There are several reasons why entering competitions is a good idea:

They focus the mind on a particular piece of writing as the organisers specify a topic and a word count. This solves the 'I don't know what to write!' problem.

Writing competitions provide a deadline which forces the writer to concentrate on the task in hand.

If you do well in a competition you can use this as a selling point when you are submitting to potential publishers.

Some tips:

Writing competitions can vary greatly in the prize money they offer and this is reflected in the entry fees they charge. If you are starting out it might be better to start with smaller local competitions where the entrants are measured in hundreds rather than the national and international competitions where they are measured in thousands. 

Always read the submission guidelines and follow them.

Keep a note of the deadline for a competition and stick to it.

Don't get carried away - the entry fees soon add up!  

Where to find competitions:

On the 'Links' page of this website their is a list of websites most of which will have updated lists of writing competitions.

Why not enter a few. Best of luck!