One of the most reliable and accessible sources of data and information for competitive analysis is the public financial statements of your competitors. These include annual reports, quarterly reports, 10-Ks, 10-Qs, 8-Ks, proxy statements and other filings that disclose the financial performance, position, cash flows, risks and strategies of your competitors. You can use these statements to compare and benchmark key financial ratios, margins, growth rates, profitability, liquidity, solvency, efficiency and valuation multiples of your competitors and your own business. You can also identify the sources of revenue, cost drivers, capital structure, dividend policy, investments, acquisitions, litigation and other factors that affect your competitors' value.
In fact, public financial statements are a great resource for competitive analysis since they shed light on a business's tactics, position, and financial success. However, in order to obtain a thorough picture of competition, it is imperative to complement this data with information from other sources. Industry studies, market research papers, trade journals, analyst reports, press announcements, business websites, investor presentations, and social media platforms are a few examples of these. Analysts can identify trends, opportunities, and dangers in the competitive landscape by combining data from several sources, which helps them make better decisions.
Financial statements are great source of information often overlooked. 30 years ago, you would never have built a business plan or prepared a valuation without relying on financial statements. Today this is less true. The shortening business cycles as well as many new types of companies has changed the approach regarding financial statements. Today the one which is getting the most attention is the cash flow statement, as compared to the balance sheet before. Also due to the plethora of startups, it is more common to accept p&L showing recurring losses over a number of years and accountants are learning to deal with this. Before it would have been unthinkable.
One of the key aspects to conducting a comprehensive competitive analysis lies in sourcing reliable data and information. From my experience, leveraging a combination of primary and secondary sources can yield valuable insights. Primary sources such as customer feedback, surveys, and interviews offer firsthand perspectives, while secondary sources like industry reports, market research, and competitor websites provide broader context & benchmarking data. Additionally, monitoring social media trends and industry forums can uncover nuanced insights into competitor strategies and consumer sentiment. Ultimately, a strategic blend of these sources ensures a holistic understanding of the competitive landscape, empowering informed decision-making.
Public financial statements are often treated as the holy grail of competitive analysis, but their reliability can be questionable. While they provide a snapshot of financial health, they also mask underlying issues and can be manipulated. As Warren Buffett points out, "Accounting is the language of business, and you have to learn it like a language to understand it." It's essential to supplement financial statements with qualitative data from customer reviews and market trends to get a full picture.
Another useful source of data and information for competitive analysis is the industry reports and databases that provide comprehensive and updated information on the industry trends, size, growth, segmentation, drivers, challenges, opportunities and outlook. These reports and databases are usually prepared by reputable research firms, consulting firms, trade associations, government agencies, academic institutions and other organizations that have expertise and access to industry data. You can use these reports and databases to understand the industry structure, dynamics, attractiveness, competitiveness, profitability, regulations and best practices. You can also identify the key players, market share, customer segments, product categories, pricing strategies, distribution channels and innovation trends in your industry.
Industry reports have become a massive business due to the growth in Private Equity and Venture Capital Investments. Before only a handful of financial and industrial players needed these reports and in-depth analyses. Since, the target market for that service has grown tremendously and there are also many more players. The issue however is not with historic data. The issue is with prospective data. A lot of funds and startups are using these reports to justify valuations or investment strategies. But when you look at a few reports from a few different providers you can find very serious discrepancies in the figures, the trends, the analysis. The reason being that each team has its own methodology. My advice: never to rely on one report!
Access to comparative sales data is a great advantage to anybody valuing a business. There are resources such as Bizstats for Australian valuers. Details of Businesses are collected from a network of business brokers across Australia. Each sale has been carefully entered to ensure that the database is as accurate as possible.
A third source of data and information for competitive analysis is the customer feedback and reviews that reflect the opinions, preferences, satisfaction, loyalty and behavior of your customers and your competitors' customers. These include surveys, interviews, focus groups, testimonials, ratings, reviews, comments, complaints and referrals that you can collect from various platforms, such as your own website, social media, online forums, blogs, podcasts, newsletters, email campaigns and other media. You can use this feedback and reviews to measure and improve your customer value proposition, customer experience, customer retention, customer acquisition, customer advocacy and customer lifetime value. You can also identify the strengths, weaknesses, gaps, opportunities and threats of your competitors' products, services, features, benefits, quality, reliability, pricing, branding, marketing and customer service.
A fourth source of data and information for competitive analysis is the social media and web analytics that reveal the online presence, activity, engagement and influence of your competitors and your own business. These include metrics, such as followers, likes, shares, comments, mentions, hashtags, views, clicks, impressions, conversions, bounce rate, dwell time, traffic sources and other indicators that you can track and analyze from various tools, such as Google Analytics, Facebook Insights, Twitter Analytics, Instagram Insights, YouTube Analytics and other platforms. You can use these analytics to evaluate and optimize your online reputation, visibility, reach, awareness, interest, desire and action. You can also compare and contrast your competitors' content, tone, style, frequency, timing, keywords, hashtags, calls to action and other elements of their online strategy.
Relying solely on social media and web analytics for competitive analysis can be misleading. Although these metrics offer real-time insights into online presence and engagement, they often reflect short-term trends rather than long-term value. As Jeff Bezos famously said, "Your brand is what people say about you when you're not in the room." Combining these insights with deeper, more stable sources like industry reports ensures a more balanced view.
A fifth source of data and information for competitive analysis is the competitive intelligence tools that help you collect, organize, analyze and visualize data and information from multiple sources in a systematic and efficient way. These tools are software applications that use artificial intelligence, machine learning, natural language processing, data mining, web scraping and other technologies to provide you with relevant and actionable insights into your competitors and your own business. You can use these tools to monitor and benchmark your competitors' performance, strategy, innovation, marketing, customer feedback and other aspects of their business. You can also use these tools to identify and evaluate new competitors, potential partners, emerging trends, untapped markets and other opportunities for your business.
Some CI tools do offer only a platform for you to upload, visualize and interpret data collected elsewhere. But there are also tools that offer access to a host of information and data you don't need to buy or subscribe to the primary source. The tools of the last nature are really valuable. But before buying a tool just to have a CI tool, search and compare the value for money. It is only useful if you can combine your data too.
If you're just getting started, check out these free CI tools that are pretty handy but not super well-known. Visualping keeps an eye on changes to competitor websites, while Owler gives you the lowdown on company info and comparisons. Patent Inspiration shows you what's trending in patents. Wappalyzer lets you peek at the tech your competitors are using. Google Trends helps you see how popular different brands are over time. With TalkWalker Alerts, you can track mentions of brands across the web, and Moat shows you the ads your competitors are running.
A sixth source of data and information for competitive analysis is the SWOT analysis framework that helps you synthesize and summarize the data and information from the previous sources into a simple and effective tool. SWOT stands for strengths, weaknesses, opportunities and threats, and it is a strategic planning method that allows you to identify and evaluate the internal and external factors that affect your business value. You can use this framework to highlight your competitive advantages and disadvantages, as well as the potential risks and rewards that you face in your industry. You can also use this framework to formulate and implement your goals, objectives, strategies and actions to improve your business value.
The SWOT analysis method is crucial in competitive analysis. It helps businesses understand their strengths, weaknesses, opportunities, and threats, both internally and externally. By recognizing these factors, businesses can make informed decisions to improve their competitive edge and overall value. This framework guides strategic planning across different business areas, like marketing and operations, by identifying areas for improvement and potential growth opportunities. In essence, SWOT analysis simplifies complex data into actionable strategies for businesses to enhance their competitive advantage.
For a thorough competitive analysis, utilize multiple data sources: - Company Reports: Annual reports, press releases, and investor presentations from company websites. - Industry Reports: From market research firms like Gartner and trade associations. - Financial Data Services: Bloomberg, S&P Capital IQ, and free options like Yahoo Finance. - Social Media and Blogs: For customer perceptions and industry discussions. - Government Publications: SEC filings and patent databases for legal and innovation insights. - Customer Feedback: Online reviews and surveys. - Professional Networks: LinkedIn and industry events. These resources provide comprehensive insights into financials, market strategies, and customer views.
Focusing exclusively on quantitative data sources can lead to overlooking qualitative insights that are crucial for a comprehensive competitive analysis. Steve Jobs believed in intuition and empathy, famously saying, "You have to start with the customer experience and work backward to the technology." Incorporate anecdotal evidence from customer interactions and employee feedback to understand the nuanced, human aspects of your competitors' strategies. Balancing hard data with soft insights can lead to more innovative and customer-centric business decisions.