How to Write the Competitive Analysis
The competitive analysis portion of your business plan gives an in-depth look at the companies within your industry that currently compete with you for business or could compete with you in the future. Competition is not limited simply to companies that offer the same products or services as you—it includes any company that meets the same need or solves the same problem regardless of technique. Once you’ve identified the competition, the next step is to monitor them and learn from them. Your success in the marketplace will depend upon your ability to communicate how you are different.
Table of Contents
Typical Competitive Analysis Content
- List of major competitors
- Market share
- Relative strengths and weaknesses (features, location, service, and price)
- Barriers to entry
- Future competition
- SWOT analysis (strengths, weaknesses, opportunities, and threats)
What You Need to Get Started
- Competitors’ press releases and other marketing materials
- Industry research
- Trade journal articles
Competitive Analysis Tips
- Cast a wide net: Be sure to include indirect competition—companies that offer a different product to meet the same need that your product fills—in your analysis. If you sell children’s bicycles, for instance, consider not only other bike retailers but also sellers of inline skates, because both meet kids’ need for speed.
- Think creatively: Price is often the worst basis for differentiating yourself from your competition, because when you win, you don’t win much. Rather than rely on low prices alone, consider the features, services, and conveniences that set you apart.
- Show, don’t tell: Illustrate your competitive advantages with concrete examples. For example, rather than simply claim that customers prefer your cola, cite blind taste-test results or a survey conducted by a credible third party.
- Take the competition seriously: The purpose of your business plan is to position you well to compete. Don’t cheat yourself by failing to take the competition seriously. Identify competitive threats early and keep tabs on them continually.