How to write the competition section of your business plan
An investigation is key to preparing a thriving competitor analysis section of your business plan. You need to understand the markets your competition is catering to, learn everything you can about the products and/or services being offered, and analyze why customers choose this company.
Identify the purpose of your analysis.
In a management plan for business owners, the competition section provides a breakdown of the competition. You and your team look at comparative strengths and weaknesses to develop strategic positioning. In a business plan aimed at potential investors or lenders, a description of the competition is designed to reassure your audience that you understand the competition and are positioned to take advantage of opportunities and avoid pitfalls.
Gather information for your competitor analysis
Visiting your competition is a great starting point, whether that means a URL entry or a trip to their physical store. Go and investigate. Look at the systems they have in place, price points, and how customers are treated. You can learn a fair bit about your competitors from talking to their customers and/or clients. Additional valuable sources of information about competitors include their vendors or suppliers, as well as a company’s past or current employees. They may or may not be willing to talk to you, but it’s worth a try. Seek out any publicly available information about your competitors. Online publications, newspapers, and magazines can contain information about the company you’re investigating for your competitive analysis.
Analyze the competition
Simply finding and listing the results of your research into the competition won’t be helpful by itself. It’s the analysis of the information that’s important. Study the information you’ve gathered about each of your competitors and ask yourself how you plan to compete with that company. The key to competing successfully for many businesses is identifying a gap in the market and a specific customer base whose needs are not being met and cater to them. The goal of your competitor analysis is to identify and expand upon your competitive advantage. Layout the benefits that your proposed business can offer the customer or client that your competition cannot. And remember that there is always competition. There are only two reasons competition may not appear to be a problem:
> Your business or product is so new and innovative that no one else has had time to replicate it, OR
> There’s a fatal flaw you’ve missed that others have identified; essentially, it’s not a good enough business idea to attract others.
Either way, competition still exists. In the first case, your competition is getting ready to jump in, so be prepared. In the second case, look at your plan more closely.
Use online reviews
When it comes to searching for and utilizing information, use common sense. Look for readily available information that will represent what you’re hoping to demonstrate. Credible online reviews are a quick and easy way to find evidence of quality. Websites, social media, and reviews are widely available on lots of local businesses.
Source financial information
It can be challenging to access the financial data of privately held companies. More exhaustive research and speculation are sometimes required, such as numbers of employees, rooms, tables, vehicles, or stars in reviews. If you’re up for it, you could play the role of potential customer to gain insight.
Establish your competitive position
How well does your business compare? The goal of positioning is to set your business up against the background of your competitors, so the differences are apparent to your target market. What are you doing better? How do you work toward strengths and away from weaknesses? What do you want customers to think and say about you in comparison to others? Once you’ve drafted and perfected this section, pop it into your well-written and clear business plan and get ’em! Got questions? Call me at (778) 319-8550 to chat more about my business plan writing services or contact me here!