In Business Planning, Competition is Good

When developing the competition section of your business plan, companies must define competition correctly, select the appropriate competitors to analyze, and explain its competitive advantages.

To start, companies must align their definition of competition with investors. Investors define competition as any service or product that a customer can use to fulfill the same need(s) as the company fulfills. This includes firms that offer similar products, substitute products and other customer options (such as performing the service or building the product themselves). Under this broad definition, any business plan that claims there are no competitors greatly undermines the credibility of the management team.

In identifying competitors, companies often find themselves in a difficult position. On one hand, they want to show that they are unique (even under the investors' broad definition) and list no or few competitors. However, this has a negative connotation. If no or few companies are in a market space, it implies that there may not be a large enough customer need to support the company's products and/or services.

Business plans must detail direct and, when applicable, indirect competitors. Direct competitors are those that serve the same target market with similar products and services. Indirect competitors are those that serve the same target market with different products and services, or a different target market with similar products and services.

After identifying competitors, the business plan must describe them. In doing so, the plan must also objectively analyze each competitor's strengths and weaknesses and the key drivers of competitive differentiation in the marketplace.

Perhaps most importantly, the competition section must describe the company's competitive advantages over the other firms, and ideally how the company's business model creates barriers to entry. "Barriers to entry" are reasons why customers will not leave once acquired.

In summary, too many business plans want to show how unique their venture is and, as such, list no or few competitors. However, this often has a negative connotation. If no or few companies are in a market space, it implies that there may not be a large enough customer need to support the venture's products and/or services. In fact, when positioned properly, including successful and/or public companies in a competitive space can be a positive sign since it implies that the market size is big. It also gives investors the assurance that if management executes well, the venture has substantial profit and liquidity potential.

Since its inception, Growthink Business Plans has developed over 200 business plans. Growthink clients have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. Growthink has become the firm of choice for venture capital firms, angel investors, corporations and entrepreneurs in the know. For more information please visit http://www.growthink.com

---

Top Reasons To Form A Strategic Business Alliance

A strategic alliance is when two or more businesses join... Read More

Site Selection and Demographic Tips for Establishing Outlets

Many cities have home pages on the Internet. Many of... Read More

Cost-cutting Essential to Maintaining Profits

Why cut costs now? Efforts are multiplying to cut costs... Read More

Strategic Acquisition Strategies for Small Businesses

Growth through acquisition should not be considered an option reserved... Read More

Urban Flight in Ohio

Many of Ohio's downtown areas are in need of upgrading... Read More

8 Ways to Earn More Without Working Harder

Conventional wisdom has it that there are only three ways... Read More

College Students and Graduates to Run Company Outlets or Franchises

Does your overall business strategy include the recruitment of college... Read More

Mobile Franchise Business Expansion Strategy

If you own a mobile franchise business and wish to... Read More

Rules to Setting Business Goals and Objectives: Why and How to be SMART

We all know that nothing runs without a plan, and... Read More

The Impact of Price Popularity on Profits

The goal of almost every business owner is to generate... Read More

The 7 Critical Steps to Formulating Your Annual Strategic Business Plan

Businesses tend to avoid doing their annual business plan thinking... Read More

Corporate Venturing For Emerging Growth Companies

The boom of the dot-com era in 1999 brought the... Read More

Why Six Sigma Will Work in Healthcare

If ever there were an industry where we want zero... Read More

Mining Market Data

With a heightened awareness of opportunity, ideas can often be... Read More

3 Undercover Ways to Make Big Profits from Your Competition

You have heard that there is extra money on the... Read More

Six Key Areas For Evaluating A Strategic Alliance

Strategic alliances are increasing at a rapid rate. It is... Read More

Getting Started with Succession Planning: Part II

Succession planning requires the owner of a small or medium-sized... Read More

Regroup - How To Do It And Why It Works

Regroup?is this a new management trend? Not a chance! Regroup... Read More

Abstract Thought; Business Strategies and Biological Systems

To stop a computer virus you must understand how it... Read More

How to Achieve E-commerce Success ?You Gotta Plan!

Before becoming a netpreneaur, I was an entrepreneur. First, I... Read More

Home Improvement Construction Project Planning

The first task before hiring a contractor for home remodeling... Read More

More Uses for Your Business Plan

You have invested a lot of time and energy on... Read More

Top Ten Reasons To Create A One Page Business Plan

There is a story, about a business owner who wasn't... Read More

Fail to plan... or Plan to FAIL??

Running a business, whether it be an offline multi-billion dollar... Read More

If You Dont Focus, Innovate and Evolve, You Die

After 128 years of business, a household word, Montgomery Wards,... Read More

Is Your Company Growing Fast Enough for You?

Are you frustrated by the lack of growth in your... Read More

TQM Total Quality Management, the book

Every decade we seem to come up with a buzz-word... Read More

Microsoft Great Plains Implementation: Healthcare/Hospital example ? overview for consultant

Microsoft Great Plains fits multiple services market niche and healthcare... Read More

Going Self-Employed ? A Few Handy Hints

The day you decide to take the plunge and work... Read More

Microsoft Great Plains in Agriculture ? implementation highlights

In this small article we'll concentrate on farmers associations and... Read More

A Backup To The Internet Is Vital & Now Cost Effective

It doesn't take a Terrorist Act, Tsunami or Earthquake to... Read More

ERP Role in Selling Your Mid-size Business ? Microsoft Great Plains and CRM Example

If you own the mid-size business and actively work in... Read More

Thinking Like A Farmer

One of the difficulties we face in our industrialized age... Read More