In the military--
Knowing the other and knowing oneself, in one hundred battles, no danger.
Not knowing the other and knowing oneself, one victory for one loss.
Not knowing the other and not knowing oneself, in every battle certain defeat.
-- Sun Tzu
The Art of War is an interesting text about competition. Its advice is applicable to competition in every fashion, and especially helpful to the young entrepreneur. If you haven't read it, I recommend getting it as soon as possible. Sun Tzu's quote above has a few interesting ideas packed into it.
Not Knowing Your Competition or Yourself
It is pretty easy to see that if you don't know your competition or yourself, you're doomed for failure. If you don't know what decisions you are capable of making, what your "army" is capable of doing, or what you have going for you, you can't possibly know how to compete against others. If you find yourself in this category, start working now to understand you and your company, and how things are tied together. That'll at least take you away from certain defeat and towards an even playing field.
Knowing Yourself, Not Your Competition
If you know yourself and not your competition, Sun Tzu says you'll win one for every loss. This is where most companies fit (else the odds would be different). Here, you know what you're capable of, what you can do and can't do, and how to act on that information. If this is where you are at, you definitely have some room for improvement. The best way to win in a competitive market is to know the market, its players, and the moves that each are making. You can see that knowing where things are headed gives you a great advantage, and knowing how you can use that information (that is, knowing yourself) gives you much much more.
Know Your Competition and Yourself
Knowing your competition and yourself is the ideal place to be. Here, you can see the market's moves, and act on them accordingly. You know what your company is capable of doing, and can find ways to use the market's movement to your benefit. This is a prerequisite for much of the advice in the book The Art of War. If you aren't at this point yet, take some time to learn as much as you can about your industry and the people in it. Learn about your competitors' decisions, and how/why they are made. See what openings there are in the market - where people aren't, where people are but don't want to be, and why. Armed with this knowledge, you can put your company in a positive position in the market, and have a good time getting there.
