- Make a list of competitors: Yes, that’s the starting step. Make sure you have chosen competitors of similar size. In case you don’t know your competitors, ask your customers who else they compared you with. Google, IndiaMart, JustDial, and other B2B websites are other places to discover them.
- Evaluate their sales and growth: Evaluate their sales in the last 2-3 years. Have they been increasing or declining? What are the reasons? Have they launched a new product line? Have they aggressively cut prices? Compare the gross and net profit margins over the last years to evaluate any price cutting.
- Evaluate major expenses as percentage of sales: Identify the important expense heads in your industry. Example ‘Cost of goods sold’, ‘Freight charges’, ‘Wages and salaries’ are important expense heads in a manufacturing business. Identify the amount your competitors are spending on them for the last 2-3 years. Compare this amount to their sales for that year. Evaluate how their ratio with sales has changed over time. This will give insights into how they are shaping their business model.
- Evaluate these two important ratios: Ratios like ‘Outstanding days receivables’, ‘Outstanding days payables’ are crucial in understanding the competitor’s negotiation power with their suppliers and customers. Calculate these ratios for your competitors for the last 2-3 years and see how they have been reshaping. You can also find them in financial reports provided by Tofler on companies.
- Websites and other social profiles: Follow your competitors on social media if they are active there or other b2b websites. Check out the reviews of people on their services and products. It will give you an idea of how they deal with customers, complaints and their overall mindset. You will be surprised by the insights you can get from here.