Hello Latinfiend,
I think that you are ready to compete when you make the decision that you want to compete. You can choose to enter a comp anytime you want. Comps are structured so you compete against dancers at your level. (i.e. newcomer, bronze, silver, gold etc.)
I think that the best approach is to discuss your desire to compete with your instructor. They can help you choose a competition for your debut. Choosing a competition will give you a goal to work towards and will help to keep you focused. I would suggest entering a comp sooner rather than later. My experience has been that it is harder to stay focused on your goal if the deadline is to far off.
Just remember to have fun.
Blair