How to Write a Business Plan: Competitive Analysis

In the next part of our series on how to write a business plan, we tackle the Competitive Analysis.  The competitive analysis section of the business plan is a statement of the business strategy and how it relates to the competition.   The purpose of this section is to determine the strengths and weaknesses of your competitors within your market, how you will create an advantage, any barriers within your market, and any weaknesses that can be exploited within the product development cycle.

 

The primary goal of the competitive analysis is to identify your business’s current and potential competition within the market.   This section is important because it breaks down your customers by answering key questions that you will need to know to start your own business.  Below I have provided a list of questions that we use to help write the section to ensure that we have identified a given business’s competitors when writing the competitive analysis.

 

Who are the top three competitors for your business?

You have to know what you are up against in your market.  Investors want to see that you have done your homework and have identified any potential competitors for your company.

 

What are your competitors’ market strategies?

Is it working for them?  With the right marketing strategies at your disposal and research of your competitor’s strategies, you can save time developing your own marketing strategy and dominate your market.

 

What are your competitors’ channels of distribution?

You need to know how your competitors distribute their products and services, any weaknesses or strengths within their method and how you plan to distribute your products or services.

 

How can you improve upon your competitors’ product offerings

You need a clear plan on how you plan to provide a better product or service than your competitor.  It is why you are writing the plan in the first place.  How can you do things better or what is missing from their current product offering that you can do better?

 

How are your competitors competing?

By being able to identify how each competing business is doing within your market, you will be able to pick the strengths from competitors and implement some of their practices in your business endeavor.  By locating competitive advantages and disadvantages of the businesses competing in your market, you will be able to build the best model for your business to succeed.

 

Establish a market share goal

You need to establish a realistic market share goal for your business.  What share do your competitors currently hold in the market?  By clearly defining a market share goal, it provides investors with how much market you intend to capture and how long it will take.

 

How will you develop your pricing strategy?

You should know what each of your competitors are charging for their products and services.  By knowing this information, how will you create your pricing strategy to compete?  Will you be the low cost provider or will the product be at a premium because it is of higher “quality?”

 

The competitive analysis section of the business plan can sometimes be overlooked but it is very important that this part of your plan be thorough.  Investors or lenders want to see that you did your homework in identifying your competitors and have provided an analysis of each one and how you plan to compete.  You have presented an idea that you feel could be a successful business but this all depends upon the market that you are trying to enter and the players within the industry.  For the SBA’s breakdown of the Market Analysis and Competitive Analysis sections of the business plan visit here for more info.

 

For all of your needs in starting a small business, contact Coastal Business Strategies for more info.  We help take your “Idea to Implementation!”

 

-Don Pleger

info@cbsplans.com

http://www.cbsplans.com

How to Write a Business Plan: Competitive Analysis

In the next part of our series on how to write a business plan, we tackle the Competitive Analysis.  The competitive analysis section of the business plan is a statement of the business strategy and how it relates to the competition.   The purpose of this section is to determine the strengths and weaknesses of your competitors within your market, how you will create an advantage, any barriers within your market, and any weaknesses that can be exploited within the product development cycle.

 

The primary goal of the competitive analysis is to identify your business’s current and potential competition within the market.   This section is important because it breaks down your customers by answering key questions that you will need to know to start your own business.  Below I have provided a list of questions that we use to help write the section to ensure that we have identified a given business’s competitors when writing the competitive analysis.

 

Who are the top three competitors for your business?

You have to know what you are up against in your market.  Investors want to see that you have done your homework and have identified any potential competitors for your company.

 

What are your competitors’ market strategies?

Is it working for them?  With the right marketing strategies at your disposal and research of your competitor’s strategies, you can save time developing your own marketing strategy and dominate your market.

 

What are your competitors’ channels of distribution?

You need to know how your competitors distribute their products and services, any weaknesses or strengths within their method and how you plan to distribute your products or services.

 

How can you improve upon your competitors’ product offerings

You need a clear plan on how you plan to provide a better product or service than your competitor.  It is why you are writing the plan in the first place.  How can you do things better or what is missing from their current product offering that you can do better?

 

How are your competitors competing?

By being able to identify how each competing business is doing within your market, you will be able to pick the strengths from competitors and implement some of their practices in your business endeavor.  By locating competitive advantages and disadvantages of the businesses competing in your market, you will be able to build the best model for your business to succeed.

 

Establish a market share goal

You need to establish a realistic market share goal for your business.  What share do your competitors currently hold in the market?  By clearly defining a market share goal, it provides investors with how much market you intend to capture and how long it will take.

 

How will you develop your pricing strategy?

You should know what each of your competitors are charging for their products and services.  By knowing this information, how will you create your pricing strategy to compete?  Will you be the low cost provider or will the product be at a premium because it is of higher “quality?”

 

The competitive analysis section of the business plan can sometimes be overlooked but it is very important that this part of your plan be thorough.  Investors or lenders want to see that you did your homework in identifying your competitors and have provided an analysis of each one and how you plan to compete.  You have presented an idea that you feel could be a successful business but this all depends upon the market that you are trying to enter and the players within the industry.  For the SBA’s breakdown of the Market Analysis and Competitive Analysis sections of the business plan visit here for more info.

 

For all of your needs in starting a small business, contact Coastal Business Strategies for more info.  We help take your “Idea to Implementation!”

 

-Don Pleger

info@cbsplans.com

http://www.cbsplans.com

How to Write a Business Plan: Competitive Analysis

In the next part of our series on how to write a business plan, we tackle the Competitive Analysis.  The competitive analysis section of the business plan is a statement of the business strategy and how it relates to the competition.   The purpose of this section is to determine the strengths and weaknesses of your competitors within your market, how you will create an advantage, any barriers within your market, and any weaknesses that can be exploited within the product development cycle.

 

The primary goal of the competitive analysis is to identify your business’s current and potential competition within the market.   This section is important because it breaks down your customers by answering key questions that you will need to know to start your own business.  Below I have provided a list of questions that we use to help write the section to ensure that we have identified a given business’s competitors when writing the competitive analysis.

 

Who are the top three competitors for your business?

You have to know what you are up against in your market.  Investors want to see that you have done your homework and have identified any potential competitors for your company.

 

What are your competitors’ market strategies?

Is it working for them?  With the right marketing strategies at your disposal and research of your competitor’s strategies, you can save time developing your own marketing strategy and dominate your market.

 

What are your competitors’ channels of distribution?

You need to know how your competitors distribute their products and services, any weaknesses or strengths within their method and how you plan to distribute your products or services.

 

How can you improve upon your competitors’ product offerings

You need a clear plan on how you plan to provide a better product or service than your competitor.  It is why you are writing the plan in the first place.  How can you do things better or what is missing from their current product offering that you can do better?

 

How are your competitors competing?

By being able to identify how each competing business is doing within your market, you will be able to pick the strengths from competitors and implement some of their practices in your business endeavor.  By locating competitive advantages and disadvantages of the businesses competing in your market, you will be able to build the best model for your business to succeed.

 

Establish a market share goal

You need to establish a realistic market share goal for your business.  What share do your competitors currently hold in the market?  By clearly defining a market share goal, it provides investors with how much market you intend to capture and how long it will take.

 

How will you develop your pricing strategy?

You should know what each of your competitors are charging for their products and services.  By knowing this information, how will you create your pricing strategy to compete?  Will you be the low cost provider or will the product be at a premium because it is of higher “quality?”

 

The competitive analysis section of the business plan can sometimes be overlooked but it is very important that this part of your plan be thorough.  Investors or lenders want to see that you did your homework in identifying your competitors and have provided an analysis of each one and how you plan to compete.  You have presented an idea that you feel could be a successful business but this all depends upon the market that you are trying to enter and the players within the industry.  For the SBA’s breakdown of the Market Analysis and Competitive Analysis sections of the business plan visit here for more info.

 

For all of your needs in starting a small business, contact Coastal Business Strategies for more info.  We help take your “Idea to Implementation!”

 

-Don Pleger

info@cbsplans.com

http://www.cbsplans.com

How to Write a Business Plan: Market Analysis

We appreciate everyone who has read through our series on How to Write a Business Plan and we are now on a very important part of the plan, the Market Analysis.   The Market Analysis section of the Business Plan is an assessment of the potential market of the products and services that your business looks to offer.  The Market Analysis can be one of the most time consuming sections of creating a business plan.  The reason for this is that the majority of the plan is found outside the business rather than inside and requires a lot of accurate research on the writer’s behalf.    This information is not easily accessible and a lot of times its outdated.  Finding accurate and up-to-date research to assist you in writing this section is imperative for its accuracy.

We have broken down the Market Analysis section into four main parts:

SWOT Analysis

To begin with, SWOT stands for: Strengths, Weaknesses, Opportunities, and Threats.

Strengths are the parts of your business that give you a competitive advantage over your competitors.  This is where your business excels and goes above and beyond what your current competitors are currently doing.  This is the core of your business and how you plan to compete.

Weaknesses are areas of your business that need improvement.  No business is perfect and competitors will look for weaknesses within your company to take business away from you.  It’s best that you find your weaknesses before they do…

Opportunities and Threats are outside influences that can either help or hurt your business.  What conditions or restrictions in your market affect business and how can you take advantage of it? This can also include the economic climate, new laws and regulations, barriers to entry and other limitations that could hinder product innovation.

Target Market/Customer

In order to sell your products, you need to find out who the customers are that will be buying your products.  In this section you need to identify your ideal customer and do extensive research to see how your products or services can appeal more to this particular segment.  What age are they?  Demographic?  Location? Profession?  Income? Education?  Buying patterns?

Competitive Advantage

For me this is single handily one of the main sections that I really push our clients to ponder.  What is your competitive advantage?  You are writing the business plan because you feel that there is a need for your product or service.  An idea is great but how are you going to be able to COMPETE?  What’s in it for your customers to buy from you rather than your competitors?  Finding key benefits of your products and services over competitors will help define your business and will be a key indicator of how successful your business can be.

Competitor Analysis

The old saying “keep your friends close, keep your enemies closer” especially applies in business.  You need to know you competitor’s business inside and out and be ready to answer any questions about their operations and product offering.  How does your product compare to theirs?  Doing in depth research in comparing the quality, price, selection, and any other competitive factors of similar businesses will help you know your competitors thoroughly.  This will not only help you know what you are up against but will also help fuel your marketing efforts.  Listing out several competitors and comparing your products and services to theirs often will lead you to change they way you “envisioned” your business or could also bring new opportunities to your business that you may not have thought of.

The market analysis section can be tricky but with the right research and marketing plan, you will begin to accurately assess your competitive landscape.   As a resource we included the SBA’s definition of the Market Analysis Section of the Business Plan that can be found here. Stay tuned to our business planning series for more help on How to Write a Business Plan.  For free samples, tools and help to launch a small business feel free to contact us!

 

“From Idea to Implementation”

Don Pleger

rpleger@cbsplans.com

NC Business Plans: Writing a Business Plan: Industry Analysis

 

 

 

 

We continue our series on how to write a business plan with one of the toughest sections, the Industry Analysis. Coastal Business Strategies has been a leading North Carolina Business Plan Writer and we find that this section can really throw off entrepreneurs starting a small business. When creating the industry analysis in a business plan, we find that you must be able to explain what type of business you are in, the general state of your industry, the nature of the business, the industry participants, distribution patterns, competition, and the buying patterns within your industry. The more you know about your industry the more you will be able to protect your business and create an advantage. Your business plan must address the forces at work in your industry, trends, growth over time, and how your company fits within the industry.

To accurately assess your industry, you must take a good look at companies providing products and services similar to yours as well as companies providing complementary or supplementary products or services. This is a very important step in starting a small business and will show whom you are up against in offering your products or services. So to be able to write the industry analysis section of the business plan, what questions need to be answered? In the industry analysis, you must be able to provide answers to the following questions:

• What is the size of your industry by both size and number of firms?
• What are the characteristics of your industry such as growth trends, units sold, or employment?
• What factors are influencing growth or decline in your industry?
• What have been common trends in your industry in previous years?
• What trends/growth are expected in the coming years?
• What are the barriers of entry for your industry (SWOT Analysis of Industry is very beneficial)
• How many companies are expected to enter your industry in the future?
• What government regulations affect your industry and your business?
• Is your industry highly regulated? If so what regulations or laws will you have to abide by?
• What kind of distribution system is setup for your industry?

These questions should be answered within the industry analysis and you should also include any supporting research at the end of the plan to back your assumptions. The main sections that should be included within the plan alongside answering the questions above are identifying participants, researching distribution patterns and researching competitors and their buying patterns.

Distribution patterns and the path products or services take between suppliers and users are vital in describing your business and your industry. Is this an industry in which retailers are supported by regional distributors, direct sales to large industrial customers, or do manufacturers sell their own product or services? Sometimes products are sold directly from manufactures to stores and sometimes some are sold from manufacturers to end-users. In most cases, there are several alternatives and distribution choices so researching to find the best method that fits your business while competing in the industry will provide the best strategic plan for your business. Distribution patterns are more critical for product oriented companies rather than services but is still relevant in researching the best way to compete in the industry.

You want to do a complete analysis of your main competitors and provide strengths and weaknesses for each one. Factors that you should research for each competitor include their product selection, pricing formula, reputation, management team, financial position, distribution patterns, brand awareness, and any other factors that you feel are important in being able to compete. If you can pinpoint the strategies of your competitors, it will help you exploit any shortcomings and identify opportunities to compete better.

 

Stay tuned for more business plan help through our series and feel free to contact us for a free consultation and small business support! At Coastal Business Strategies, we help take your “Idea to Implementation!”

 

Don Pleger

rpleger@cbsplans.com

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The Rise of the “Homepreneur”

This is a great article from Business week written by John Tozzi. It discusses the impact that home based businesses have and how successful they can be.
More than half of all U.S. businesses are based at home. These companies often are dismissed as quaint hobbyist ventures, but new research suggests that’s a mistake. An estimated 6.6 million home-based enterprises provide at least half of their owners’ household income. Together these “homepreneurs” employ one in 10 private-sector workers, and by many measures they’re just as competitive as their counterparts in commercial spaces.
Ask Stephen Labuda, the 35-year-old president of Agency3, a Web development firm he runs from his home in Cambridge, Mass. A former programmer at Deutsche Bank (DB), Labuda started building Web sites as a side job in 2003 and took the venture full time three years later. Agency3′s revenue is in the millions, and Labuda is about to hire his fifth employee, who will work remotely, like the rest of the staff and the slew of contractors he taps. “I’m not intending to go rent office space,” he says.
You can trace the rise of home-based businesses to the early days of telecommuting in the 1980s and the mass adoption of the Internet in the 1990s. Cloud computing, online collaboration, and smartphones have accelerated the trend, and recent research clarifies the economic significance of companies like Labuda’s. “We’re seeing more and more home-based businesses that are real businesses,” says Steve King, who coauthored the new report with his wife, Carolyn Ockels. (The couple runs Emergent Research, a small research and consulting shop, from their home in Lafayette, Calif.) The pair analyzed U.S. Census data and Small Business Administration research, along with data from the Small Business Success Index, a survey of 1,500 companies sponsored by Network Solutions and the University of Maryland’s Robert H. Smith School of Business.

WIDE ACCEPTANCE AND LEGITIMACY
Here’s more of what they found: The 43% of home-based businesses that provide at least half of the owners’ household income are, on the whole, smaller than non-home-based companies. Only about 35% have revenue above $125,000, compared to 75% for non-home based businesses. But they measure up to other small companies on key aspects of doing business, including access to capital, benefits to workers, marketing, and innovation. On average they have two employees, including the owners, and together they employ more than 13 million people—more, King notes, than venture-backed companies. (Venture-backed companies employed 12.1 million people in 2008, according to the National Venture Capital Association.)
In some of these companies, the operations are concentrated in the owner’s home. Others use their residence as a headquarters but do most of their work at clients’ homes or offices. The variety of home-based businesses cuts across industries, but the top sectors are business and professional services, construction, retail, and personal services.
A few trends are driving the growth of sophisticated home businesses. First, technology has made it easier to start and run a business from anywhere. But just as important, there has been a change of consciousness in the business world to recognize home-based enterprises as legitimate.
Labuda has seen that shift at Agency3. “When I first started, I really felt compelled to go rent an office. I felt like in order for me to be taken seriously as a business, I had to have an office that my clients could come to,” he says. It didn’t matter—clients didn’t want to visit him. Labuda meets most of them at their businesses or at coffee shops. He also uses on-demand office space, where he can rent a conference room by the hour, if needed.

LOWER COSTS ARE A COMPETITIVE EDGE
Now, Labuda never feels that his working from home damages Agency3′s credibility. Instead, it’s a selling point. “It’s reflected in our pricing that we don’t have the same kind of infrastructure costs and fixed costs that some of our competitors do,” he says.
Indeed, the most obvious financial benefit for home-based entrepreneurs is lower operating costs. A 2006 SBA study compared tax returns of sole proprietors who deducted home-office expenses with those who deducted commercial rent. That analysis found that home businesses, on average, had lower sales and net profits than companies in commercial spaces. But profitable home-based ventures retained a greater share of their total receipts as net income: 36%, vs. 21% for non-home-based businesses.
King predicts that as large companies try to reduce their fixed costs by outsourcing business functions, small home-based enterprises will play an even larger role in the economy. “Over the next 20 to 30 years, you could see the percentage of people who are self-employed and home-based double, potentially,” he says.