What You Need to Know About Competitive Analysis for Your Business Plan

As you draft your business plan, you'll quickly learn that learning as much as possible about the competition is a crucial element to your growth strategy. Whether it's marketing, pricing, business organization, or even just the launch, understanding who and where your competitors are will help you develop your blueprint for success.

The competitive analysis section of the business plan is where you'll be reporting all the data and compiling research. This information will help potential investors understand why your business will succeed, and will also show any reader of your plan how well you can strategize. The main question to ask yourself as you write the competitive analysis section, is really what will make you stand out from your competition?

Many small businesses do not identify their unique selling proposition right away, avoiding it until the very end. This is a mistake, since you may find yourself creating and developing a product or service that is already saturated within your market. Competitive analysis may open your eyes to this in the early stages of development, so it's best to be as precise as possible. Finding your niche, establishing the identity, and really searching for similar competition is the best way to start getting the competitive analysis portion of the business plan together.

After identifying what makes your business unique, you'll need to start research. This will usually involve a lot of online market research, and you may work with a small market research company to find out about leading companies and brands in your industry. The key questions to ask are:

• Is there a company providing similar or replicated products and services?
• If my product or service is already on the market, what are the price ranges?
• What will my business need to present in order to stay competitive?
• Who specifically is my competition? Is it another small business? A group of well-established small business? Or, one larger corporate entity in my market?
• Can I find published facts and figures about my competition's market penetration?

Compiling this information is often the most difficult part of competitive analysis research, and you will need to set aside at least a solid couple of weeks to get some rich data. Many companies publish their statistics on the web, especially if they are exclusively online. It can be helpul to request media and press kits for pricing, as well as reviewing press releases for product reports and other consumer news. ‘Doing your homework' on your competitors is essential, but it's easy to fall into the trap of getting too much information. Heading to the research library or online database too soon will more than likely leave you confused and with far too much information on your hands. Outline the questions you need answered first, and then go ahead answering them.

After you've answered these questions, you'll be able to set some goals for your own business and really see what it will take for you to reach the top of the market. The first part of the competitive analysis will simply summarize your findings, and will highlight your major competitors. The second part of the competitive analysis will provide more details for the reader, and possibly include your strategies for developing the market for your small business.

Your competitive analysis is complete with a little organization and clearly defined steps for your competitive strategy. Remember that the goal of this section is to provide the reader with information on your market potential. . .and future success!