It’s a competitive world out there! It’s fierce! It’s bitter and it never relents!
No matter what part of the real estate world you come from, you likely have companies, partnerships, joint ventures, and individuals going after the same piece of pie as you. What’s more, this competition comes from all different angles and is infinitely deep. So no matter how hard you fight one battle, another competitor is sure to line right up and take their shot.
This competition can be overwhelming and, among other red-flags, can be a sign of an over-saturated market. However, when you have established competition, you have more opportunities at your disposal than you might think. If you find yourself entrenched in competition with your business, here are a few reasons why that might not be such a bad thing.
The Bright Side of Competition
1) Immediate market validation.
On the surface you don’t want anyone taking bites out of your proverbial economic pie. It makes sense to want to be the first and only business in a given market. Yet the presence of other players could be a very strong indicator that you are thinking correctly about your strategy and business model.
Many potential equity partners (and lenders) will almost always ask about your competition. For many, this is even the first question they’ll ask. On the surface this seems like odd logic because you would think they’d want you to be free and clear of any potential competition.
So why are they looking for (and even expecting) other players in your space? The presence of competition shows immediate exterior validation of economic potential in your given market. In most cases, if you concoct a new investment strategy or seek to enter a new area based on changes in the market, chances are someone else is also attempting the same thing. So partners may even feel better if there are multiple competitors because it tells them immediately that others are dabbling in your space who also see the big picture.
2) Second-Mover Advantage.
Not every real estate opportunity is seized up by the first mover in a given space. Market share always shifts, it is always on the hunt for something better, and first movers often make mistakes. As a second mover, you can learn from the mistakes your competition makes. Just be ready to swoop in and take advantage of any opportunity you can get.
3) Free Research Partner.
In the race to grow, your competitors will likely be testing new ideas and iterating on old models. Let them learn the hard way while you iterate on their mistakes and capitalize on their wins. Since you’ll be doing the same, you can learn from their growth and adapt alongside them.
Your competition gives you a perfect benchmark for gauging everything from market size to pricing and expenses. Not sure how much market share you can capture–see what they’re up to. A bit hesitant to invest in and develop a top-of-the-market product–analyze if it worked for others. Think marketing through social media and your website isn’t a good use of your time – see how effective it is for your peers. Bench-marking gives you a great way to quickly understand the effectiveness of your efforts and cut out things that aren’t helping you grow your business.
5) Instant Goal and Mission (Beat Them and/or Grow With Them).
Your competition gives you a great understanding of the potential for your own business. Along with bench-marking, you can also quickly establish clear goals and set laser-focused missions. If company A is achieving X amount in rent/sales/occupancy, we will set out to achieve Y in rent/sales/occupancy. Your competition can make your goals and strategy simple and clear rather than complex and confusing.
6) Forced to Get Creative.
At times the most creative solutions come when your back is against the wall. Competition can force you to take a step back and get more creative about your business.
7) Win in the Trenches.
When you’ve identified hard-nosed competition in your space, sometimes it’s just good to go at ‘em hard and in the trenches. If you’ve exhausted other measures, at times you just have to stand your ground and slug it out.
So there you have it – not extensive or exhaustive – but several reasons why not to run for the hills when you face some adversity in the form of competition.
What other benefits to competition can you come up with? Leave a comment below.