Irrational fear of existing competitor?

You might really be benefited by reading Getting Real from 37signals. (The online version is free btw.) Maybe you can't compete with them on the same playing field and that is the source of your anxiety. So don't. Be simpler, underdo your competition. (See the first section of chapter 2, "Build Less".)

I am going to quote five ideas of my favorite book: Rework

Don't copy

Look at all those commercials about the next "iPhone killer". It is stupid. They are all essentially wrong. You cannot win a war against the one that set the rules of war. If you focus on overcoming a specific product, you will lose, because your product is lacking a soul.

The iPhone is successful because it perfectly embodies an idea. The idea that style plus usability are the most important.

Find a soul for your product. Embody an idea. You don't need features. You need to state your intention to create something useful.

The features of your product are a result of that spirit.

Pour yourself into your product

If your product embody an idea and the customers like that idea you are going to find that your competition is copying you.

And that's fine.

Who cares? The will never copy your spirit. Nike is Nike, and they are great not because they fabricate shoes full of features, but because they pour their sportsmanship spirit in their shoes.

Pick a fight

It is part of having an spirit. What is the reason you are building that product? You want to do things simpler for the user? You love italian pizza and want to share that love with the rest of the world?

That's your fight. That's your identity.

Underdo your competition

Someone said that you must have more features than the product your are competing with.

Bullshit.

What was the result of the Cold War? Who won?

Nobody. You don't beat an enemy by having the biggest features, millions of services and a myriad of options.

You win by doing something really specific so fucking good that it is even impossible to do it better.

You cannot be defeated if you strike at simplicity. And simplicity comes from focusing on little features that makes a great difference.

Find that 3 features and make me proud of using your product.

Focus on you instead of they

And this is the corollary.

At the end of the day, it is you the only one that matters. You are focusing yourself on designing your shining idea and making a very simple implementation that embodies your spirit.

Who cares what the other do? They are not really your competition.

You are unique.

Competition is good..it will help you advance your product and expand upon current offerings shortcomings if any.. Also it means there is viability in the space you are heading into, investors will feel better you are not the first ground breaker in your space and there are others already cutting a path to follow..or better. Best of luck xsd

Answer this question for yourself and for your customers:

What do I have that my competitors don't have?

Design is actually overated, I think. If your service is better, if you are the only one with specific data, information, then people will stick around. Google search page is from a design point of view nothing, but the service is the best in the world...

You also need to keep an eye on "What do my competitors have that I don't have", but this you keep for yourself and see if it's really that important. If it's just design, I don't think it matters that much.

There is no one silver bullet, but my recipe would be:

1. Competitors are but one of the many worries an entrepreneur will constantly have. The others include the presence or birth of substitute product/services (ex: movies being cinema, then rentals, now being shunted by streaming), changes in market power, changes in supplier power, etc. If competitors send you screaming for Prozac :), I wonder if you have the risk-affinity for this field. You will never be free of fear, nor should you ignore it. You have to mitigate it where possible, and use it where it cannot be eliminated.
2. To generally mitigate it, realize that you need to compete not with the others, but with yourself. Fundamentally, success hinges on continuously raising your own game quickly and effectively, and being a creative problem-solver. Face it, there will always be a steady stream of competitors. Your current batch of competitors don't matter. Furthermore, if you excel, you will attract more competitors, both incumbent and new. IOW, getting too concerned with competitors is an exponential problem.
3. Therefore, train yourself to ignore competitor specifics and focus on your market. Yes, ignore them individually. Because otherwise, you will get that overwhelming paralysis. By ignore them, I mean stop making your success/failure a function of each of theirs. Worrying at the look-and-feel of their site as opposed to yours is a bit backwards. The question should be: "Does my website generally meet market standards? Are there even any?" You want to be aware of their strengths/weaknesses/strategies, but only as a guide to understanding where you can be successful within your market.
4. Create a structure whereby you constantly review your performance. What did you do wrong? Right? Apart from not having a north star, nothing makes one feel powerless than not having a grasp of one's own performance.
5. Read The Innovator's Dilemma. This gives you insight on how the bigger incumbents fall against the smaller.
6. Read Blue Ocean Strategy. Full of good advice on how to develop your strategic sense and avoid low-margin, cutthroat areas of business.
7. Read Competitive Strategy by Porter. This is a more formal, MBA-ish book, but you should definitely fuel your creative juices with it.
8. Innovation and Entrepreneurship by Peter Drucker is another good book.

I'll end with an analogy: how does an athlete survive the pressures his/her competitive landscape? By setting ambitious but achievable goals for himself (visualize), working hard to develop the necessary tools and mindset to get there (prepare), and constantly review what you've done so far.

Figure out what you do well, that they don't do well, and turn up the amplitude. Identify what, in your niche, is the most critical component (that maybe your missing) and make sure it lines up with your middle-range goals for development.

Figure out what they do well, get better at it.

Don't worry about the flash, worry about the substance; people stay with a product for its usability and service from the developer.

Use them as a benchmark, strive to be customer driven while aiming to deliver the level of professionalism and polish that you believe your competitors do. Do this while you're concentrating on and marketing the areas that you believe you surpass your competitors in. In almost every case there will be something you're better at than they are. If they are big then promote your responsiveness, if their software is feature rich emphasise that your software as easy to use, if your software is early in the life cycle and theirs is a long way along then promote that you 'add customer driven features'.

We've been chasing a competitor for the last 5 years using their reputation in the business and customer numbers as our goal. All of this while still trying to develop areas that we believe we are superior in and highlighting those to our existing customer base and potential new customers. It's been a hard grind and sometimes we've struggled with motivation. But what do you know? Our competitor dropped the ball in an area in which we excel in late 2010 and their customers are moving to us in swarms because of what can only be described as crazy business tactics on the competitors behalf.

When you have such kind of feeling just close your eyes and think about facebook and myspace where myspace went down even though it is top once up on a time so you can get customers from other sites if your product is better than that

1. Try to convince yourself that you are better, even if it's not entirely true.
2. Listen to the customers instead of comparing everything you do to the competition.
3. Innovate instead of following. It's often better to go around the competition instead of fighting them face to face. It's best if you manage to make a successful product without ever directly competing with your competition. There are various ways of achieving that: concentrating on a particular unoccupied sub-niche of the market, promoting your offer to different demographics and local markets, offering something that achieves the same thing but in a completely different manner than your competition, etc. Then, after your product is successful enough already (maybe even more so than the conservative competition) you can face them without the anxiety as you'll be confident in that your product is as good or better than their's.

If this is your first steps, consider launching and failing a success and tell yourself it's okay to fail. Once you're okay with the option of failure, mentally. give it all you got.

For each and every technical X, you can't out-X the competition.

So choose to be the one who cares most about your customers - about what they want, about how they're going to get shining value out of your (maybe presently spotty) product.

That may leave most of the market to the big guys. But you'll be better than them for your customers, and your reputation will grow.

Especially if you're brave enough to recommend your prospective customers to take your competitors' products when they're looking like the best proposition. And take the trouble to follow up and ask them how it's working out.

Getting to know your competition is an interesting exercise. Getting to know your competition through their customers' eyes is golden.

Don't go to any competitors site and also remove all competitors software. Do your software from scratch. Do unique product independently from competitors. When you will created your product you can observe your competitors and adopt some best features. When you will release your product your competitors will fear you.