Last time in Part 4, we discussed how to present your products and services. It was important to follow up the problems with your solution but in this part, Part 5, we will attack the competition – the competitive landscape.
This section covers how you are differentiating yourself by describing the competition and why you will stand out from them and beat them in the long run.
There are a few key sections of the competitive landscape in a business plan.
The first is Competitive Analysis Summary. The point of this section is to give some one reading this without diving into the details the top points and reasons that your company is different and beats the competition. Hopefully, this section will be compelling and interesting enough that people will read into it more. Most likely, people will not read to deep into the competition but it is there for review when necessary and is an exercise you must complete.
The second is Competitive Analysis Matrix. This can be done in table format with the main competitive areas and companies on different axis. Many times people will spin the diagram so your company has all the boxes checked. Don’t do this. Be honest and recognize the 800lb gorilla. Don’t fear them, understand how to beat them.
Once you are done the summary you must go into more details regarding competitive advantages and competitive disadvantages. Hopefully, the advantages will out weigh the disadvantages.
Competitive Advantages are the ways that you stand out from the competition. Examples could be the following:
- Integrated Payment Processing for Credit Cards and Checks/Wire Transfers
- Streamlined marketing systems that integrates popular third party data
- High performance reporting and business intelligence analysis capabilities
- Ability to market in real time
- Providing a branded and personalized portal interface for X
- Building a patented technology to be licensed and integrated with major technology platforms and portals
- Flexible foundation technology designed to expand into other types of alternative services
- Providing an outsourced call center to assist companies with customer service requests and after hours client management
- Ability to leap frog our competitors who have designed their systems on an outdated business model
Competitive Disadvantages are the threats and adversity you must overcome from the competition. Examples could be the following:
- Segment is extremely fragmented making any type of scale difficult
- Our market penetration is shallow at this point
- Our track record and reputation in the industry is unknown
- Product Development in proof of concept phase behind one competitor
- Larger competitors could invest lots of money to compete very quickly
Last on in this section is the best way to wrap it up. This are the Barriers to Entry that will make you a real threat to the competition. Examples could be the following:
- Low cost offering of superior technology to lock in a provider network
- Patentable technologies for license to other providers
- Personnel with deep industry knowledge and extensive contacts
- Current customer inertia from our current network
- Existing relationships with vendors and providers
- Deep network of partners and managers
NEXT TIME: MARKETING AND SALES STRATEGY– After you have explained how competitive your products and services are you will need to discuss how you will market and outsell the competition. Since both are so involved, we will separate them into two parts to focus and cover the material the right way.