The market section of a business plan: Competition

The competition section indicates where your products or services fit in the competitive environment. Presenting your business in the landscape of its competitors proves that you understand your industry and may be prepared to cope with some of the barriers to your company's success.

Present a short discussion of each of your primary competitors. If possible, include their annual sales and their market share. Each assessment should include why these companies do or do not meet their customers' needs. You should then explain why you think you can capture a share of their business.

Strengths and weaknesses can fall into a number of different categories. Sales, quality, distribution, price, production capabilities, image, and breadth of products/services are all ways companies differentiate themselves. Ask yourself: Who is the price leader? Who is the quality leader? Who has the largest market share? Why have certain companies recently entered or withdrawn from the market? These factors are critical to a successful competitive analysis.


  • Never say "we have no competition." Lenders won't believe you. Even if your product or service is truly innovative, you need to look at what else your customers could buy instead. Remember, the first personal computer competed with calculators and typewriters; the first calculator competed with slide rules.
  • Your competitors won't always be immediately evident, since they don't necessarily provide the exact same product or service as you do. If you sell gourmet salsas, you will be competing with other salsa makers, and you also might compete with makers of gourmet ketchup, mustards, and other condiments. List these as "indirect competitors."
  • Many business plans fail to give a realistic view of their true competitive universe by defining the competitive field too narrowly. Think as broadly as possible when devising a list of competitors by characterizing competitors as any business customers may patronize for similar products or services. A local florist obviously competes with other flower shops, but must also contend with delivery services such as 0860-FLOWER and supermarkets that carry flowers and plants.
  • To determine your competitors' strengths and weaknesses, evaluate why customers buy from them. Is it price? Value? Service? Convenience? Reputation? Very often, it's "perceived" strengths rather than "actual" strengths that you will be evaluating.
  • A table can be a good way to present your competitive analysis, since it will allow your competition to be evaluated at a glance. Columns should include the name of your competitor, market share or position, annual sales (if available), strengths, weaknesses, and comments.
  • Consider describing who is not your competitor. The person reading your plan may have an inaccurate picture of who your competition is. If this is the case, you will have to dispel those preconceptions by explaining why these businesses are not your competitors. For example, people may think that a company that hires out freelance technical writers competes with temporary personnel agencies or clerical agencies. This company might want to stress that it is not a clerical agency, but rather a writing consultant.


Business plan FAQs  Creating a business plan – part 1: Introductory elements  Creating a business plan – part 2: Business descriptionCreating a business plan – part 3: The market
Creating a business plan – part 4: Development and productionCreating a business plan – part 5: Sales and marketingCreating a business plan – part 6: ManagementCreating a business plan – part 7: Financials


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