Keep in mind competitive analysis does more than help you understand your competition. Learn from competitor strengths, take advantage of competitor's weaknesses, and apply the same analysis to your own business plan. It can be tough to predict when and where new competitors may pop up. For starters, regularly search for news on your industry, your products, your services, and your target market. But there are other ways to predict when competition may follow you into a market. Other people may see the same opportunity you see. Think about your business and your industry, and if the following conditions exist, you may face competition does the road:.
In general terms, if serving your market seems easy you can safely assume competitors will enter your market. A good business plan anticipates and accounts for new competitors. Our nearest and only competition is the bike shops in Harrisonburg, VA. Our next closest competitor is located over miles away. The in-town bike shops will be strong competitors. They are established businesses with excellent reputations. On the other hand, they offer inferior-quality equipment and their location is significantly less convenient. We do not plan to sell bicycles for at least the first two years of operation.
However, sellers of new equipment do indirectly compete with our business since a customer who buys equipment no longer needs to rent equipment. Later, when we add new equipment sales to our operation, we will face competition from online retailers. We will compete with new equipment retailers through personalized service and targeted marketing to our existing customer base, especially through online initiatives. And so on A common mistake made by entrepreneurs is assuming they will simply "do it better" than any competition.
Experienced businesspeople know you will face stiff competition: showing you understand your competition, understand your strengths and weaknesses relative to that competition, and that you understand you will have to adapt and change based on that competition, is critical.
And, even if you do not ever plan to seek financing or bring in investors, you absolutely must know your competition. Your ops plan should detail strategies for managing, staffing, manufacturing, fulfillment, inventory Fortunately, most entrepreneurs have a better handle on their operations plan than on any other aspect of their business. Operations plans should be highly specific to your industry, your market sector, and your customers.
Instead of providing an example like I've done with other sections, use the following to determine the key areas your plan should address:. What do you need to do?
10 Reasons Why You Should Write A Business Plan - Small Business Trends
How will you get it done? Then create an overview of that plan to make sure your milestones and timeline make sense. Many investors and lenders feel the quality and experience of the management team is one of the most important factors used to evaluate the potential of a new business. But putting work into the Management Team section will not only benefit people who may read your plan. Addressing your company's needs during implementation will make a major impact on your chances for success. Joe has over twenty years experience in the cycling business. A complete resume for Mr.
Rouleur can be found in the Appendix. Mary was the U.
Mountain Biking National Champion. She worked in product development for High Tec frames, creating custom frames and frame modifications for professional cyclists. She also has extensive customer service and sales experience, having worked for four years as the online manager of Pro Parts Unlimited, an online retailer of high-end cycling equipment and accessories. For example, if you manufacture a product or provide a service and will hire a key skilled employee, describe that employee's credentials. Otherwise, include staffing plans in the Operations section. One key note: Don't be tempted to add a "name" to your management team in hopes of attracting investors.
If you don't have a lot of experience--but are willing to work hard to overcome that lack of experience--don't be tempted to include other people in your plan that will not actually work in the business. If you can't survive without help, that's okay. In fact that's expected; no one does anything worthwhile on their own. Experience and reputation are great, but action is everything. Financial projections and estimates help entrepreneurs, lenders, and investors or lenders objectively evaluate a company's potential for success. If a business seeks outside funding, providing comprehensive financial reports and analysis is critical.
But most importantly, financial projections tell you whether your business has a chance of being viable--and if not let you know you have more work to do. It's easy to find examples of all of the above. Even the most basic accounting software packages include templates and samples. You can also find templates in Excel and Google Docs.
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A quick search like "google docs profit and loss statement" yields plenty of examples. Or you can work with an accountant to create the necessary financial projections and documents. Certainly feel free to do so While you don't need to be an accountant to run a business, you do need to understand your numbers But ultimately the tools you use to develop your numbers are not as important as whether those numbers are as accurate as possible--and whether those numbers help you decide whether to take the next step and put your business plan into action.
Some business plans include less essential but potentially important information in an Appendix section. You may decide to include, as backup or additional information:. Keep in mind creating an Appendix is usually only necessary if you're seeking financing or hoping to bring in partners or investors. Initially the people reading your business plan don't wish to plow through reams and reams of charts, numbers, and backup information. If one does want to dig deeper, fine--he or she can check out the documents in the Appendix. While you may use your business plan to attract investors, partners, suppliers, etc Because ultimately it's your time, your money, and your effort on the line.
Be as objective and logical as possible. Sometimes even the best ideas are simply ahead of their time. Serve as a guide to the business's operations for the first months and sometimes years, creating a blueprint for company leaders to follow. Communicate the company's purpose and vision , describe management responsibilities, detail personnel requirements, provide an overview of marketing plans, and evaluate current and future competition in the marketplace.
Create the foundation of a financing proposal for investors and lenders to use to evaluate the company. As you map out your plan, you may discover issues or challenges you had not anticipated. Now let's look at the first section of your business plan: The Executive Summary. A brief description of products and services A summary of objectives A solid description of the market A high-level justification for viability including a quick look at your competition and your competitive advantage A snapshot of growth potential An overview of funding requirements.
The economic outlook indicates fewer VA, WV, NC, and MD cycling enthusiasts will travel outside the region The park has added a camping and lodging facilities that should attract an increased number of visitors The park has opened up additional areas for trail exploration and construction, ensuring a greater number of single-track options and therefore a greater number of visitors.
Clearly define your type of business. Identify your customer. You cannot market and sell to customers until you know who they are. Explain the problem you solve. Successful businesses create customer value by solving problems. In our rental example, one problem is cycling enthusiasts who don't--or can't--travel with bikes. Another problem is casual cyclists who can't--or choose not to--spend significant sums on their own bikes. The rental shop will solve that problem by offering a lower-cost and convenient alternative.
Show how you will solve that problem. Our rental shop will offer better prices and enhanced services like remote deliveries, off-hours equipment returns, and online reservations. If you are still stuck, try answering these questions. Some may pertain to you; others may not. Who is my average customer? Who am I targeting? Unless you plan to open a grocery store, you should be unlikely to answer, "Everyone! How will I overcome that paint point? Where will I fail to solve a customer problem Where will I locate my business?
What products, services, and equipment do I need to run my business? What skills do my employees need, and how many do I need? How will I beat my competition? How can I differentiate myself from my competition in the eyes of my customers? You can have a great plan to beat your competition but you also must win the perception battle among your customers. If customers don't feel you are different Perception is critical. Provide high quality equipment, sourcing that equipment as inexpensively as possible through existing relationships with equipment manufacturers and other cycling shops Use signage to attract visitors traveling to the national forest, highlighting our cost and service advantage Create additional customer convenience factors to overcome a perceived lack of convenience for customers planning to ride roads and trails some distance away from our shop Develop customer incentive and loyalty programs to leverage customer relationships and create positive word of mouth.
Are products or services in development or existing and on the market? What is the timeline for bringing new products and services to market? What makes your products or services different? Are there competitive advantages compared with offerings from other competitors? Are there competitive disadvantages you will need to overcome? And if so, how? Is price an issue? Will your operating costs be low enough to allow a reasonable profit margin? How will you acquire your products? Are you the manufacturer? Do you assemble products using components provided by others? Do you purchase products from suppliers or wholesalers?
If your business takes off, is a steady supply of products available?
10 Reasons Why You Should Write A Business Plan
The following is a breakdown of anticipated rental price points, per day and per week:. Customers can extend the rental term online without visiting the store. A grace period of two hours will be applied to all rentals; customers who return equipment within that two-hour period will not be charged an additional fee. Newer equipment inventory with higher perceived quality Price points 15 percent below the competition Online renewals offering greater convenience A liberal return grace period that will reinforce our reputation as a customer-friendly rental experience.
What is the size of the market? Is it growing, stable, or in decline? Is the overall industry growing, stable, or in decline? What segment of the market do I plan to target? What demographics and behaviors make up the market I plan to target? Is demand for my specific products and services rising or falling? Can I differentiate myself from the competition in a way customers will find meaningful?
If so, can I differentiate myself in a cost-effective manner? What do customers expect to pay for my products and services? Are they considered to be a commodity or to be custom and individualized? Your potential customers. In general terms, potential customers are the people in the market segment you plan to target. Say you sell jet skis; anyone under the age of 16 and over the age of 60 or so is unlikely to be a customer.
Plus, again in general terms, women make up a relatively small percentage of jet ski purchasers. Determining the total population for the market is not particularly helpful if your product or service does not serve a need for the entire population. Most products and services do not. Total households. In some cases determining the number of total households is important depending on your business. For example, if you sell heating and air conditioning systems, knowing the number of households is more important than simply knowing the total population in your area.
While people purchase HVAC systems, "households" consume those systems. Median income. Spending ability is important. Does your market area have sufficient spending power to purchase enough of your products and services to enable you to make a profit? Some areas are more affluent than others. Don't assume every city or locality is the same in terms of spending power. A service that is viable in New York City may not be viable in your town. Income by demographics. You can also determine income levels by age group, by ethnic group, and by gender.
Again, potential spending power is an important number to quantify. Senior citizens could very well have a lower income level than males or females age 45 to 55 in the prime of their careers. Or say you plan to sell services to local businesses; try to determine the amount they currently spend on similar services. Always remember it's much easier to serve a market you can define and quantify. What is your market? Include geographic descriptions, target demographics, and company profiles if you're B2B.
In short: Who are your customers? What segment of your market will you focus on? What niche will you attempt to carve out? What percentage of that market do you hope to penetrate and acquire? What is the size of your intended market? What is the population and spending habits and levels? Why do customers need and why will they be willing to purchase your products and services?
How will you price your products and services? Will you be the low cost provider or provide value-added services at higher prices? Is your market likely to grow? How much? How can you increase your market share over time? Recreational sports in general and both family-oriented and "extreme" sports continue to gain in exposure and popularity. Western VA and eastern WV have experienced population growth rates nearly double that of the country as a whole. Industry trends show cycling has risen at a more rapid rate than most other recreational activities.
You may want to add other categories to this section based on your particular industry. The key is to define your market -- and then show how you will serve your market. Focus on your target market. Who are your customers? Who will you target? Who makes the decisions? Determine how you can best reach potential customers.
Evaluate your competition. It's hard to stand out from a crowd if you don't know where the crowd stands. Know your competitors by gathering information about their products, service, quality, pricing, and advertising campaigns. In marketing terms, what does your competition do that works well? What are their weaknesses? How can you create a marketing plan that highlights the advantages you offer to customers? Consider your brand. How customers perceive your business makes a dramatic impact on sales.
Your marketing program should consistently reinforce and extend your brand. Before you start to market your business, think about how you want your marketing to reflect on your business and your products and services. Marketing is the face of your to potential customers--make sure you put your best face forward. Focus on benefits. What problems do you solve? What benefits do you deliver? Customers don't think in terms of products--they think in terms of benefits and solutions.
Your marketing plan should clearly identify benefits customers will receive.
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Take Dominos; theoretically they're in the pizza business, but really they're a delivery business. Focus on differentiation. Your products and services have to stand out from the competition in some way. How will you compete in terms of price, product, or service? What is your budget for sales and marketing efforts? How will you determine if your initial marketing efforts are successful?
In what ways will you adapt if your initial efforts do not succeed? Will you need sales representatives inside or external to promote your products? Can you set up public relations activities to help market your business? Road signage. Access to the forest is restricted to a few primary entrances, and visitors reach those entrances after traveling on one of several main roadways. Since customers currently rent bicycles in the local town of Harrisonburg, road signage will communicate our value proposition to all potential customers. Web initiatives. Our website will attract potential visitors to the resort.
We will partner with local businesses that serve our target market to provide discounts and incentives. Promotional events. We will hold regular events with professional cyclists, like demonstrations and autograph signings, to bring more customers to the store as well as to extend the athletes' "brand" to our brand. What are their strengths? Price, service, convenience, extensive inventory are all areas where you may be vulnerable. Weaknesses are opportunities you should plan to take advantage of. What are their basic objectives? Do they seek to gain market share?
Do they attempt to capture premium clients? See your industry through their eyes. What are they trying to achieve? What marketing strategies do they use? Look at their advertising, public relations, etc. How can you take market share away from their business? How will they respond when you enter the market? Check out their websites and marketing materials. Most of the information you need about products, services, prices, and company objectives should be readily available.
If that information is not available, you may have identified a weakness. Visit their locations. Take a look around. Check out sales materials and promotional literature. Have friends stop in or call to ask for information. Evaluate their marketing and advertising campaigns. How a company advertises creates a great opportunity to uncover the objectives and strategies of that business.
Advertising should help you quickly determine how a company positions itself, who it markets to, and what strategies it employs to reach potential customers. Search the Internet for news, public relations, and other mentions of your competition. Search blogs and Twitter feeds as well as review and recommendation sites. While most of the information you find will be anecdotal and based on the opinion of just a few people, you may at least get a sense of how some consumers perceive your competition.
Plus you may also get advance warning about expansion plans, new markets they intend to enter, or changes in management. You might be surprised by what you can learn about your business by evaluating other businesses. The industry enjoys relatively high profit margins Entering the market is relatively easy and inexpensive The market is growing--the more rapidly it is growing the greater the risk of competition Supply and demand is off--supply is low and demand is high Very little competition exists, so there is plenty of "room" for others to enter the market.
Now distill what you've learned by answering these questions in your business plan:. Who are my current competitors? What is their market share? How successful are they? What market do current competitors target? Do they focus on a specific customer type, on serving the mass market, or on a particular niche? Are competing businesses growing or scaling back their operations? What does that mean for your business?
How will your company be different from the competition? What competitor weaknesses can you exploit? What competitor strengths will you need to overcome to be successful? What will you do if competitors drop out of the marketplace? What will you do to take advantage of the opportunity? What will you do if new competitors enter the marketplace?
How will you react to and overcome new challenges? By offering mid- to high-end quality equipment, we provide customers the opportunity to "try out" bikes they may wish to purchase at a later date, providing additional incentive besides cost savings to use our service. Offering drive-up, express rental return services will be seen as a much more attractive option compared to the hassle of renting bikes in Harrisonburg and transporting them to intended take-off points for rides. Online initiatives like online renewals and online reservations enhances customer convenience and positions us as a cutting-edge supplier in a market largely populated, especially in the cycling segment, by customers who tend to be early technology adapters.
Renting bikes and cycling equipment may be perceived by some of our target market as a commodity transaction. If we do not differentiate ourselves in terms of quality, convenience, and service, we could face additional competition from other entrants to the market. One of the bike shops in Harrisonburg is a subsidiary of a larger corporation with significant financial assets.
Before you physically start writing your business plan, you need to spend some time doing in-depth research into your industry and market. This is important regardless of whether you have previous experience in that particular industry. You can use the Internet, industry experts and associations, suppliers and existing competitors for the information.
Your research will help you in putting the business plan together as it will give you an understanding of the dynamics and forces affecting the industry. All sections in the business plan format are interrelated, and cannot be written in isolation. Each should be written by people who are fully aware of the contents and intricacies of the other areas of the plan so that the different sections are all integrated.
The best option is to write the plan yourself as you know your business best. Also, if you are responsible for writing the business plan, you could identify certain challenges and find solutions to them, it will also ensure that you know every single aspect of the business, which is critical when meeting with potential investors. Although there is a fairly well accepted structure for a business plan format , there are many ways of putting it down on paper.
Some of the contents will have different names and be presented in a different order but almost any business plan will cover these broad areas:. Your contents page should be the very last thing you write to ensure that all the page numbers are correct. Make sure that you number your pages correctly so that a person can quickly and easily find the sections they are interested in. He holds a Ph. Saturday, 29 June Trending Tags.
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