The Competitive Analysis section of your business plan provides an overview of the competition in your market. This section should help readers understand the strengths and weaknesses of your competitors and how your business will differentiate itself.
Why Competitive Analysis is Important in Business Plan?
The Competitive Analysis is important because it helps you understand your competitors and to develop strategies to differentiate your business and gain market share.
What to Include in Competitive Analysis
Before we jump in to the next section. You can download free business plan examples written by our professionals to see how we have written the competitive analysis in business plan. Here are some key components to include in your Competitive Analysis,
Competitor Overview:
Identify your main competitors including direct and indirect competitors, describe their products or services, market position, and target customers.
Direct & Indirect Competitors Example
Direct competitors:
- Pepsi and Coca-Cola are direct competitors in the soft drink industry.
- Nike and Adidas are direct competitors in the athletic shoe market.
- Apple and Samsung are direct competitors in the smartphone market.
Indirect competitors:
- A fine dining restaurant may have indirect competition from fast food chains.
- A high-end spa may have indirect competition from at-home spa products.
- A movie theater may have indirect competition from streaming services like Netflix.
Competitive Advantage:
Identify the strengths and weaknesses of your competitors and explain how your business will differentiate itself. This includes your unique value proposition, pricing strategy, and marketing approach.
Market Share:
Estimate the market share of each competitor and explain how you will gain market share. This includes your sales strategy, customer acquisition tactics, and promotional efforts.
Barriers to Entry:
Identify the barriers to entry in your industry, such as high capital costs, regulatory requirements, or proprietary technology. Explain how your business will overcome these barriers and establish a competitive advantage.
SWOT Analysis:
The SWOT Analysis component of the Competitive Analysis assesses the strengths, weaknesses, opportunities, and threats facing the business in relation to its competitors. This analysis should include an evaluation of the business’s internal strengths and weaknesses, as well as an analysis of external factors such as market trends, regulatory changes, and competition.
Risk Analysis:
The Risk Analysis component of the Competitive Analysis identifies potential risks and challenges that may impact the business’s ability to achieve its marketing goals. This includes an evaluation of financial risks, such as changes in market conditions or unexpected expenses, as well as non-financial risks such as reputational damage, supply chain disruptions, or legal and regulatory risks.
Miles stones
The milestones section in the competitive analysis of your business plan outlines the major goals and achievements that your business hopes to reach over a specific period.
The milestones section should include a clear timeline with specific, measurable objectives that will allow the business to track its progress towards achieving its goals. Some examples of milestones could include:
- Opening a new store or location
- Launching a new product or service
- Reaching a specific sales target
- Hiring key staff members or building out a team
- Implementing new technology or systems
- Obtaining regulatory approval or certification
Overall, the milestones section provides a roadmap for the business’s success, helping to ensure that it stays on track and achieves its objectives.
