The opinions expressed by Entrepreneur contributors are their own.
Antitrust can be defined as “a type of law or regulation that protects fairness and competition in business.” At the corporate level, antitrust issues are often brought to the forefront during one-off events, such as a merger, acquisition, or public offering. However, violations can also occur over a period of time as a continuous pattern of behavior.
For an early-stage start-up, the topic of antitrust may seem like a distant topic. The idea of preparing for a legal acquisition or not unfairly infringing on competition may seem distant, especially as immediate issues such as fundraising, going to market and burning cash take precedence. Survival efforts naturally take priority.
However, the reality is that ignoring antitrust efforts early on can prove detrimental to growing companies in the future, when the stakes are much greater. And in fact, overlooked antitrust issues often reveal critical gaps in the business plan itself. Future violations were rooted in decisions made (or not made) early on and continued over a period of time. When they emerge to the forefront, their preventable consequences can exponentially limit a company’s ultimate success.
Related: Legal Information on Starting a New Business: A Startup Lawyer Explains
While early-stage companies continue to struggle with capacity issues, there are critical and manageable practices that can be undertaken to reduce the risk of catastrophic breaches in the future. There are four key actions early-stage founders must take to address antitrust, all of which help both refine a company’s goals and vision and establish often-overlooked barriers that protect the company in the long term. To illustrate this more directly, let’s use the case study of an entrepreneur who created a company that creates and sells “self-cooking hotdogs”:
Imagine that an entrepreneur invented a hot dog that cooks perfectly at the precise moment the customer wants to eat it. No grill or cooking equipment is needed; Indeed, just press the button and three minutes later cooking is perfect. Here are the steps this business owner should consider regarding antitrust:
1. Determine your key competitive advantage
This is something your company can do that very few (if any) can easily replicate. For the hot dog entrepreneur, this would be technology associated with the ability to cook oneself, for which the entrepreneur should consider applying for intellectual property (e.g. a patent) before it goes to market. Any attempt by an existing hot dog manufacturer to replicate this technology would prove difficult or could cannibalize existing sales of “regular hot dogs”.
2. Highlight how your competitive advantage helps customers
In antitrust, competitive advantages that result in benefits to consumers (e.g., price, convenience, quality) are favored and encouraged by law. On the other hand, competitive advantages that give a company an edge over competitors but do not help or harm consumers are where problems can arise. For our hot dog entrepreneur, fundamental innovation saves consumers time, money (in terms of energy), and potentially the embarrassment of not knowing how to cook a hot dog. Clearly and consistently articulating these benefits across all aspects of branding can help the entrepreneur on both the commercial/marketing and antitrust fronts.
3. Execute a plan to surpass the market leader
One of the most common pitfalls for startups is that the current leader in the respective space has a reputation or other sustainable advantage built up over time that prevents the entrepreneur from gaining significant traction. For example, customers may be inclined to the “if it ain’t broke, don’t fix it” analogy. For our innovative hot dog, a primary constraint might be that the cooking process itself gives customers pleasure, or that there is a natural skepticism toward purchasing a new product to eat from a company that no one has ever heard of. talk first. To overcome these barriers, the hot dog entrepreneur may need to do a “blind taste test” campaign or perhaps partner with another company known for offering products used for barbecue. Over time, once the new product gains greater mainstream acceptance, it will be easier to gain market share (and perhaps funding) at a rapid pace.
Related: 8 Legal Requirements When Starting a Business
4. Determine the social benefit associated with success
As a larger percentage of the consumer audience is associated with younger generations, a common successful tactic has been to convey that your company isn’t just about making money, but rather improving a global social problem. The hot dog entrepreneur can focus on whether his innovation will reduce costly and/or harmful forms of heat energy. Or you can donate food products to needy populations who do not have access to heating mechanisms.
A focus on antitrust advances all of these efforts and, if successfully implemented, provides natural and compelling defenses to future problems. Addressing them early not only protects against future risks, but also better defines a company’s competitive advantage today, positioning it more strongly for both short- and long-term success. Even if disguised as a practice aimed at avoiding risks, the fight against antitrust can actually prove to be a determining factor in paving the road map towards long-lasting and successful business growth.