Search is very competitive. For each query that a user enters into a search bar, the search engines come up with a huge number of results. This means that unless you sell socks hand-made by Argentinian mountain monks, it's more than likely that there are businesses offering a similar product or service to you. In order to beat the competition, you can't go without competitive analysis.
When done properly, it gives loads of insights into the competitor's strengths and weaknesses that you can both learn from, and take advantage of. However, competitive analysis often seems complicated to those with little SEO experience. Below, I describe it in the form of a simple step-by-step guide, aimed first and foremost at beginners.