My Competition Won’t be a Big Problem

My Competition Won’t be a Big Problem

Competition is almost always an issue with every business. You want your customers to spend their money with you rather than with your competition. Don’t dismiss your competitors. Unless you really do “know it all”, you have to do your market research to write a good business plan. Check out the competition. What’s their niche? Why do their customers choose them? How do you know that your competition won’t get in your way? Even if you believe that you have a unique business, there will still be other businesses competing for your customers’ money.

You may think that your larger competitors won’t be worried by your small business. Don’t make that big mistake. The larger the competitor, the more detailed market statistics they can afford to track. If they see that they are losing business, the big companies’ market analysts will try to find out why.

Perhaps they can come up with an alternative product or service that they can provide to recapture their market share. (McDonalds introduced espresso drinks to directly attack Starbucks, as Starbucks added breakfast sandwiches to its product list.) Perhaps they will start predatory pricing and lower their prices to try to drive you out of business. (Walmart has been accused of this practice.)

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.