickly or too slowly compared to peers can both hurt your business.
C. Strategic Moves: Where Are They Betting Their Future?
- Capex Trends: Who is investing aggressively in expansion or capacity building? Capex data signals strategic intent — whether it’s scaling up, entering new geographies, or launching new products. Look at their fixed assets and cash flows from investing to get more details on this.
- Financing: Check the cash flows from operations and financing to understand where the funds are coming from. Also, review the liabilities side of the balance sheet to see how the business is being funded.
- Network of Companies (Strategic Angle): Are your competitors involved in other businesses? This could reveal diversification strategies, backward or forward integration, or group-level synergies that give them an edge.
- Location Analysis: Where are your competitors based? Clusters often signal strategic supply chain choices, access to skilled labor, or proximity to key customers.
How to Put This Data to Work (Practical Applications)
Competitor analysis becomes powerful when it leads to action. Here’s how to use these insights meaningfully:
- Benchmark Your Performance: Know where you stand — whether it’s revenue growth, profitability, or operational efficiency. Are you ahead of your peers? Where are the gaps?
- Negotiate Better with Suppliers: If industry payables days are 90 and you’re paying in 45, there’s room to renegotiate without damaging relationships.
- Re-evaluate Client Strategies: Study your clients’ industry peers. Identify which companies in their sector are growing. These might be your next set of potential customers or partners.
Avoiding Common Mistakes in Competitor Analysis
Good competitor analysis is not about data overload — it’s about focus and context. Here’s what to avoid:
- Tracking only the top 1-2 players and ignoring smaller but relevant competitors
- Looking at one year’s data without studying longer-term trends
- Ignoring operational ratios and focusing only on revenue or profit numbers
- Keeping the competitor list static — markets evolve, so should your watchlist
6. Conclusion: Don’t Compete Blindfolded
Business isn’t built in isolation.
Competitor analysis when done with the right data and approach, it helps you benchmark accurately, identify risks early, and uncover new opportunities.
Stop guessing where you stand. Start analyzing with the right insights.
