The answers to these four questions offer an overview of what the competition section of your business plan should achieve:
What is a competitor?
A competitor can be defined as a product or service which makes your product or service of lower value to a consumer or business who uses both. The competitor’s product or service seeks to satisfy the same need for a customer. The most direct competitors target the same exact customer group, using similar marketing channels and similar methods. More indirect competitors may serve slightly different needs, but still present a choice for customers between using their product or service and yours.
How do I research competitors?
Ideally, you should patronize your competitors to get first-hand information about their product or service. In addition, speak to current and past customers to learn about why they made their choice, and how they identify the company’s strengths and weaknesses. A survey, focus group, or direct interviews may achieve this. Looking at the company’s website, advertising, and physical location are necessary research elements, but are not enough to find the depth of information this section required.
What kind of information should I include?
Provide basic information on the competitor’s status, such as the company’s size, age, revenues, and ratings in the industry or market. Detail the strength and weaknesses of the competitor, relative to your own product and service offering. Include information on the specific products they offer, how they market, specific successes or failures they’ve had, and the nature of their company.
What if I don’t have competitors?
Everyone has competitors! If customers are not currently purchasing any product or paying for any service to satisfy the need, it must be because they have been using a free alternative or don’t see it as a need worthy of spending money on. If they have been satisfied with a free alternative so far, you have to battle the competition of the status quo. However, this will not be the case very often. If you look hard enough you will find other companies seeking to serve the same customer need. If you offer no competitors in your business plan, you are sending the message to readers that there is probably only a very small market for your product.
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