Why bother with a local competitive analysis?

If you run a small firm or work as an independent consultant, you probably already know your competitors by name. You nod to them at networking events, you see their vans, you hear about them from clients. But knowing who they are is not the same as understanding how they compete. A structured competitive analysis turns vague impressions into something you can act on — a clear picture of where you sit in your local market, where you're being undercut, and where there's room to charge more.

The good news is this doesn't require expensive research tools. It takes a few focused afternoons and the discipline to write things down. Here's how to do it properly.

Start by mapping your direct and indirect competitors

Draw two circles. In the first, list your direct competitors: the businesses a local client would genuinely consider alongside you for the same job and similar budget. If you're an independent bookkeeper in Chester, that's other bookkeepers and small accountancy practices serving comparable clients nearby. Aim for three to six names — more than that and the analysis becomes unwieldy.

In the second circle, list indirect competitors — the alternatives that solve the same problem differently, or compete for the same slice of your client's budget. For that bookkeeper, that might be cloud accounting software a client muddles through with, a virtual assistant who also handles invoicing, or an accountant twenty miles away who works remotely and charges less. It's tempting to dismiss these. Don't — they're often why a promising enquiry goes quiet.

A few practical prompts to fill the gaps:

• Ask three loyal clients who else they considered before choosing you. The answers are frequently surprising.
• Search for your main service plus your town, and note who appears on the first page of local results.
• Check trade directories, local business groups and professional bodies for members listed in your area.
• Use public records for company information if you need to check how long a rival has been trading.

Compare pricing honestly, not just the headline number

Pricing is where most small firms get sloppy. A competitor advertising "from £199" tells you very little. What matters is the price for a comparable scope, and the way it's presented.

Where you can, collect quotes properly. If a competitor publishes rates, note them. If they don't, ask for a quote as a prospective customer would — an anonymous enquiry is fair game if you keep it brief and don't waste anyone's time. Then record, for each competitor:

• The quoted price for a defined piece of work, and what's included or excluded
• Whether they charge hourly, by project, on retainer or by subscription
• Minimum engagement sizes, travel charges, VAT treatment and payment terms
• How quickly they respond, and how clearly they explain things

Note the pattern rather than fixating on the lowest figure. If every rival bundles a free discovery call and you charge for one, that's a friction point worth addressing. If two competitors are locked in a price war, that's usually a signal to compete on something other than price.

Assess services, positioning and reputation

Now look at what they actually offer. Read their website as though you were a client with a problem, not a business owner doing research. What's the first promise they make? Which services get the most space? Who are they clearly trying to attract — sole traders, growing limited companies, charities, a particular trade?

Reputation is the piece small firms most often skip, and it's often the most useful. Spend an hour reading reviews on the platforms your clients use. Look for repeated themes rather than individual grievances:

• What do people praise most often — speed, communication, value, expertise?
• What complaints recur? Slow replies and poor communication come up far more than technical errors.
• How does the business respond to criticism? A measured reply builds more trust than silence.
• Are there gaps in their service that clients clearly wanted but didn't get?

If it's practical, become a customer once — buy a small item, book a consultation, sign up to a newsletter. First-hand experience of a competitor's onboarding tells you more than any amount of browsing.

Turn your findings into changes you can actually make

A spreadsheet full of notes is not an analysis. Sit down and answer three questions in writing.

Where are we cheaper or dearer, and is that deliberate? If you're the most expensive option locally, you need a reason a client can repeat to a friend. If you're the cheapest, ask whether that's a strategy or a habit — underpricing is the most common way small firms quietly go under.

What do we do that nobody else nearby does? It might be same-day callouts, fixed monthly pricing, a specialism in one sector, or simply answering the phone. Whatever it is, make it visible on your website and say it plainly in proposals.

What are clients complaining about elsewhere that we could fix? This is the quickest route to a genuine advantage. If rival reviews are littered with people waiting days for a reply, a clear, published response time becomes a powerful selling point at almost no cost.

Finally, diarise a review. Markets shift, competitors hire, prices move. An hour every six months updating your notes will keep you sharp — far easier than starting from scratch when a big tender lands or a key client walks. The aim isn't to copy anyone; it's to know your local market well enough to choose exactly where to stand out.