Developing a Competitive Analysis
One of the areas where most people have trouble in developing a business plan is formulating a competitive analysis. For more localized businesses, a competitive analysis is extremely important given that you need to understand how many different market agents that are in any specific target market radius so that there are can remain an economically viable business that is going to be produced. For instance, it is unwise to develop a small independent bookstore in an area that already has a number of these businesses in operation. As such, completing the competitive analysis is one of the more difficult aspects of any type of blood business planning activity. Typically, this involves the entrepreneur going to individual businesses within the area to get an understanding of what they offer, their pricing, and other ways that they are going to be able to differentiate themselves in the greater market.
For larger scale businesses were companies that could be operated online, completing a competitive analysis is a little bit more challenging. This is primarily due to the fact that the Internet is a very large place and a main or large-scale competitor can remain unnoticed for a substantial period of time. As such, one of the ways that an entrepreneur can find all competitors is by completing a number of different keyword searches concurrently purchasing a number of competitive research reports from industry research firms. These large-scale industry research firms typically provide a significant amount of information as it relates to the top 10 to top 20 providers of any specific product or service. It should be noted that these reports can be expensive but they can be worth in order to determine whether or not the idea for any given project is going to be economically viable. It can be expected that a research report will run anywhere
from $100 to $1,000 depending on the specific industry that is being targeted. On this website, we provide a number of different lists of online providers of industry research reports that can assist with finding specific types of competition.
When developing a competitive analysis, one of the things that many entrepreneurs do is to create a one through ten ranking system so that they can understand exactly who is a direct competitor and who is an ancillary competitor. For example, for specific services there may be a competitor that offers what your business intends to provide any very limited basis. As such, a lower competitive ranking would be applied to this business that they only provide the service ancillary to a number of other services. A competitor that solely focuses on the same service that you're going to offer would be considered a much greater competitive risk moving forward. This is one of the aspects of business planning that is a little bit more of an art than a science given that a subjective opinion is going to be provided for an object manner. There are a number of different mathematical tools are available so that the cyber data can be properly quantified
and examined by any entrepreneur or senior management team. It is typically very easy to apply a 1 to 10 ranking scale to specific types of competitors that are going to be working alongside the business moving forward.
In closing, a competitive analysis is moderately difficult to do and be one of the more time-consuming aspects of writing a business plan. It should be noted that all financial institutions, banks, lenders, and private investors are going to want to see a fully completed competitive analysis before they issue any type of funding to a new started venture. This is primarily due to the fact that the funding sources going to want to ensure that the business is going to be able to remain competitive in any given market and remain economically viable at any given time. One of the key things to developing the section of the business plan is well is to make sure to properly showcase why the business will maintain a number of competitive advantages over other area providers moving forward. This is a topic that we are going to further discuss at this website on an ongoing basis.