Navigating a Competitive Landscape: What to Do When You Discover a Similar Business Model

In the fast-paced world of startups and entrepreneurship, it’s not uncommon to find that someone else has already developed a similar business model. This situation can be both challenging and validating. However, with the right mindset and strategies, you can not only survive but thrive in a competitive market.

Understanding the Validation

When you come across a startup with a similar business model, treat it as a validation rather than a threat. Much like how most hairdressers, car dealers, and other businesses follow similar structures, the presence of a competitor can signal that there is a demand for your product or service. Identical business models are often executed quite differently, and this is where managerial competence and adaptability play crucial roles.

Managerial Competence and Adaptability

Managerial competence is key in leveraging your business model effectively. As emphasized, identical business models will often be used quite differently. Use this opportunity to focus on executing well and look for long-term advantages. If the market is not large enough for both of you, it’s likely not large enough for you either. In such cases, innovation and adaptability can be your best allies.

The Rare Occurrence: Simultaneous Business Model Development

It is rare for two individuals to come up with a truly original business model simultaneously. However, it is not unheard of. Having a unique business model is not a prerequisite for a successful business. If your model relies on capturing 100% of the market in the absence of competition, you are likely doomed. Competitors will eventually arise, and you can’t afford to be unprepared when that happens.

Having a competitor can actually be beneficial as it helps prove the appeal of your offering, educates buyers on your product or service, and pushes you to continuously improve and innovate. Look for ways to stay competitive and improve based on their actions. This competitiveness can lead to mutual growth and success.

Learning from a Shared Market

A similar situation I’ve witnessed involved two companies with the same business model and target audience operating from the same town. Instead of confronting each other, the companies maintained a gentleman’s agreement not to engage in spying or cross-hunting. This mutual understanding allowed both companies to thrive, learning from each other and growing together.

The Power of Collaboration

The understanding that you are in this together can be extremely beneficial for the development of both companies. There’s no need for rivalry; instead, focus on collaboration and innovation. The more you learn from each other, the better both companies can become.

Conducting a Risk Assessment

From a strategic standpoint, having a competitor can also indicate that your idea might be viable. If no one has ever tried to build out your idea before, educating your target customer can be extremely expensive. Having a competitor is often one of the leading indicators that your idea might indeed be viable. At our company, Proxima Sales, a client who claims their idea is completely unique and no one has ever introduced it to the market is considered a very high-risk client. Conduct a risk assessment and continuously build from any mistakes along the way. This will help you refine your model and increase your chances of success.

Ultimately, the presence of a competitor should not discourage you. It should motivate you to be smarter, bolder, and more creative. With the right strategies and mindset, you can transform the challenge into a strategic advantage and help both you and your competitor thrive.