One of the most overlooked, forgotten, and intentionally ignored sections in a business plan is the analysis of the competition. Don’t kid yourself. You have competition. Everyone has competition.
It might be direct competition; another business selling the same service or products. Say you sell house paint. There are probably several other paint dealers and home improvement stores in your area selling paint as well.
It might be indirect competition. Using the same example, stores which sell wallpaper, wood paneling or vinyl siding compete against you. Even the house painter/contractor may compete against you by convincing a “do-it-yourself” homeowner to pay for the job on a “time and materials” contract where the painter provides the paint, purchased from his favorite supplier.
Here at Palo Alto Software, we have read hundreds of business plans over the years. Our Business Plan Pro business-planning software includes over 500 sample plans. Time and again we’ve read a plan where someone thinks they have a unique service or product and proclaims they have no competition. Wrong. So very wrong.
Remember, before anything else, that every potential customer you identify has the option to not spend their money at all. They can choose not to buy from you, choose not to buy from anybody. Or they can spend their money on something entirely different.
Your competition is the savings account, the electric bill, the school tuition, the 401(k), the groceries, the kids’ allowance, next year’s vacation fund, etc.
When you develop your business plan, whether it is a startup plan for the bank or your day-to-day operations roadmap, spend some time thoroughly finding and analyzing your competition. From this you can evaluate what the other businesses are doing right and what they are doing wrong in marketing themselves, how well they are generating potential leads, and then converting those leads into customers.
Palo Alto Software