What products and companies will compete with you?
List your major competitors with names and addresses:
Do they compete across the board with your entire business, or just for select products, customers, or only in certain locations?
Are there any important indirect competitors? (For instance, personal chefs compete with restaurants, even though they are different businesses entirely.)
How do your products or services compare with your competitions?
Below is a Competitive Analysis table. Use the table to compare your company with the two most important competitors to your business. In the first column of the table, there are some standard competitive factors; of course you may need to customize the list of factors for your unique business.
In the column labeled My Business, evaluate how your business compares to your competitor’s to your prospective customer. Then consider whether each of these factors are strengths or weaknesses to your business. It may be difficult to evaluate your own business weaknesses but it’s better to be honest than misguided. Another option is to consider asking someone outside of your business to help you with the evaluation. The Small Business Administration can help you connect with a business professional to act as your mentor. That person can add invaluable insight into the business planning process. A neutral observer can help you evaluate your business without the emotional attachment you bring to the picture.
Next, use the table to analyze each of your competitors. Briefly sum up how they compare to your business.
Finally, think of how your customer will view these factors – how important is each of the criteria to the customer with 1 being critical and 5 being unimportant.
Table 1: Competitive Analysis
Sum up the results of the table with a few brief paragraphs that state as completely as possible your competitive advantages and disadvantages.
After you’ve completed your analysis of the overall industry, and specifically your products and customers, narrow your focus. Describe how your business addresses a particular niche – a unique part of the market or industry.
Describe how you plan to utilize a marketing strategy.
How will you promote your business, products or services? How will you get your customer’s attention?
Advertising: What type of media will you use and how often? Why did you select this media over other methods?
How will you maximize your promotional budget? Have you evaluated whether this is the lowest cost method versus the most effect method?
Do you plan to use other advertising venues, such as referrals, word of mouth, trade shows, dealer incentives, and catalogs? How will you find these other methods, what is the cost associated with them?
What image do you want your business to project to your customers?
What other promotional materials will you need? Do you need to have these materials created by a third-party, such as logo creations by a graphic artist. Other promotional materials may include business cards, letterhead, brochures, newsletters, store signage, even interior design to a facility.
How much should you budget for the promotional items? Break your budget into two categories, the promotional materials you’ll purchase prior to the business starting and the ongoing materials needed.
Explain how you determined your pricing structure for your goods or services. You can’t always price your goods lower than the competition (if you expect to make any money). So how do you determine if your prices are competitive and in-line with what the customer will tolerate? Are you competitive with customer service, quality of goods or services, how does your prices compare to the competition?
Consider your competitive analysis table – how does the pricing strategy fit into the competitive analysis? Does it create advantages or disadvantages when compared to your competition?
Are your customers sensitive to pricing policies – does it effect their buying decisions?
What are your policies for customer service and extending credit?
If your business is just starting up, you may not have a location selected already. This is a great time to consider possible locations and evaluate which will best suit your needs. Some businesses are able to start out of a home; others require a retail space, a small office space, or a machine shop.
The Operational Plan section of the business plan is where you describe your physical needs. In this sections, describe how your location will affect your customers.
Will your customers come to your location? Is your location important to you customer?
Is the location convenient to your customer?
Do you offer parking spaces for customers?
Is the location consistent with your image?
Does the location provide what customers want and meet their expectations?
Are you located near by competition? Is it better for you to be near them (like car dealers or fast-food restaurants) or distant (like convenience-food stores)?
How will you sell your products or services?
- Direct (mail order, Web, catalog)
- Through your own dedicated sales force
- Through third party agents
- Independent representatives
- Bid on contracts
Once you’ve completed a detailed description of your products, services, customers, markets, and marketing plans, you need to provide the numbers to support your plan. Include a sales forecast spreadsheet to prepare a month-by-month projection. Your forecast should be based on your research into sales forecasts, your marketing strategies, your market research, and industry data, if available.
Your forecast should include two sets of numbers 1) a “best guess”, which is what you really expect, and 2) a “worst case” low estimate that you are confident you can reach no matter what happens.
Keep all your notes on research and assumptions. You’ll use these sales forecasts and all subsequent spreadsheets in the plan. You may need your supporting data when you make presentations to funding sources.