Few businesses keep tabs on competitors, yet such knowledge can give you a distinctive competitive edge. Building a file on them, looking at everything from the customer’s viewpoint and asking suppliers and employees what they know about them can be worthwhile.

Remember, before starting to gather information, that your competitors will come in two forms, direct and indirect – the latter being those selling the same product but in different ways.

Build a profile

Ask yourself what products and services they offer. Do they overlap with yours? What customer needs and wants are they satisfying? What is their unique selling proposition? How do they position themselves? Are they the Savoy or a McDonald’s? Is their mind-set corner shop, high street franchise or old establishment? Are they exclusive and high-priced or a dime-a-dozen? Are they as passionate and knowledgeable as you?

How do they market themselves? Where do they advertise? What sales channels do they use – retail, direct mail, Internet, wholesale? What is their sales literature like? How can you make yours stand out in comparison? How good are their employees? Should you be considering enticing them over to you?

Are they growing, level pegging or declining? If so, why? Use the Internet to get hold of credit reports on them. Find out how many employees they have, and what they do.

Develop a strategy

Once you have all this information, analyse their strengths and weaknesses and relate them to your own, asking how each one affects you. And remember, their strengths are your threats, their weaknesses your opportunities. Arc your strengths good enough to lure people away from the competition – or even to keep existing customers? Could your weaknesses be driving people away?