To start or run a business, one must identify competitors. Competitors may either ruin your business, or inspire your business to grow. In a business plan, one must include competition analysis, thus, understanding how well can your business grow in the market strategically.
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Steps To Evaluate Competition:
1. Step 1- Find out about business competitors at a national level and your local area, especially within the business field you considered to enter. Information about them can be found also on websites, business magazines, trade associations, etc.
2. Step 2- Once you get to know about the competition; try to get more information about them, what they do, what they sell, and how they approach their targets. Read up about their business companies, associations, and more; if possible, read up about their annual reports- these are keys to their future plan. Understand their business backgrounds, products, targeting market, financial stabilities and support, and any other relevant news.
3. Step 3- Be conscious about indirect competitors of your business. Direct competitors are businesses similar to yours, but indirect competitors are businesses, in a way, in the same “field” as yours. You would like to run a pet shop. Direct competitors are other pet shops, while indirect competitors could animal clinics, animal hospitals or grooming services. In this case, the indirect competitors are pet services; they will not compete with you for business, however, with most of them around your business location, you can be sure that pet care is in demand for that particular area.
4. Step 4- After evaluating competition and business competition; include this report in your business plan. This section of a business plan, competition analysis, can be offensive to other competing businesses but defensive for your own business. If the business plan is for investors, show in your competition analysis what you can offer or improve to benefit investors for investing in yours rather than in your competitors.