(FORTUNE Small Business) – Staying ahead of the competition doesn't require eye of newt, Polyjuice Potion, or even a doctorate in the dark arts. Instead, it takes a strategic approach and a careful examination of your industry and rivals, says David Magnani, managing director for client solutions at Sopheon, an international strategy consulting firm with U.S. offices in Colorado and Minnesota. "For every company the warning signs are different," says Magnani. You've got to stay vigilant and act quickly but judiciously, he says. Follow these tips, and maintaining your edge should be as simple as child's play.

--Any kid familiar with Harry Potter knows that survival depends on knowing who your enemies are. Do a "SWAT analysis of your company," says Brian Reuter, Sopheon's research director. Identify vulnerabilities and threats. Stay aware of new entries into the market, recent acquisitions and alliances, regulatory changes, and patent applications.

--Not everyone is a potential enemy. Be judicious, but stay open to new alliances, says Reuter. Say you make copper widgets, and suddenly clients want iron ones. Don't throw out your business plan yet. Ally with another company and expand your line to include both products, thus grabbing market share. --Harry's great at Quidditch, but average in academics. Likewise, pick your competencies and aim high. "Focus on building yourself up to a world-class level in a few areas," says Peter Duncan, vice president of the Center for Simplified Strategic Planning. "Then it's very hard for the competition to knock you off."

--Don't rely on old tricks. "A strong culture of innovation" is important, says Duncan. Instead of copying the competition or always trying to catch up, chart your own course. "Have people fall in love with your product rather than choose you just because you're the least of the evils in your industry," says Duncan.

--Calendar: December 2002/January 2003

Dec. 3: The New York Women's Agenda The group's annual breakfast honors women in business, media, and politics. Past attendees include Gloria Steinem and Hillary Rodham Clinton. www.nywa.org

Dec. 10-12: Creating the Real-Time Enterprise, San Francisco Learn how technology helps a business reduce inventory levels, boost employee productivity, and improve customer support. www.dci.com

Dec. 11-12: Search Engine Strategies Conference, Dallas Find new ways for a search engine to help your site lure more customers. www.jupiterevents.com