Knowing the threat of substitutes

- Your business plan has to spell out…what the threats are to your product.…And one of the biggest threats you'll face…is substitute products.…What can replace your product…what can solve the customer's problem…just as easily and do it cheaper?…What substitutes are competing for the same…dollars that you are?…And remember, it may not be a direct…competitor to you.…Be able to articulate what those substitutes are…and why your customer's going to choose…your product versus that substitute.…

A few examples,…I had a guy come to me one time…with his awesome business idea,…and the problem he articulated was…when he gets his socks out of the dryer…they're not matched and he takes him a lot…of time to match his socks together.…He shared his business idea was for…RFID pairing of his socks,…so he would put a small device in each sock,…and then when he held them close together…they would beep.…Now, I looked at him and I said,…"You know the substitute to your product, right?"…And he said, "No, I'm not sure.…"We don't have any competition."…