Today we will be going over Part I of preparing the competitive analysis section of the business plan. However, compared to the Executive Summary, Industry Overview, and Market Analysis sections of the business plan, the Competitive analysis section is probably one of the hardest. We will discuss how to gather information on your local/out of town competitors, as well as how they promote their product, sell their product, and treat their customers.

Part 1: Preparing the Competitive Analysis of The Business Plan
The Competitive Analysis part of the business plan is considered to be one of the toughest to prepare. This is because you have to investigate your competitors before you can analyze them.

The first step in preparing a competitive analysis section is to find out who your competitors are. If you plan on opening up a business locally, this won’t be hard. You can just roam around and look in the phone book. If you were planning on opening up a bakery, the only question you would need answered is: How far will people drive to get fresh bread, etc.?

However, if you plan on selling supplements like my brother and I, you have to look at the wide spectrum of things, such as the non-local competitors. We have to look at the big retailers within a driving distance as well as mail order companies, and companies that offer supplements online.

The main goal is to identify all your possible competitors, either it being in your category or related.

Secondly, you need to gather information about your competitions, which you will need for your competitive analysis. You may be able to approach your competitors directly, but they may not be willing to give up any answers or tell you how to put together this section of your business plan.

You need to know the following:

  1. What markets or market segments your competitors serve?
  2. What benefits your competitions offers?
  3. Why customers buy from them?
  4. What kind of service do they provide?
  5. What kind of pricing are their products at?
  6. How do they promote their product?

Gathering information on Competitors
Making a visit to your local competitor is the most obvious starting point – either it being a bakery, supplement store, or online website. You can learn a lot about what they are selling, how they are selling their product, and their services. You can even find out how they are promoting their products. Go to these places a couple times a week and observe how their customers are being treated, check out if prices change, and maybe you can pick up why people buy from them.

Another good source and way to gather information about your competitor is to talk to that company’s vendors or suppliers, and employees. They may or may not talk to you, but it’s worth a try.

Also watch out for trade shows that your competitors are attending. Businesses are there to advertise information about and sell their products or services. By visiting their booths you may be able to find out an array of information about your competitors.

Try searching for publicly available information as well. Such as newspapers, magazines, and online publications about the company you’re gathering information on for your competitive analysis.

Once you have gathered the information about all your competitors, you are finally ready to analyze it. Tomorrow I will be talking about part 2 of the competitive analysis and give tips and instructions for analyzing your competition.

Part 1: The Competitive Analysis Section of The Business Plan
Part 2: The Competitive Analysis Section of The Business Plan

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