Available statistics have shown that SMEs are indeed the backbone of every economy. According to PwC, the South African economy is 91%-driven by small businesses. These SMEs account for 60% of the country’s employment and contribute 52% to the total GDP. Similar stats have emerged from Nigeria where SMEs contribute 48% to national GDP, account for 96% of businesses and 84% of employment.
It is not surprising, therefore, why many are opting to become entrepreneurs. But then again, entrepreneurship can be hard, especially for anyone trying to break into a competitive market. As a matter of fact, one of the biggest mistakes any entrepreneur can make is to underestimate just how challenging it is to break into competitive markets. However, this is not to say that it is absolutely impossible for an entrepreneur to break into saturated markets.
How to Break into Competitive Markets as an Entrepreneur
For the rest of this article, we shall briefly discuss simple and proven business tactics that can help entrepreneurs to play advantageously in markets that are already dominated by big players.
Study the Market to Find Lapses that can be Improved upon
As you may well know, one of the first things every entrepreneur does when starting a new business is to conduct a feasibility study. This kind of extensive research has one primary purpose —to help you understand the market you are going into. But beyond that, feasibility studies can also help entrepreneurs to uncover the lapses in an ecosystem. This will, in turn, give them an advantageous vantage point from where to enter the market.
This is the strategy Tayo Oviosu adopted when he established Paga, the leading fintech startup that facilitates efficient payments in Nigeria and elsewhere. He observed that despite Nigeria’s many banks, a lot of people still had to carry cash about even though they didn’t want to. Apparently, POS and ATMs can disappoint you when you need them the most. And this is a major problem that can hinder efficient transactions.
Provide unique Solutions to the Problems you have Identified
As you can see from the foregoing, it was after observing the problem that Oviosu proceeded to come up with a solution in the name of Paga. And it is not surprising why the service became a hit among Nigerians. After all, provides solution to a major problem. And people are ever willing to patronise solution.
Disrupt the Market with Unique Product Offerings
Today, the likes of Paga, Flutterwave, Carbon and other successful fintech startups in Nigeria and elsewhere are able to compete advantageously with banks because of their disruptive powers. Disruption is one tested and trusted strategy that successful entrepreneurs and startups use to break into competitive markets. Usually, disruption entails the adoption of ingenuous ideas through the introduction of unique products and services that offer more efficient alternatives to what customers are used to.
Again, let’s use Paga as an example; Nigerians had no choice but to pay their bills either with cash or POS. They used these methods despites the shortcomings that were associated with them. All the while, banks dominated the payment space. And then Paga and other fintech companies emerged and disrupted the ecosystem. Today, these companies are competing effectively with banks.
If you can’t Compete with the big Guns, Collaborate with them
According to the Harvard Business Review, entrepreneurs can either choose to compete with already established players or collaborate with them. Either decision has advantages and disadvantages. For instance, “working with established players provides access to resources and supply chains that may enable the start-up to enter a larger and better-established market more quickly. Then again, the venture may encounter significant delays owing to the bureaucratic nature of large organizations and may also capture a smaller fraction of that potentially larger pie. (The incumbent is likely to hold greater bargaining power in the relationship—particularly if it can appropriate key elements of the start-up’s idea.)
“The alternative, too, has pluses and minuses. Competing against established players in an industry means the start-up has more freedom to build the value chain it envisions, to work with customers that the incumbents may have overlooked, and to bring innovations to market that enhance value for customers while displacing otherwise successful products. However, it means taking on competitors that have greater financial resources and an established business infrastructure.”
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