One of the most common ways to do this is a competitive analysis, but what exactly does this report achieve? Once you know all this, you can reflect on how your company fits into the market, and use it to build a strategy on where you need to go. A competitive analysis is critical to your strategy because once you understand the playing field, you can line up exactly what it is your target customers value, and knock the competition out of the park. This goes without saying for your entire business plan!
The Competitive Analysis section of your business plan is devoted to analyzing your competition--both your current competition and potential competitors who might enter your market. Every business has competition. Understanding the strengths and weaknesses of your competition--or potential competition--is critical to making sure your business survives and grows.
In fact, small businesses can be especially vulnerable to competition, especially when new companies enter a marketplace. Competitive analysis can be incredibly complicated and time-consuming Here is a simple process you can follow to identify, analyze, and determine the strengths and weaknesses of your competition.
Profile Current Competitors First develop a basic profile of each of your current competitors. For example, if you plan to open an office supply store you may have three competing stores in your market. Online retailers will also provide competition, but thoroughly analyzing those companies will be less valuable unless you also decide you want to sell office supplies online.
Only you can determine that.
To make the process easier, stick to analyzing companies you will directly compete with. If you plan to set up an accounting firm, you will compete with other accounting firms in your area. If you plan to open a clothing store, you will compete with other clothing retailers in your area.
Again, if you run a clothing store you also compete with online retailers, but there is relatively little you can do about that type of competition other than to work hard to compete in other ways: Once you identify your main competitors, answer these questions about each one.
What are their strengths? Price, service, convenience, extensive inventory are all areas where you may be vulnerable. What are their weaknesses? Weaknesses are opportunities you should plan to take advantage of. What are their basic objectives?
Do they seek to gain market share? Do they attempt to capture premium clients? See your industry through their eyes. What are they trying to achieve? What marketing strategies do they use? Look at their advertising, public relations, etc.
How can you take market share away from their business? How will they respond when you enter the market? While these questions may seem like a lot of work to answer, in reality the process should be fairly easy.Each free business plan template is available in Microsoft Word (DOC) format, and many of the Business Plan Forms are available in Excel (XLS) format as well.
Just choose a business plan template and download it. How to Write a Great Business Plan: Competitive Analysis. The Competitive Analysis section of your business plan is devoted to analyzing your For example, if .
The market analysis section of your business plan comes after the products and services section and should provide a detailed overview of the industry you intend to sell your product or service in, including statistics to support your claims.
When you're writing the business plan, you'll write the competitor analysis section in the form of several paragraphs. Aug 13, · Business plans should incorporate a section addressing the competitive analysis.
Business Plan Pro by Palo Alto Software is one example of how the competitive analysis is integrated into the plan. This information and perspective is then used to build a more comprehensive competitive business strategy/5(4).
Including a competitor analysis in your business plan, for example, shows investors that you are aware of the competition, that you understand your marketplace and that you have plans in place to compete at the same level as established competitors.