Smaller competitors can be worse for your business that larger ones. Small businesses are often owner-managed and can make decisions very rapidly. A small business competing in the same marketplace, in the same neighbourhood or online space, will soon know that your company is competing for their customers’ dollars. Small companies can react very quickly. They can change their product lines, adjust pricing, and create marketing campaigns on the fly.
Even if your product is fairly unique, like a new software product or technical gadget, competition can still impact you. Your service might solve a problem in a different way or your product might deliver functionality that no other product provides … you will still have competition for your customer’s money. Your customer has finite resources and they choose how to allocate them. You often have to make a compelling argument to convince someone to spend their money with you.
Don’t ruin your business plan by downplaying the competition. Make sure that you have a competition section in the marketing part of your plan and make the effort to do the market research. The people who read your business plan want to see that you have given this section of your plan the attention it deserves.
The Dirty Dozen Business Plan Mistakes. A series by Barry Sharp, Expert Business Plan Writer & Business Consultant.