hird article in a series on developing a business plan

Your business plan is now ready to take shape, and you have a mission statement. So, what now?

Before you begin marketing your services, you need to know with whom you are competing. Any additional planning on your part will depend on identifying your competition.

One of the biggest mistakes you can make is to assume that you have no competition. Even if none exists today, you can be sure that another company will jump in the market tomorrow. Denying that competition exists or will exist is an unrealistic approach to developing a business.

If you plan to seek funding, not identifying any competitors may be a red flag to investors. They may question whether your product or service is viable if there is no one else in the market offering something similar. Good products and services almost always generate competition.

To get a better feel for your competitors, identify the companies you will be competing with directly. Evaluate their services and products. Define their weaknesses as well as their strengths. How do these differ from your value proposition? How will this affect your business?

There are many resources to assist you in identifying possible competitors. Do a Web search on your product or service. Use the yellow pages. Watch newspapers for advertisements. Don't forget to include indirect competitors in your assessment, such as out-of-state companies offering services through the Internet.

Also, make sure to look for information such as how long your competitors have been in business and the market share they control. Potential investors in your business will want to see charts identifying market share held by your competition. You also should identify what share you intend to pursue.

Next, review what makes your business different from the competition. How are you going to gain that market share? Consider why someone would want to switch to your service.

A good competitive analysis will assist you in developing a strategy for your business. Knowing the market is crucial to maintaining and growing your company. Give this process in your business planning the attention it deserves.

Next Issue: How to develop and implement a marketing plan