When starting up a business, there are various building blocks you need to have in place for a strong foundation. A profitable idea is one, as is procuring the necessary finances to get everything up and running. Another key element is a well-researched, competitive business plan.
For new entrepreneurs, it can be easy to overlook the importance of a business plan. It might seem like a time-consuming, redundant document, particularly if they feel their idea is foolproof and ready to go.
However, there are many reasons to put together a business plan.
Some will simply see it as a gateway to the funding they require from a bank or other financial institution. In reality, a quality business plan supplies an accurate roadmap, one that points you in the right direction across every stage of running and managing a new business.
One such stage is analyzing the competition.
A competitive business plan is a great educational platform for your entrepreneurial adventure. You can learn more about your competitors, the current market opportunity, where your business fits in, and much more. This guide will explain how to create a competitive business plan, including what areas to focus on and which tools are best for gathering and analyzing data.
What is a competitive business plan?
A competitive business plan is about learning the type of competition your prospective business will face. The other businesses that are vying for the same customers.
Never assume you are out there alone and focus on solely your own path, that is a sure way to fail. Every solid business has to deal with some form of competition. You may not experience this directly during your company’s formative months, but it will always be there, dictating everything from sales numbers to the employees you can attract.
By putting together a competitive business plan, you gain a full understanding of the rivals in your sector. These rivals can take on various forms. For example, a new Italian restaurant could see their main competitor being the long-established pizza joint down the road. An online retail business, however, may be up against multinational organizations, including the likes of Amazon.
The knowledge gained by analyzing the competition assists with constructing a marketing sales strategy. It makes it possible to define how your business will fit into your chosen industry, including available opportunities and how to gain a competitive advantage.
Dive deep enough, and you will also discover the products and services your customer base enjoys, those they avoid, and the types of features they desire in future releases.
How do you identify competitors?
You cannot create a competitive business plan without knowing your competitors, that part is obvious. What is less obvious is how to identify the competitors you need to focus on.
When operating online, your planned business could be up against a wide assortment of competitors. It is not just local entities that might be on your radar, it may also be national or even global enterprises you are fighting for a market share. A small company might be battling against hundreds, possibly even thousands of competitors.
If you are in that position, trying to analyze all of these is, well, pretty much impossible for a newcomer to the market with minimal resources. Not only that, but it is also not necessary for a competitive business plan.
With that in mind, it is recommended you place the spotlight on 5-10 relevant competitors, both direct and indirect, to produce an accurate, diverse analysis.
What makes a competitor relevant? Of course, they need to operate in the same sector, yet they should also offer similar products and services to what you plan to feature.
With the power of the internet, finding competitors is a breeze. Simply head to Google or Amazon, input keywords that represent your product/service, and see which organizations appear at the top of the search results. These will typically be your main competitors, and not just from a search engine optimization (SEO) point of view!
What do you include in a competitive business plan?
You have found a major competitor. They sell products and services that are similar – or even identical – to what you will offer. Yet, simply comparing this aspect is only one step in truly analyzing the competition. You also must focus on elements such as:
- Estimated market share, including sales numbers and revenue.
- The target market you are focusing on.
- Price comparison between your products/services and the competition.
- Customer reviews rivals have received.
- Marketing strategies used by competitors.
Covering aspects like these are essential for getting the most out of your business plan.
Take a product price comparison. If your competitors are, by and large, selling a similar product at a much lower price than you envisioned, you have a few points to consider. Does your product have the added quality to justify the bump in price?
In terms of researching the marketing strategies your competitors use, this can help save your business a lot of time, effort, and finances. You are able to discover the promotional channels that are effective, the ones to put on the back burner, and those which are ripe for experimentation.
The steps to creating your competitive business plan.
You know what a competitive business plan is, how to find competitors, and the type of information to include in this document. However, ample work is necessary to craft a high-quality, effective competitive business plan that will help your company both in the present and future.
To make it a reality, here are the steps you need to take to produce a competitive business plan:
1. Overview of your competitors.
As mentioned above, it is recommended to cover up to ten relevant competitors for your business plan. As well as direct and indirect competitors, a mixture of long-established organizations and fellow startups is advised for a truly diversified analysis.
As the title of this section suggests, it should not delve too deep into the details of each business. This is only an overview of each competitor – the hard work is done later on in the process.
2. Market research.
Now it is time to put in the effort that will ultimately make your competitive business plan worthwhile. In-depth market research comprises numerous components. You need a healthy combination of primary and secondary research. Then with all the information and data collected, this has to be combined and measured accurately.
As for primary market research methods, try out the following:
- Sample the products and services of your competitors
- Perform in-person focus groups
- Get customers to complete an online survey
- Interview customers to gain more insight into their experience
Secondary market research methods can cover the following:
- A study of company records
- Assess the content and structure of competitor websites
- Identify technology and trend developments in your industry
- Factor in the current economic situation
- Read customer reviews
It is true: market research is not something you can do successfully with minimal effort and in just an hour or two. With that said, various tools can help make the task a much more straightforward – and ultimately effective – one. Here are some of our recommendations:
GapScout: It is not all about looking at star ratings. The analysis of customer reviews can reveal a goldmine of information about a company’s products and services. However, discovering the gold within these reviews is time-consuming and tricky. GapScout is the solution.
Our tool, thanks to its specialist AI technology, accelerates the process considerably. It also can identify specific trends, ensuring it uncovers all the valuable data pertaining to a competitor’s product or service.
SEMrush: There are many search engine analysis tools available. One of the best, however, is SEMrush. This can be vital for obtaining SEO-related information like the keywords they use, the backlinks they have pointing back to their website, their most popular web pages, and much more. With this information, you can strengthen your marketing efforts.
SurveyMonkey: If you are on the search for an online survey tool, one of the most popular is SurveyMonkey, and for good reason. With SurveyMonkey, you can create surveys with ease and send these to customers. Once customers complete these surveys, all the data is collated in an easy-to-consume way.
Google Trends: Again, there are countless tools available for discovering the latest trends. Yet if you desire something that combines effectiveness with a price tag that does not go beyond 0, Google Trends is a no-brainer. This free tool allows you to effortlessly find out what users are currently searching for in your industry or topic of choice.
3. Compare and assess.
You have a general viewpoint of the products and services that are offered by the competition. Yet, you cannot simply take a broad approach with such a key element. You need to delve deeper, learning more about each feature and how this compares against what you offer.
With a product, here are the aspects to keep in mind:
- The value it offers
- Number of features
- Ease of use
- Product age range
- Style and design
- Customer support offered
You may not necessarily have to go through all of the above points. You can abbreviate and zone in on the most important features for your competitive business plan. Key aspects are price, features, and overall quality.
It is not just the products or services you want to compare. Another essential factor for any business is marketing, and you should analyze your competitor’s marketing efforts. This includes evaluating their social media, paid ads, email campaigns, product sales copy, and website content.
Again, you want to avoid just a surface analysis of these marketing efforts. You have to dig deep into the promotional strategies of your competitors, answering questions such as these:
- What value are these marketing strategies providing to customers?
- What brand voice are they using?
- What story are they telling with their marketing materials?
- What is the overall mission of the company?
- How successful are they in currently achieving this mission?
4. Perform a SWOT analysis.
The nature of a competitive business plan is to study and gather information about your competitors. Nevertheless, you should never lose focus or forget that the plan is built around your business.
This is why a SWOT – Strengths, Weaknesses, Opportunities, and Threats – analysis should be part of your business plan.
With a SWOT analysis, you can uncover your strengths and weaknesses, assess threats, discover possible market gaps, turn any weaknesses into potential opportunities, and more.
Ultimately, it supplies you with a different viewpoint to evaluate your business, giving you additional points to fine-tune your business plan.
The good news: the research you conducted in the previous steps will help significantly with your SWOT analysis.
5. Understand your competitive position.
With all the work done for your competitive business plan so far, it is time to figure out exactly how your company stacks up against the rest. This is done by understanding your competitive position.
Understanding your position in the competitive landscape gives your business the launch pad to carve out a presence within your target market. This is because it helps you to identify:
- The distinctive differences that make your business different from the rest.
- How you can take advantage of these differences to stand out.
- Your strengths and weaknesses, and how you will work towards the former and hide away the latter.
- The general approach of your business, along with how this will appear to the world.
Position yourself behind a competitor, and you will fail to stand out – which means a lot of lost attention and sales. By recognizing what your business does better than those rivals, you have a selling point, something that will get potential customers to stand up and take notice.
Creating a competitive business plan demands a lot of effort on your part. That effort, however, is rewarded in numerous ways. You learn about the competition, you understand what makes them tick, and you can use this information to improve your company’s own standing and long-term future.
A competitive business plan is the best way forward if you want to be successful.
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