Check Mate Your competitor has just been taken over by a huge corporation. To stay ahead of the game, what should your next move be?

Like every MBA student, Dwight Schultheis was waiting for a business idea to inspire him. Then he noticed something: He and his male friends had shaving-related skin problems, and the products they used didn't help. "[We're] spending $200 on jeans, but using soap [on our faces]," he says. "It felt to me like it was a really untapped market."

Months of market research and a few focus groups later, his upscale men's grooming products company, Amenity, was born. The New York City business has grown to nine employees and annual revenue surpassing $1 million--quite a leap from last year, when Schultheis and co-founders Lisa Lehan, 28, and Kimberly Pecoraro, 32, started the company with $500,000 from personal funds and angel investors. "We're trying to be a first-mover and innovator in the men's category [of clinical grooming]," he says.

Moving could get a little trickier now that the proverbial 800-pound gorilla has entered the market. In January, Schultheis, 32, learned that Procter & Gamble was acquiring DDF, one of Amenity's competitors. The news brought a mixed bag of emotions for Schultheis, who was excited that such a big player saw potential in the $75 million U.S. market for men's premium skin care but also worried that DDF would be even more competitive with Procter & Gamble's marketing, innovation and distribution power behind it. Amenity spent the following weeks reassessing its business strategy. "If we're going to stay competitive," Schultheis says, "we're going to have to sharpen our mission."