A business plan is a crucial tool for both new and established companies. Setting out strategies to achieve your goals with detailed background information is key to set your venture up for success. An essential part of establishing your business is understanding who else is out there in your market space. It’s important to write this into your business plan early on to determine how you will set yourself apart from your competitors.
What should I keep in mind when creating my business plan?
First, it’s important to keep in mind that market research is separate from competitor research. Competitors will be part of the current market share, but try not to get the two confused. You should have both clearly marked out in your business plan for separate reasons. You can find a separate article on market trends for your business plan here.
Remember to note down your findings and references in an organised way as you go, so that you don’t have to waste time trying to go back and find statistics again. You could use charts to display your company’s attributes against the competition to make the information more digestible.
Who are your competitors?
Start by defining who your competitors are on a local scale. Understand what services are offered in your area so that you can set yourself apart from them.
Then, find out who your competitors are on a larger, national scale. Which brands dominate your sector? How did they grow to their current size? Try to find out about their origins, so you can pick and choose the elements you would like to apply to your own business.
Once you have identified who your competitors are, research the following questions:
Who are their audiences?
What is your competitors’ biggest sales demographic? You can use online tools and software to find out this information, and whether their following on social media is predominately this same audience. For bigger brands, it can be a good idea to look at what celebrities or influencers follow them, to give an indication of the kind of audience this business speaks to.
For example, a well-known ‘mummy blogger’ who follows a beauty brand will likely draw in other women that have children and are interested in similar topics. This beauty brand could engage this audience with relevant messaging or by collaborating with the influencer.
This will all help you figure out who your competitors speak to in their communications and sales messaging. Researching your competitors’ audiences can highlight where you can add value.
What benefits do they offer?
Research why customers are loyal to your competitors. Investigate the benefits attached to their products or services, and advantages they pose over other similar brands.
This information may be factual, like price or special offers, or more intangible, such as luxury branding. Spend some time understanding this area, because it may help you discover a gap in the market that you can fill to have an edge over the competition.
Product or service information and pricing
Get some hard facts on your competitors’ pricing plan. Is there a product gap they have overlooked that you could capitalise on? Use this information to determine where your pricing should lie. Making your prices too high or too low can cause customers to shy away from your business. It’s crucial to get it right.
Gathering your information
To gain useful insights into your competitors, broaden your search. Suppose you’re a locally-based retail boutique or restaurant. You may have to visit other businesses to glean the information you need. Make notes on the quality of service, the look and feel of the premises, and other factors that you want to differentiate from.
If you will operate and provide your service digitally, you can likely do most of your research online. Use company websites to see how they talk about themselves. What do they feature in their messaging? Read reviews on Trustpilot or service directories to find out what their customers say. You could even use Glassdoor to find out what employees think of the business.
You could also use SEO tools to understand the digital marketing advantages competitors have, such as the share of search engine results that a competitor occupies. Examine whether they have a robust content marketing strategy by looking at their website and position in the search results, and you can use online tools like SEMRush to determine whether they have a large market share of the search engine results.
Analysing your findings
Now it’s time to pull together what you found. What matters is not the facts, but the way you interpret them to benefit your business plan and your strategies going forward.
The first part of your competitor research should be about the competitive environment – who the competitors are and the market they occupy. The next sections should be about your competitive advantage. Focus on how you will compete against these brands and the strategies you could apply to establish yourself in the industry.
Get on track to success from day one
Now that you are starting your own business, make sure to keep on top of your business finances from the get go. To manage your cash flow and keep organised records of your transactions ahead of your first tax return, it’s important to keep personal and business expenses separate. Countingup is the unique 2-in-1 business current account that automates your bookkeeping so that you can focus more on running your business. Find out more here.