You need to include as much as you can in competitive analysis

I am currently writing a business plan for my start-up, but I am stuck on a point that has been weakly hit on by all of the business plan books.

How should I address the competition in an effective business plan?

What information about the competition should I provide?

Question posted by Bplans User (488 points) 6 years ago. Answers: 1



Everything. Completely.

If you are a start-up, they own the market and you own zip. Therefore, you have to talk about what they have done in the market. Their strengths and their weaknesses. Unless your market is growing significantly, you will have to identify how you can carve off your piece of the pie in the face of well established competition by working around their strengths and capitalizing on their weaknesses.

Practically speaking, list all of the competition by name. Describe their market position and approach, their lines, organization, etc. Do this for each competitor, but don't be critical or judgmental here.

When you describe your market penetration plans in your marketing strategy section, focus your planned activity against a composite competitor, without listing them by name. List your own strengths and weaknesses against the composite. You might have more than one composite, such as large competitors, small ones, etc.

One thing to remember: If your plan to beat the competition is to out-price them, kiss your business goodbye right now. Remember, you are a start-up; they know how much it costs to deliver a product and keep the doors open year after year. I guarantee they know more about pricing than you do. And if you've ever said, "I can beat those guys because I think their prices are too high," start kissing.

I'm not saying it's never happened, but your chances of opening up as the price leader and sustaining that position are about like the chances of a waxed dog chasing an asbestos cat though hell.

The road to business bankruptcy is paved with the home equity, retirement funds, and jewelry of people who started their business thinking they were going to be the price leader.

Good luck and let us know if there is anything else we can do for you.

Jim Blasingame

Answer posted by Palo Alto Software (186 points) 6 years ago