Three Major Competitors Types That Every Small Business Must Compete With!

This article covers all types of competitors that any small business must compete with in order to achieve its goals, objectives, to survive.

 In this article you will learn

  • Major types of competitors that any small business must compete with.
  • How to conduct target market research to identify the most elusive type of these competitors that is "Indirect Competitors".
  • How to deal effectively with all esp the most elusive type.

Usually, in most cases small business have far more competitors compared to large setups, according to a study each year over one million businesses start in U.S alone that excludes online start-ups (1). That means 116 each hour!

And out of those one million around 134,139 patents are issued roughly to the same number of businesses while the rest of the businesses are essentially “Me-Too’s Businesses” means businesses with same product/service, numbering around 866,000 businesses (2).

And that means your business needs to compete with at least seventy more businesses each hour!

Now these aren’t the only competitors that small business needs to tackle with, from my own years of experience in small business I have identified three major kinds of competitors that any small business needs to compete with to survive & thrive.

Three Kinds of Small Business Competitors

1.     Traditional Competitors 
2.     Direct Competitors
3.     Indirect Competitors

Okay now let me elaborate each of these three types of competitors with an example.

Traditional Customers

For instance you run an ice-cream business then other ice-cream dealers are your traditional customers.

Direct Competitors

And cold drink, drinks, snack, fast-food dealers are your direct competitors.
Indirect Competitors

Indirect Competitors

And indirect competitors would be any other product that the consumer would like to prefer with the same amount of money that is equal to price of your product.

How to identify all of your Competitors

Well that’s easy, the traditional competitors are obvious, the direct competitors in most, majority cases are too. I believe the last ones, the indirect competitors are hard to identify but I believe you still can identify these competitors.

All you need to do is to identify all the potential indirect competitors and then using a little research to identify the exact indirect competitors for your business (out of all those potential indirect competitors) .

For instance you have identified the following competitors as indirect competitors for your ice-cream business.

1.     Candies Dealers
2.     Herbal Tea, Diet Pills Dealers
3.     Fruits Dealers

Now what you need to do is to conduct a little target market research to pinpoint the exact indirect customers.

Below I have provided a questionnaire sample for our ice-cream example.

ice cream questionnaire

If you look at the questionnaire sample you would see that I have asked the most pressing question or important question before asking anything from the respondent, that is because most of the time respondents don’t usually take time to provide answers to all questions asked thus you need to put the most important questions at the top.

“Nothing” option in the questionnaire indicates that there is nothing in questionnaire that the customer would prefer to have with that amount of money, that means you need to reconsider your other options in the questionnaire that makes up your indirect competitors.

Make sure that your sample size is large as the larger the sample size the smaller the sampling error, in other words the more accurate, exact would be your research in terms of identifying the indirect competitors.

Dealing Effectively with your Small Business Competitors:

For traditional & direct competitors use common approaches, tactics as per needs, strengths of your business while at the same time keeping in mind your business capacity in terms of financial, technical, human, time resources etc.

And in case of indirect competitors, make sure your product is widely spread to ensure maximum availability for utilization, consumption. Use tactics like attacking the strengths/weaknesses of indirect competitors for instance launching zero fat, minimum sugar ice cream (to tackle herbal, diet products).

Or provide ice cream with a specific candy or candies flavor, fruit flavor or something that is made out of fruits along with ice-cream, something like Fruice-cream, just think out of the box!

You can also use a strategy of allying your product/service with your indirect competitors like making an ice-cream that increases metabolism or fat burning when taken before or after herbal tea and the sky is the limit!

Over to you guys!

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1.      Small Business by the Numbers (Washington DC: Small Business Administration, 2004)


About Publisher Arshad Amin

Certified SEO Professional, Small Business, Start-up, Marketing Expert with ton's of practical, actionable ideas, insights to share, Proud Founder and Owner of and

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