Don’t kid yourself you have no competition, and never ever make that claim when pitching to potential investors.
As I was saying last week, I have seen hundreds of pitches to investors: some great and some terrible. To make sure you are not in the terrible camp there are some fatal flaws to avoid.
Last week I covered Pitching for Money: Fatal Flaw #1. Today I’m examining Fatal Flaw #2: Telling investors you have no competition.
I have heard quite a few entrepreneurs make this claim. It simply flies in the face of common sense. And it doesn’t help if you simultaneously admit that you know you shouldn’t say it but blurt it out anyway.
Just don’t do it! Because if you really believe you are the first in the world to tackle your particular issue then you haven’t looked hard enough.
The reason most entrepreneurs think that there is no competition is because they think in terms of product or service features rather than product or service benefits. In other words, if another product of service has a different functionality or solves the problem using different technology that it is not competition. This is a serious mistake.
Think about your competitors from the perspective of solving customers’ problems. You will see the list of competitors swell.
Here is an example: When I worked in the waste industry I came across technology that got rid of highly toxic waste using totally new technology. It was innovative and no other company had anything like it.
The entrepreneur stated very confidently that there was no competition.
But consider all these options his potential clients had:
- They could do nothing. Companies at the time were simply burying the waste in the paddock. Legal? No. Ethical? No. But it happened a lot. That is competition.
- At the time there was a ship that travelled from port to port collecting toxic waste. That ship never actually treated the waste. Mysteriously, drums of waste just disappeared. That made room for the next load of drums.
- High temperature incinerators were available to treat waste. (My guy didn’t consider them competitors because it was a different treatment process. He was looking at the feature rather than the benefit to customers.)
Customers just want a problem solved. The ‘hows’ are not as important as some innovators think they are.
So no matter how tempting it is to say, “We have no competitors”, don’t do it. No one will believe you and saying it will blow your credibility. It’s a fatal flaw.
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