Creating the Competitive Analysis Section of a Business Plan

Business is competitive by nature, and to succeed, it is vital that you research, understand, and evaluate your competition. This section of the business plan provides investors with a clear understanding of what market share you can realistically gain. In addition, it allows you to best determine

what you require to gain a competitive edge. Using available data, and even visiting competitors in person, you can learn how your competitors conduct business, price their merchandise or services, and manage their businesses.

The strengths, weaknesses, and details of the most direct and indirect competition should be included in this section of your business plan. Without being disparaging toward any other business, you should then describe exactly how your business will differ and present alternatives to that which your competition is currently offering.

While putting together the competitive analysis, ask yourself:

What are my competitors doing that I can learn from?

What are their strengths and weaknesses?

What could I do better?

How can I present similar products or services in a distinctive manner?

What section of the market (if any) are they not capturing?

How are they marketing themselves?

The reader should see a clear distinction between the competition and what you hope to achieve from your business. Naturally, the more crowded the marketplace, the more creativity will be required on your part. You may need to find a niche market that will allow you to compete against a more established business. For example, several privately owned bookstores have succeeded against competition from larger superstores by appealing to niche markets, such as targeting a store, along with special services and activities, to science fiction and occult readers.

Your plans to gain a competitive edge are very significant to prospective investors.