10 Questions to Ask When Writing a Business Plan Competitive Analysis
The key to a competitive analysis is to differentiate yourself from your competition with a strength, or several strengths, that will attract customers. You need to explain your strategy to potential clients in order to gain a competitive edge.
Because there is often a lot of competition from well-established, respected businesses, it can be hard to carve your own niche. That’s why it's better to determine this while doing your competitive analysis rather than after you’ve spent a great deal of time and money on a business that cannot gain a competitive share of the market.
These questions will help you identify the strengths and weaknesses of your competitors and determine how they operate their businesses:
- Have you thoroughly listed all of your direct and indirect competitors? Missing a major player in the industry can reflect poorly on your business plan.
- Have you done your homework and gathered accurate facts and figures on your competitors? Don’t be afraid to show strong competition. You can learn from what your competition is doing.
- What are the strengths and weaknesses of your competitors? Include both in your competitive analysis. Remember, their weaknesses may be your strengths.
- What target markets are your competitors reaching? What will it take for you to be able to reach those markets as well?
- Is there a segment of the market that your competitors are overlooking? This could provide a potential niche market for you.
- Are there services that your competitors are not providing for their customers that you could provide?
- How much of a market share can you anticipate? How quickly can you get there? Be realistic; overreaching can create cash-flow problems fast.
- Are you pricing goods or services competitively in regard to your competition? Make sure to explain why you are able to price higher or lower than your competition. Undercutting competition with price is not always favorable.
- Do you have the finances required to build a business in a competitive market? The more competition you have, the longer it may take to become established in the market.
- What is your competitive advantage?
Read 12 Tips for Doing Competitive Analysis.
