While completing your business plan you will come across a section known as competitive analysis. In this area, you will point out whom or what constitutes your competition. Included will be weaknesses and strengths of said competition as well as how you are going to do better than the competition.
Some companies make the mistake of thinking there is no competition because they are so unique in what they are offering. If this sounds familiar, you must understand the potential investors will look at any action or service that can fill the same need you do for your customer as competition.
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Any business that states they have no competition will look foolish in front of investors. If you are facing a rare case where there actually is no competition this implies that the niche industry you are in is too small which means so are the profits.
Bottom line, businesses that say there is no competitors out there do not get funds!
The flip side to this is a business that has a great deal of competition. This could mean your company will hit blocks to gaining any type of sizable market share.
You guessed, this also means no funds.
This is what is referred to as the ΓÇ£competition dilemmaΓÇ¥ and it can seem very tricky. Be tricky in return, outside the competition analysis.
Deal with the competition dilemma with the customer analysis. In addition to customer profiles, psychographics and demographics, which should be as specific as possible, your customer analysis will highlight the needs of your consumers.
As you can see from above the essence of competition is need. You are attempting to fill the needs of customers with your service or product and do it well enough that people will part with money to acquire it.
Include research that shows various figures in your customer’s analysis, such as:
- How many people would purchase a service or product like yours
- How many people have purchase products and services like yours; and
- What these numbers mean
You have just stopped the tricky question in it tracks and nips the competition dilemma in the bud.
First, show you understand the market with the customer analysis. Now explain about indirect and direct competition and how you will overcome it all in the competitive analysis.
You absolutely have a point there, I have never imagined it like it like that before. You make it sound so compelling. I am going to have to look up this more!