Every business has competitors which is why the business plan includes a section that presents a thorough competitive analysis. The analysis considers businesses in the same industry your business will be operating in and evaluates similar products or services. It also looks at the features of the competitor businesses. The goal is to pinpoint the strengths and weaknesses of the competitors and then position your business in the industry and marketplace.
A common mistake new entrepreneurs make is telling themselves there is no competition. In the excitement of starting a business, they fall prey to the belief that their products or services are so unique there are no other options for consumers to choose among. One point to keep in mind at all times is every business has competition, and you need to know your competition well.
The competitive analysis in the business plan considers a number of factors for multiple businesses. It’s a good idea to analyze at least 5 businesses to ensure your research is thorough. The factors include product and services prices, the quality level and the product lines.
However, the competitive analysis also considers how your competitors market their products and services and the structure of customer services. The more information you know about a competitor’s organizational structure, sales team, type of facilities, management, and culture, the more effectively you can compete. The analysis should also be done from different perspectives based on market segmentation.
Often, the completed competitive analysis developed for a business plan uncovers opportunities for marketing, product and services differentiation, customer service or new distribution channels. So don’t look at the competitive analysis as a tedious research process. Instead, consider it time well spent learning how to succeed. Every business has competitors and should know who they are, what they’re doing and how they’re doing it. Then your business can do it differently.
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