Analyzing The Competition
The competitive analysis section of the business plan is not just a list of information about your competitors. It's the analysis of the information that's important.
Study the information you've gathered about each of your competitors and ask yourself this primary question:
How are you going to compete with that company?
For many small businesses, the key to competing successfully is to identify a market niche where they can capture a specific target market whose needs are not being met.
Is there a particular segment of the market that your competition has overlooked? For example, if you hope to start a book store, and your competitor sells all kinds of books to all kinds of people, might you be able to specialize in children's books, or educational books and supplies?
Is there a service that customers or clients want that your competitor does not supply? What if you want to start a business offering computer repairs and you discover that none of the other computer repair businesses in town offer home service? Computer owners may have a desire for in-home repair services that you could meet.
The goal of your competitive analysis is to identify and expand upon your competitive advantage - the benefits that your proposed business can offer the customer or client that your competition can't or won't supply.
Writing the Competitive Analysis Section
When you're writing the business plan, you'll write the competitive analysis section in the form of several paragraphs. You may wish to give each paragraph a separate heading.
The first paragraph will outline the competitive environment, telling your readers who your proposed business's competitors are, how much of the market they control, and any other relevant details about the competition.
The second and following paragraphs will detail your competitive advantage, explaining why and how your company will be able to compete with these competitors and establish yourself as a successful business.
Remember; you don't have to go into exhaustive detail here, but you do need to persuade the reader of your business plan that you are knowledgeable about the competition and that you have a clear, definitive plan that will enable your new business to successfully compete.
Go to the next section of the business plan: The Marketing Plan.