The Competitive Environment In Your Business Plan
Author : Dee Power
Every product or company has competitors. DO NOT state that your company or product has no competitors. Even if your product is groundbreaking, there is always competition for the dollars spent by your customers with your competitors. Not knowing who your competition is, or stating you have no competition is a common and critical mistake. Every product has competition. These competitors need to be specifically named and described.
The Competitive Environment of your business plan should include:
General Discussion of the Competition
Sustainable Competitive Advantage
Barriers to Entry
Direct Competitors’ Analysis
General Discussion of the Competition
Is the market dominated by two or three major companies, think soft drinks, Coke and Pepsi? A few major competitors and then hundreds of smaller companies, think Salsa, there’s Ortega and then lots of regional brands? Or very fragmented with no one company dominating, like the dry cleaning industry?
Sustainable Competitive Advantage
What is your sustainable competitive advantage, those characteristics that will allow your company to succeed? What does your company have that the competitors don’t? Define this advantage in one paragraph. If you can’t define your company’s sustainable competitive advantage in one paragraph then you don’t know what it is.
Barriers to Entry
What barriers to entry are there? How difficult will it be for new competitors to enter your market?
Barriers to entry can include first to market advantage, uniqueness of your product, customer retention and loyalty, licensing requirements, patents, or intellectual property.
Where do you find out about your competition?
Thomas Registry http://www.thomasregistry.com of American Manufacturers is sort of a huge national yellow pages for businesses. It is not a comprehensive listing of every company that provides a product or service. To be included requires an advertising fee, but it does give you a good idea of the general competitive level in your product category.
Ward’s Million Dollar company lists companies with a minimum of $1 million in revenues by SIC code and then by state.
Directory of Corporate Affiliations lists both parent companies and their subsidiaries.
Standard & Poor’s Register of Corporations
If your competitors are public companies check their annual reports.
Market research firms will do an extensive amount of competitive analysis but of course you have to pay them.
Publications: trade publications, industry publications, The Wall Street Journal, Newsweek, Business Week, Entrepreneur,, Inc. magazines, local business papers will all profile the major players in an industry or in a geographic location in the case of a local paper. People love to talk about their company and will often divulge sensitive information to reporters.
And, of course, the world wide web and search engines. If your company is web based, search under key words that you’ve used for your search engine optimization and see what competitors pop up. Amazon.com and Ebay are both good resources to see what’s selling and who is selling it. If you provide an informational product, go to sites like clickbank dot com and paydocom dot com and research their marketplaces for top selling products.
Dee Power is the author of several business books and ‘Business Plan Basics,’ on how to start a business. Her company’s website provides business experts and small business finance resources to entrepreneurs looking for capital.