When starting a company, how do I determine the level of competition I'll have?

I want to start a company, but see another player in the space doing what I want to do. How do I determine the level of competition they'll be? I have an idea for a company, but after doing some market research found that there is already another website doing the same thing. Think about if I was starting Lyft and I found out that Uber had been in business for 2 years, but didn't have many customers in my region of the United States. How would I know if I'll end up doing well (like Lyft did), or if I'll end up being crushed by the competitor. And what do investors say if they know there is already another company doing the same thing?


I've started several online companies where we have been first to market, but there have been marginally similar services out there....

A good investor will probably want to know there is someone else in the space, as if no-one else has thought of the idea, it *might* not be a good idea. Use this to your advantage. First off, it's proof of concept. Secondly, you can study where you think their downfalls are or what they are not doing well, and make that part better. Thirdly, look at which portion of the market they aren't serving, and target that. There may be enough customers to share, or they may end up acquiring you or vice versa. This will also show investors that an exit plan is feasible.
In answer to your question about the level of competition, you can probably only estimate. Do some research about the amount of customers they seem to have and what the average spend per customer is. You might find some of this data (or assumptions) in trade press or hire a Virtual Assistant to pool research for you. Think of it not just as determining competition, but as validating your market, which in turn shows investors you're realistic and well-informed. Furthermore, look at some horizontals and verticals in the space. For instance, when I started our Video Chat for Actors website,, although there was nothing like it, I could pool data from Auditions sites, Actors Unions, and IMDb to work out how many potential customers there were, and what they are generally spending on similar services, so as to get an educated assumption. Best of luck!

Answered 7 years ago

You're not the first entrepreneur in that position - its a common problem. I'm semi-retired (consulting / project work only), a former serial entrepreneur and I've been in similar circumstances. The good news is that investors will view the existence of one or more competitors as a positive because it validates market need. However, you'll have to explain your advantage(s) and why you'll succeed. Start with a clean sheet of paper and create three one page documents: a) a clear description of your planned offering including the customers it serves, the need it meets, the value it adds and your success factors b) a side by side comparison of your offering vs. your competitor's on the basis of features, functions, services, etc. from the customer's perspective and finally, c) the advantages and disadvantages of your offering vs. competitors. The answer as to your question about whether to enter the market should emerge from that evaluation. If you're offering is EXACTLY the same as your competitor's, the first mover has a BIG advantage. If that's the case, you'll have to modify your offering to create a clear advantage in some part of the market. I'd be happy to help you with the evaluation or the planning process.

Answered 7 years ago

Like some of the other responses on this thread, I do not think competition is a bad. Lets put it this way: Every good idea has already been thought of by someone somewhere. The difference between most people and an entrepreneur is taking the most difficult step, which is to move from idea to actually putting in to place. After that all it comes down to is execution and that is what you need to optimize for. Investors will care about what makes you think you can do this better than everyone else out there. What is it about you, your team, your demographic, your product, your strategy that is superior. It's about how you frame your Go to market. Since you're interested in moving forward with your company despite the competition I'm guessing you see some advantages to your approach and it's just making sure you illustrate those AND in some cases double-down on those.

The other piece of this is 'second mover' advantage. So using the Uber / Lyft example. Uber is the bigger player so they get the brunt of the regulatory focus, scandals, etc. Lyft has the benefit of seeing where Uber has run into trouble or made a mistake and ensure they avoid doing the same thing. You can actually use this to frame your pitch to investors. For instance one of Lyft's focus points has been building a strong government relations team. They can then go to investors and say we want to do car-sharing but from the perspective of partnering with the existing rather than 'breaking it down' which is the uber approach.

In terms of collecting competitive intelligence:
1. do your due diligence. look at every piece of content you can find on them. Use their products if they have any
2. see if you can connect with someone there to learn more - be transparent, the fear of someone stealing your idea is overblown
3. Talk to people who used to work there. You don't need to ask for proprietary info but even just understanding their experience will tell you a lot about the company. For instance talking to uber employees who left 2 years ago would probably be good writing on the wall for where they are today.
4. Industry experts. They'll know what's working in the space and what needs more attention.

Hope this helps. Let me know if you need further clarity or want to chat. Happy to walk through in depth.

Answered 7 years ago

As mentioned before, having competition is a good thing to the eyes of an investor. Moreover, it shows you've done some research.

Try to understand the apparently small differences between you and your competitor. E.g. Is he selling in the same region? To the same type of people? Approaching customer using the same means? All these can be used as a differentiation point, which could be enough for both companies to co-exist.

Also try to evaluate the size of the market: how big is it? Is it expected to grow? If it's a growing big-enough market, there's no reason why you wouldn't succeed as well.

Apart from these business concepts, in the end it all goes down to the specifics of your startup idea. Try to get industry-specific advice on that.

Answered 7 years ago

Likely you'll never be first or best in any niche.

Also likely you can still live very well.

Find your unique voice to communicate about your offerings.

The more uniqueness you inject into your messaging, the more you'll attract your perfect audience + repel others.

A tried + true path to maximum cash for minimal work.

Answered 7 years ago

Any business venture that you plan to embark upon should go through the “3Cs and 4Ps” exercise. You’ll soon realize how incredibly valuable and insightful this exercise is. It may seem simple, but the “3Cs and 4Ps” exercise really allows you to think about a business venture in a structured way. Once you force yourself to really go through this exercise, you’ll realize how much you didn’t know about the business idea you had in mind. This is critical because you want to know that the venture you are about to embark upon is worth giving up a secure job for.

Part of the 3Cs is to list your competitors and identify all of their strengths and weaknesses. There are many ways to do this through various forms of online and offline research.

You can read more about it at:

Remember that the 3Cs and 4Ps will continually need updating as your business grows and changes. It is what we call a “living exercise” so you need to come back to it often to refine your strategy and approach. The exercise may seem obvious, but once you start thinking about each step in the process, you’ll be amazed at how much more organized your business planning will become.
Please feel free to contact me if you have any follow up questions or want to learn more about business development.

Answered 7 years ago

When starting a company do not waste time j determining the level of competition, during starting focus more on giving quality product or service at best price with high degree of customer service

Answered 7 years ago

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