Businesses generally know who their competitors are on the open market. But are they the same companies you need to fight to get the best placement for your website? Not necessarily!
In the area of your competitors are any websites that can be found by using the same as yours. For example, a hairdresser in Boston offers, among other things, advice on beauty products. Therefore their website will be found by typing in “Boston beauty products”. The same search term will give results for a pharmacy which sells beauty products in Boston. Both businesses are competing for the same search term.