example of competition analysis in business plan

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How to create a competitive analysis (with examples)

Competitive analysis involves identifying your direct and indirect competitors using research to reveal their strengths and weaknesses in relation to your own. In this guide, we’ll outline how to do a competitive analysis and explain how you can use this marketing strategy to improve your business.

Whether you’re running a business or playing in a football game, understanding your competition is crucial for success. While you may not be scoring touchdowns in the office, your goal is to score business deals with clients or win customers with your products. The method of preparation for athletes and business owners is similar—once you understand your strengths and weaknesses versus your competitors’, you can level up. 

What is a competitive analysis?

Competitive analysis involves identifying your direct and indirect competitors using research to reveal their strengths and weaknesses in relation to your own. 

Direct competitors market the same product to the same audience as you, while indirect competitors market the same product to a different audience. After identifying your competitors, you can use the information you gather to see where you stand in the market landscape. 

What to include in a competitive analysis

The purpose of this type of analysis is to get a competitive advantage in the market and improve your business strategy. Without a competitive analysis, it’s difficult to know what others are doing to win clients or customers in your target market. A competitive analysis report may include:

A description of your company’s target market

Details about your product or service versus the competitors’

Current and projected market share, sales, and revenues

Pricing comparison

Marketing and social media strategy analysis

Differences in customer ratings

You’ll compare each detail of your product or service versus the competition to assess strategy efficacy. By comparing success metrics across companies, you can make data-driven decisions.

How to do a competitive analysis

Follow these five steps to create your competitive analysis report and get a broad view of where you fit in the market. This process can help you analyze a handful of competitors at one time and better approach your target customers.

1. Create a competitor overview

In step one, select between five and 10 competitors to compare against your company. The competitors you choose should have similar product or service offerings and a similar business model to you. You should also choose a mix of both direct and indirect competitors so you can see how new markets might affect your company. Choosing both startup and seasoned competitors will further diversify your analysis.

Tip: To find competitors in your industry, use Google or Amazon to search for your product or service. The top results that emerge are likely your competitors. If you’re a startup or you serve a niche market, you may need to dive deeper into the rankings to find your direct competitors.

2. Conduct market research

Once you know the competitors you want to analyze, you’ll begin in-depth market research. This will be a mixture of primary and secondary research. Primary research comes directly from customers or the product itself, while secondary research is information that’s already compiled. Then, keep track of the data you collect in a user research template .

Primary market research may include: 

Purchasing competitors’ products or services

Interviewing customers

Conducting online surveys of customers 

Holding in-person focus groups

Secondary market research may include:

Examining competitors’ websites

Assessing the current economic situation

Identifying technological developments 

Reading company records

Tip: Search engine analysis tools like Ahrefs and SEMrush can help you examine competitors’ websites and obtain crucial SEO information such as the keywords they’re targeting, the number of backlinks they have, and the overall health of their website. 

3. Compare product features

The next step in your analysis involves a comparison of your product to your competitors’ products. This comparison should break down the products feature by feature. While every product has its own unique features, most products will likely include:

Service offered

Age of audience served

Number of features

Style and design

Ease of use

Type and number of warranties

Customer support offered

Product quality

Tip: If your features table gets too long, abbreviate this step by listing the features you believe are of most importance to your analysis. Important features may include cost, product benefits, and ease of use.

4. Compare product marketing

The next step in your analysis will look similar to the one before, except you’ll compare the marketing efforts of your competitors instead of the product features. Unlike the product features matrix you created, you’ll need to go deeper to unveil each company’s marketing plan . 

Areas you’ll want to analyze include:

Social media

Website copy

Press releases

Product copy

As you analyze the above, ask questions to dig deeper into each company’s marketing strategies. The questions you should ask will vary by industry, but may include:

What story are they trying to tell?

What value do they bring to their customers?

What’s their company mission?

What’s their brand voice?

Tip: You can identify your competitors’ target demographic in this step by referencing their customer base, either from their website or from testimonials. This information can help you build customer personas. When you can picture who your competitor actively targets, you can better understand their marketing tactics. 

5. Use a SWOT analysis

Competitive intelligence will make up a significant part of your competitor analysis framework, but once you’ve gathered your information, you can turn the focus back to your company. A SWOT analysis helps you identify your company’s strengths and weaknesses. It also helps turn weaknesses into opportunities and assess threats you face based on your competition.

During a SWOT analysis, ask yourself:

What do we do well?

What could we improve?

Are there market gaps in our services?

What new market trends are on the horizon?

Tip: Your research from the previous steps in the competitive analysis will help you answer these questions and fill in your SWOT analysis. You can visually present your findings in a SWOT matrix, which is a four-box chart divided by category.

6. Identify your place in the market landscape

The last step in your competitive analysis is to understand where you stand in the market landscape. To do this, you’ll create a graph with an X and Y axis. The two axes should represent the most important factors for being competitive in your market. 

For example, the X-axis may represent customer satisfaction, while the Y-axis may represent presence in the market. You’ll then plot each competitor on the graph according to their (x,y) coordinates. You’ll also plot your company on this chart, which will give you an idea of where you stand in relation to your competitors. 

This graph is included for informational purposes and does not represent Asana’s market landscape or any specific industry’s market landscape. 

Tip: In this example, you’ll see three companies that have a greater market presence and greater customer satisfaction than yours, while two companies have a similar market presence but higher customer satisfaction. This data should jumpstart the problem-solving process because you now know which competitors are the biggest threats and you can see where you fall short. 

Competitive analysis example

Imagine you work at a marketing startup that provides SEO for dentists, which is a niche industry and only has a few competitors. You decide to conduct a market analysis for your business. To do so, you would:

Step 1: Use Google to compile a list of your competitors. 

Steps 2, 3, and 4: Use your competitors’ websites, as well as SEO analysis tools like Ahrefs, to deep-dive into the service offerings and marketing strategies of each company. 

Step 5: Focusing back on your own company, you conduct a SWOT analysis to assess your own strategic goals and get a visual of your strengths and weaknesses. 

Step 6: Finally, you create a graph of the market landscape and conclude that there are two companies beating your company in customer satisfaction and market presence. 

After compiling this information into a table like the one below, you consider a unique strategy. To beat out your competitors, you can use localization. Instead of marketing to dentists nationwide like your competitors are doing, you decide to focus your marketing strategy on one region, state, or city. Once you’ve become the known SEO company for dentists in that city, you’ll branch out. 

You won’t know what conclusions you can draw from your competitive analysis until you do the work and see the results. Whether you decide on a new pricing strategy, a way to level up your marketing, or a revamp of your product, understanding your competition can provide significant insight.

Drawbacks of competitive analysis

There are some drawbacks to competitive analysis you should consider before moving forward with your report. While these drawbacks are minor, understanding them can make you an even better manager or business owner. 

Don’t forget to take action

You don’t just want to gather the information from your competitive analysis—you also want to take action on that information. The data itself will only show you where you fit into the market landscape. The key to competitive analysis is using it to problem solve and improve your company’s strategic plan .

Be wary of confirmation bias

Confirmation bias means interpreting information based on the beliefs you already hold. This is bad because it can cause you to hold on to false beliefs. To avoid bias, you should rely on all the data available to back up your decisions. In the example above, the business owner may believe they’re the best in the SEO dental market at social media. Because of this belief, when they do market research for social media, they may only collect enough information to confirm their own bias—even if their competitors are statistically better at social media. However, if they were to rely on all the data available, they could eliminate this bias.

Update your analysis regularly

A competitive analysis report represents a snapshot of the market landscape as it currently stands. This report can help you gain enough information to make changes to your company, but you shouldn’t refer to the document again unless you update the information regularly. Market trends are always changing, and although it’s tedious to update your report, doing so will ensure you get accurate insight into your competitors at all times. 

Boost your marketing strategy with competitive analysis

Learning your competitors’ strengths and weaknesses will make you a better marketer. If you don’t know the competition you’re up against, you can’t beat them. Using competitive analysis can boost your marketing strategy and allow you to capture your target audience faster.

Competitive analysis must lead to action, which means following up on your findings with clear business goals and a strong business plan. Once you do your competitive analysis, you can use the templates below to put your plan into action.

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How to Write Competitive Analysis in a Business Plan (w/ Examples)

Free Competitive Analysis Kit

• Vinay Kevadia
• January 9, 2024

13 Min Read

Every business wants to outperform its competitors, but do you know the right approach to gather information and analyze your competitors?

That’s where competitive analysis steps in. It’s the tool that helps you know your competition’s pricing strategies, strengths, product details, marketing strategies, target audience, and more.

If you want to know more about competitor analysis, this guide is all you need. It spills all the details on how to conduct and write a competitor analysis in a business plan , with examples.

Let’s get started and first understand the meaning of competitive analysis.

What is Competitive Analysis?

A competitive analysis involves collecting information about what other businesses in your industry are doing with their products, sales, and marketing.

Businesses use this data to find out what they are good at, where they can do better, and what opportunities they might have. It is like checking out the competition to see how and where you can improve.

This kind of analysis helps you get a clear picture of the market, allowing you to make smart decisions to make your business stand out and do well in the industry.

After having a brief knowledge of what a competitive analysis is, let’s understand how to conduct it:

How to Conduct a Competitive Analysis?

• Identify your direct and indirect competitors
• Study the overall market space
• Prepare a competitive framework
• Take note of your competition’s strategies
• Perform a SWOT Analysis of your competitors

1. Identify Your Direct and Indirect Competitors

First things first — identify all your business competitors and list them. You can make the final list later, but right now jot down all the competitors including new competitors.

Explore your competitors using Google, social media platforms, or local markets. Then differentiate them into direct or indirect competitors. And then distinguish them into direct or indirect competitors.

Direct competitors

Businesses offering the same products or services, targeting a similar target market , are your direct competitors.

These competitors operate in the same industry and are often competing for the same market share.

Indirect competitors

On the other hand, indirect competitors are businesses that offer different products or services but cater to the same target customers.

While they may not offer identical solutions, they compete for the same customer budget or attention. Indirect competitors can pose a threat by providing alternatives that customers might consider instead of your offerings.

2. Study the Overall Market

Now that you know your business competitors, deep dive into the market research. The research should be a combination of both primary and secondary research methods.

Primary research

It means being involved in getting the information directly from customers or by buying the product itself. Some examples of primary market research methods include:

• Purchasing competitors’ products or services
• Conducting interviews with customers
• Administering online surveys to gather customer insights

Secondary research

The secondary research involves utilizing pre-existing gathered information from some relevant sources. Some of its examples include:

• Scrutinizing competitors’ websites
• Assessing the current economic landscape
• Identifying technological advancements

Have a good understanding of the market at this point before you proceed with the next step.

3. Prepare a Competitive Framework

Creating a competitive framework is like charting a strategic roadmap for your business in the competitive landscape. It includes defining your USPs, market positioning, and various strategies.

Establishing your competitive positioning clarifies where your business stands among competitors.

Plan how to make your product or service stand out by figuring out ways to make it different to stand out, whether it’s through new features, better quality, or excellent customer service.

Craft unique value propositions that resonate with your target audience, communicating the benefits of choosing your offerings. This framework serves as a compass for crucial business decisions, ensuring alignment with your strategic positioning.

By consistently referencing this framework, your business can effectively meet customer needs, fostering satisfaction and loyalty through tailored products, services, and interactions.

4. Take Note of Your Competition’s Strategies

By stepping into your competitors’ research, you will learn what strategies they use to market their products or services and how they engage with their customers.

This will motivate you to do something more for customers and give you an idea of what your consumers like.

Start by analyzing their marketing strategies, such as sales and marketing channels, promotional activities, and branding strategies. Understand how they position themselves in the market and what USPs they emphasize.

Evaluate their pricing strategies and offerings, and keep an eye on their distribution channel to better understand your competitors. For example, here are the pricing strategies of a barber shop and its competitors:

This information allows you to make informed decisions about your strategies, helping you identify opportunities for differentiation and improvement.

5. Perform a SWOT Analysis of Your Competitors

You would love to know the opportunities and threats of your business, right? To be prepared for it when the time comes.

Well, conducting a SWOT analysis is like the same, it is more about getting to know about your strengths, weaknesses, opportunities, and threats. It also helps you understand your competitive edge in the market.

Whereas strengths and weaknesses focus on internal aspects of your company — opportunities and threats examine the external factors related to the industry and market.

Things to include in your SWOT analysis are:

It includes the positive features of your internal business operations. For example, it might include a strong brand, skilled workforce, innovative products/services, loyal customer base, etc.

It includes all the hindrances of your internal business operations. For example, it might include limited resources, outdated technology, weak brand recognition, inefficient processes, etc.

Opportunities

As the name says, it is all about the opportunities that will come your way in the near or far future. It is mainly about the external factors related to the market or industry trends.

For example, it might include emerging markets, technological advancements, changing consumer trends, profitable partnerships in the future, etc.

You should include any external factor that poses a challenge or any risk for your business in this section. For example, it might include intense competition, economic downturns, regulatory changes, or any advanced technology disruption.

These were the elements to help you conduct the competitive market analysis. Let us now go through how to write it in a business plan.

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How to Write Competitive Analysis in a Business Plan

1. determine who your readers are.

Know your audience first, because that will change the whole context of your competitor analysis business plan.

The competitive analysis section will vary depending on the intended audience is the team or investors.

Consider the following things about your audience before you start writing this section:

Internal competitor plan (employees or partners)

Objective: The internal competitor plan is to provide your team with an understanding of the competitive landscape.

Focus: The focus should be on the comparison of the strengths and weaknesses of competitors to boost strategic discussions within your team.

Use: It is to leverage the above information to develop strategies that highlight your strengths and address your weaknesses.

Competitor plan for funding (bank or investors)

Objective: Here, the objective is to reassure the potential and viability of your business to investors or lenders.

Focus: This section should focus on awareness and deep understanding of the competitive landscape to persuade the readers about the future of your business.

Use: It is to showcase your market position and the opportunities that are on the way to your business.

This differentiation is solely to ensure that the competitive analysis serves its purpose effectively based on the specific needs and expectations of the respective audience.

2. Describe Competitive Advantage

One of the most important things in the competitive analysis is to know your competitive advantage and gain insight into how you are a better option than competitors.

Your competitive analysis should pinpoint the competitive advantage based on the competitors’ product line or service and market segment, pricing, and other such situations. Some of the points you might include in this section are:

• Product/service differentiation in terms of quality or innovation
• Cost leadership or competitive pricing
• Brand reputation
• Customer service excellence
• Diverse and effective marketing strategy

3. Explain your strategies

Your competitor analysis section should not only highlight what opportunities or threats your business has. It should also mention that what will be the strategies to overcome those threats or capitalize on the opportunities.

It could be for taking a top-notch quality for your products or services, exploring the unexplored market segment, or having creative marketing strategies.

4. Know the pricing strategy

To understand the pricing strategy of your competitors, there are various aspects you need to have information about. It involves knowing their pricing model, evaluating their price points, and considering the additional costs, if any.

One way to understand this in a better way is to compare features and value offered at different price points and identify the gaps in competitors’ offerings.

Once you know the pricing structure of your competitors, compare it with yours and get to know the competitive advantage of your business from a pricing point of view.

Competitive analysis example

Need help writing the competitive analysis section of your business plan? Here’s the barbershop competitive analysis example to help you get started.

1. List of competitors

Direct & indirect competitors.

The following retailers are located within a 5-mile radius of J&S, thus providing either direct or indirect competition for customers:

Joe’s Beauty Salon

Joe’s Beauty Salon is the town’s most popular beauty salon and has been in business for 32 years. Joe’s offers a wide array of services that you would expect from a beauty salon.

Besides offering haircuts, Joe’s also offers nail services such as manicures and pedicures. In fact, over 60% of Joe’s revenue comes from services targeted at women outside of hair services. In addition, Joe’s does not offer its customers premium salon products.

For example, they only offer 2 types of regular hair gels and 4 types of shampoos. This puts Joe’s in direct competition with the local pharmacy and grocery stores that also carry these mainstream products. J&S, on the other hand, offers numerous options for exclusive products that are not yet available in West Palm Beach, Florida.

LUX CUTS has been in business for 5 years. LUX CUTS offers an extremely high-end hair service, with introductory prices of $120 per haircut.

However, LUX CUTS will primarily be targeting a different customer segment from J&S, focusing on households with an income in the top 10% of the city.

Furthermore, J&S offers many of the services and products that LUX CUTS offers, but at a fraction of the price, such as:

• Hairstyle suggestions & hair care consultation
• Hair extensions & coloring
• Premium hair products from industry leaders

Freddie’s Fast Hair Salon

Freddie’s Fast Hair Salon is located four stores down the road from J&S. Freddy’s has been in business for the past 3 years and enjoys great success, primarily due to its prime location.

Freddy’s business offers inexpensive haircuts and focuses on volume over quality. It also has a large customer base comprised of children between the ages of 5 to 13.

J&S has several advantages over Freddy’s Fast Hair Salon including:

• An entertainment-focused waiting room, with TVs and board games to make the wait for service more pleasurable. Especially great for parents who bring their children.
• A focus on service quality rather than speed alone to ensure repeat visits. J&S will spend on average 20 more minutes with its clients than Freddy’s.

While we expect that Freddy’s Fast Hair Salon will continue to thrive based on its location and customer relationships, we expect that more and more customers will frequent J&S based on the high-quality service it provides.

2. Competitive Pricing

John and Sons Barbing Salon will work towards ensuring that all our services are offered at highly competitive prices compared to what is obtainable in The United States of America.

We know the importance of gaining entrance into the market by lowering our pricing to attract all and sundry that is why we have consulted with experts and they have given us the best insights on how to do this and effectively gain more clients soon.

Our pricing system is going to be based on what is obtainable in the industry, we don’t intend to charge more (except for premium and customized services) and we don’t intend to charge less than our competitors are offering in West Palm Beach – Florida.

3. Our pricing

• Payment by cash
• Payment via Point of Sale (POS) Machine
• Payment via online bank transfer (online payment portal)
• Payment via Mobile money
• Check (only from loyal customers)

Given the above, we have chosen banking platforms that will help us achieve our payment plans without any itches.

4. Competitive advantage

5. SWOT analysis

Advantages of a Competitive Environment

Somewhere we all think, “What if we had no competition?” “What if we were the monopoly?” It would be great, right? Well, this is not the reality, and have to accept the competition sooner or later.

However, competition is healthy for businesses to thrive and survive, let’s see how:

1. It pushes you to innovation and improvement

In the competitive environment, a businessperson might get a new idea to bring innovation to the market to keep their products and services trending. This way innovation is promoted.

2. Competition validates your idea

Having a good idea becomes valid when others are developing similar products or services. A competitive market confirms that there is a market for your product and service. It also implies that the expenses of marketing and educating your target customers might likely decrease.

3. Efficiency and cost control

Businesses competing with each other get the motivation to operate efficiently to reduce costs and offer competitive prices. This thing for more sales benefits both businesses and customers.

4. Market responsiveness

A competitive environment forces businesses to be quick to adapt to market changes and customer demands. Companies need to adapt quickly to stay relevant and meet consumer preferences.

Competitive Analysis is critical, but don’t go overboard

Whether you are starting a new business or have an experience in the same field, gaining insight from your competitors will always be beneficial for your business.

Remember: Competitive analysis is essential for your business, but you can not assume all things positive on your side. Be realistic and practical while both conducting and writing this section.

Not only competitive analysis, but the whole business plan is necessary for any business to stay on the path. It will be your guide whenever your business is in any problem.

For assistance, you can visit our business plan writing guide . Additionally, we wish you all the luck in your competitive analysis journey.

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Frequently Asked Questions

Is swot analysis a competitive analysis.

SWOT analysis is a component of a competitive analysis, not the whole competitive analysis. Competitive analysis covers a broad topic of analyzing competitors and knowing the competitive advantage.

What tools can i use for competitor analysis?

Executing a thorough competitor analysis requires the use of various tools to collect and analyze data. Here are some tools you can consider:

• Google Alerts
• Social media analytics
• Google Trends
• Google Analytics
• Competitors’ website

What are the 5 parts of a competitive analysis?

The main five components to keep in mind while having a competitor analysis are:

• Identifying the competitors
• Analyzing competitor’s strengths and weaknesses
• Assessing market share and trends
• Examining competitors’ strategies and market positioning
• Performing SWOT analysis

What is the difference between market analysis and competitive analysis?

Market analysis involves a comprehensive examination of the overall market dynamics, industry trends, and factors influencing a business’s operating environment.

On the other hand, competitive analysis narrows the focus to specific competitors within the market, delving into their strategies, strengths, weaknesses, and market positioning.

About the Author

Vinay Kevadiya

Vinay Kevadiya is the founder and CEO of Upmetrics, the #1 business planning software. His ultimate goal with Upmetrics is to revolutionize how entrepreneurs create, manage, and execute their business plans. He enjoys sharing his insights on business planning and other relevant topics through his articles and blog posts. Read more

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How to Write a Competitive Analysis for Your Business Plan

11 min. read

Updated January 3, 2024

Do you know who your competitors are? If you do, have you taken the time to conduct a thorough competitor analysis?

Knowing your competitors, how they operate, and the necessary benchmarks you need to hit are crucial to positioning your business for success. Investors will also want to see an analysis of the competition in your business plan.

In this guide, we’ll explore the significance of competitive analysis and guide you through the essential steps to conduct and write your own. 

You’ll learn how to identify and evaluate competitors to better understand the opportunities and threats to your business. And you’ll be given a four-step process to describe and visualize how your business fits within the competitive landscape.

• What is a competitive analysis?

A competitive analysis is the process of gathering information about your competitors and using it to identify their strengths and weaknesses. This information can then be used to develop strategies to improve your own business and gain a competitive advantage.

• How to conduct a competitive analysis

Before you start writing about the competition, you need to conduct your analysis. Here are the steps you need to take:

1. Identify your competitors

The first step in conducting a comprehensive competitive analysis is to identify your competitors. 

Start by creating a list of both direct and indirect competitors within your industry or market segment. Direct competitors offer similar products or services, while indirect competitors solve the same problems your company does, but with different products or services.

Keep in mind that this list may change over time. It’s crucial to revisit it regularly to keep track of any new entrants or changes to your current competitors. For instance, a new competitor may enter the market, or an existing competitor may change their product offerings.

2. Analyze the market

Once you’ve identified your competitors, you need to study the overall market. 

This includes the market size , growth rate, trends, and customer preferences. Be sure that you understand the key drivers of demand, demographic and psychographic profiles of your target audience , and any potential market gaps or opportunities.

Conducting a market analysis can require a significant amount of research and data collection. Luckily, if you’re writing a business plan you’ll follow this process to complete the market analysis section . So, doing this research has value for multiple parts of your plan.

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3. Create a competitive framework

You’ll need to establish criteria for comparing your business with competitors. You want the metrics and information you choose to provide answers to specific questions. (“Do we have the same customers?” “What features are offered?” “How many customers are being served?”)

Here are some common factors to consider including: 

• Market share
• Product/service offerings or features
• Distribution channels
• Target markets
• Marketing strategies
• Customer service

4. Research your competitors

You can now begin gathering information about your competitors. Because you spent the time to explore the market and set up a comparison framework—your research will be far more focused and easier to complete.

There’s no perfect research process, so start by exploring sources such as competitor websites, social media, customer reviews, industry reports, press releases, and public financial statements. You may also want to conduct primary research by interviewing customers, suppliers, or industry experts.

You can check out our full guide on conducting market research for more specific steps.

5. Assess their strengths and weaknesses

Evaluate each competitor based on the criteria you’ve established in the competitive framework. Identify their key strengths (competitive advantages) and weaknesses (areas where they underperform).

6. Identify opportunities and threats

Based on the strengths and weaknesses of your competitors, identify opportunities (areas where you can outperform them) and threats (areas where they may outperform you) for your business. 

You can check out our full guide to conducting a SWOT analysis for more specific questions that you should ask as part of each step. 

• How to write your competitive analysis

Once you’ve done your research, it’s time to present your findings in your business plan. Here are the steps you need to take:

1. Determine who your audience is

Who you are writing a business plan for (investors, partners, employees, etc.) may require you to format your competitive analysis differently. 

For an internal business plan you’ll use with your team, the competition section should help them better understand the competition. You and your team will use it to look at comparative strengths and weaknesses to help you develop strategies to gain a competitive advantage.

For fundraising, your plan will be shared with potential investors or as part of a bank loan. In this case, you’re describing the competition to reassure your target reader. You are showing awareness and a firm understanding of the competition, and are positioned to take advantage of opportunities while avoiding the pitfalls.

2. Describe your competitive position

You need to know how your business stacks up, based on the values it offers to your chosen target market. To run this comparison, you’ll be using the same criteria from the competitive framework you completed earlier. You need to identify your competitive advantages and weaknesses, and any areas where you can improve.

The goal is positioning (setting your business up against the background of other offerings), and making that position clear to the target market. Here are a few questions to ask yourself in order to define your competitive position:

• How are you going to take advantage of your distinctive differences, in your customers’ eyes? 
• What are you doing better? 
• How do you work toward strengths and away from weaknesses?
• What do you want the world to think and say about you and how you compare to others?

3. Visualize your competitive position

There are a few different ways to present your competitive framework in your business plan. The first is a “positioning map” and the second is a “competitive matrix”. Depending on your needs, you can use one or both of these to communicate the information that you gathered during your competitive analysis:

Positioning map

The positioning map plots two product or business benefits across a horizontal and vertical axis. The furthest points of each represent opposite extremes (Hot and cold for example) that intersect in the middle. With this simple chart, you can drop your own business and the competition into the zone that best represents the combination of both factors.

I often refer to marketing expert Philip Kohler’s simple strategic positioning map of breakfast, shown here. You can easily draw your own map with any two factors of competition to see how a market stacks up.

It’s quite common to see the price on one axis and some important qualitative factor on the other, with the assumption that there should be a rough relationship between price and quality.

Competitive matrix

It’s pretty common for most business plans to also include a competitive matrix. It shows how different competitors stack up according to the factors identified in your competitive framework. 

How do you stack up against the others? Here’s what a typical competitive matrix looks like:

For the record, I’ve seen dozens of competitive matrices in plans and pitches. I’ve never seen a single one that didn’t show that this company does more of what the market wants than all others. So maybe that tells you something about credibility and how to increase it. Still, the ones I see are all in the context of seeking investment, so maybe that’s the nature of the game.

4. Explain your strategies for gaining a competitive edge

Your business plan should also explain the strategies your business will use to capitalize on the opportunities you’ve identified while mitigating any threats from competition. This may involve improving your product/service offerings, targeting underserved market segments, offering more attractive price points, focusing on better customer service, or developing innovative marketing strategies.

While you should cover these strategies in the competition section, this information should be expanded on further in other areas of your business plan. 

For example, based on your competitive analysis you show that most competitors have the same feature set. As part of your strategy, you see a few obvious ways to better serve your target market with additional product features. This information should be referenced within your products and services section to back up your problem and solution statement. 

• Why competition is a good thing

Business owners often wish that they had no competition. They think that with no competition, the entire market for their product or service will be theirs. That is simply not the case—especially for new startups that have truly innovative products and services. Here’s why:

Competition validates your idea

You know you have a good idea when other people are coming up with similar products or services. Competition validates the market and the fact that there are most likely customers for your new product. This also means that the costs of marketing and educating your market go down (see my next point).

Competition helps educate your target market

Being first-to-market can be a huge advantage. It also means that you will have to spend way more than the next player to educate customers about your new widget, your new solution to a problem, and your new approach to services. 

This is especially true for businesses that are extremely innovative. These first-to-market businesses will be facing customers that didn’t know that there was a solution to their problem . These potential customers might not even know that they have a problem that can be solved in a better way. 

If you’re a first-to-market company, you will have an uphill battle to educate consumers—an often expensive and time-consuming process. The 2nd-to-market will enjoy all the benefits of an educated marketplace without the large marketing expense.

Competition pushes you

Businesses that have little or no competition become stagnant. Customers have few alternatives to choose from, so there is no incentive to innovate. Constant competition ensures that your marketplace continues to evolve and that your product offering continues to evolve with it.

Competition forces focus & differentiation

Without competition, it’s easy to lose focus on your core business and your core customers and start expanding into areas that don’t serve your best customers. Competition forces you and your business to figure out how to be different than your competition while focusing on your customers. In the long term, competition will help you build a better business.

• What if there is no competition?

One mistake many new businesses make is thinking that just because nobody else is doing exactly what they’re doing, their business is a sure thing. If you’re struggling to find competitors, ask yourself these questions.

Is there a good reason why no one else is doing it?

The smart thing to do is ask yourself,  “Why isn’t anyone else doing it?”

It’s possible that nobody’s selling cod-liver frozen yogurt in your area because there’s simply no market for it. Ask around, talk to people, and do your market research. If you determine that you’ve got customers out there, you’re in good shape.

But that still doesn’t mean there’s no competition.

How are customers getting their needs met?

There may not be another cod-liver frozen yogurt shop within 500 miles. But maybe an online distributor sells cod-liver oil to do-it-yourselfers who make their own fro-yo at home. Or maybe your potential customers are eating frozen salmon pops right now. 

Are there any businesses that are indirect competitors?

Don’t think of competition as only other businesses that do exactly what you do. Think about what currently exists on the market that your product would displace.

It’s the difference between direct competition and indirect competition. When Henry Ford started successfully mass-producing automobiles in the U.S., he didn’t have other automakers to compete with. His competition was horse-and-buggy makers, bicycles, and railroads.

Do a competitive analysis, but don’t let it derail your planning

While it’s important that you know the competition, don’t get too caught up in the research. 

If all you do is track your competition and do endless competitive analyses, you won’t be able to come up with original ideas. You will end up looking and acting just like your competition. Instead, make a habit of NOT visiting your competition’s website, NOT going into their store, and NOT calling their sales office. 

Focus instead on how you can provide the best service possible and spend your time talking to your customers. Figure out how you can better serve the next person that walks in the door so that they become a lifetime customer, a reference, or a referral source.

If you focus too much on the competition, you will become a copycat. When that happens, it won’t matter to a customer if they walk into your store or the competition’s because you will both be the same.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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What is competitive analysis? Template, examples, and how-to

In this comprehensive guide, we’ll define what a competitive analysis is, describe the benefits product teams stand to gain from conducting one, and walk through the steps of how to do a competitive analysis.

Through the tutorial, we’ll refer to examples to demonstrate how each step of a competitive analysis works in practice. We’ll also provide a list of customizable, free competitive analysis templates for you to use when completing these steps on your own.

Complete guide to competitive analysis

Picture this: you just came up with the next disruptive, game changing, AI-powered e-commerce marketplace. The objective is to connect buyers with sellers to fulfill their tailored and customized product needs.

You’re confident your product will take on Etsy and other big players in the market. You did some market and user research and have a good idea of your ideal customer and their (underserved) needs. Based on this data, you believe your marketplace can reach product-market fit quickly.

It’s now time for you to dust off your copy of Sun Tzu’s  T he Art of War . Why is that, you ask?

The Art of War is an ancient Chinese military textbook that, although dated somewhere between ~500–400 B.C., is one of the most influential management books out there to this day. It provides great strategic and tactical advice. Moreover, it provides guidance to help you assess yourself and your competition to gain an advantage.

Maintaining a competitive advantage is the goal. Even if you have the best product in the world and you know there is a market for it, if you don’t understand your competition, you‘re bound to fail. That’s why you need to perform a competitive analysis.

As the band Rage Against the Machine would say, know your enemy .

What is competitive analysis?

Competitive analysis (sometimes called a competitor analysis or competition analysis) is exactly what it sounds like: a structured approach to identifying and analyzing your competitors. More concretely, it’s an assessment of your competition’s offerings, strategy, strengths, and weaknesses.

A competitive analysis helps you answer questions such as:

• Which other companies are providing a solution similar to ours?
• What are the ideal customer’s minimum expectations?
• What are they currently not getting from our product with regard to those expectations?
• What barriers do competitors in the market fce?
• What should we avoid introducing in our product?
• What price are customers willing to pay for our product?
• What value do we need to provide to make our product stand out in the market?
• What trends are happening and how might they change the playing field?

When conducted thoroughly and regularly, a competitive analysis provides you with tons of information that can be used to improve and optimize your product. The end result is a holistic overview of your competitor landscape.

Why do a competitive analysis?

Competitive analysis is a fundamental product management instrument. It helps PMs learn what works and what doesn’t when trying to acquire market share, identify market trends, and locate gaps in their product offering.

Competitive analysis exists to help you avoid making mistakes and empower you to beat competitors to the punch in the pursuit of product growth and success.

Knowing your competition will bring you great rewards. Conducting a competitive analysis will help you more effectively:

• Create benchmarks
• Identify opportunities to better serve customers
• Make strategic decisions
• Determine your pricing strategy
• Identify market gaps
• Determine distribution and marketing strategies

Typically, the first time you create a competitor analysis is when doing your market research. This helps you get an idea of the product-market fit , which will evolve along your journey.

As a product manager, your role is not to analyze how well your competitors are able to showcase themselves. It is your job to make the product what the customer needs it to be. Understanding your competitor’s capabilities, pricing, and product positioning helps you in this.

Keep in mind that your competitors will likely showcase themselves to appear better than they probably are. You’ll be able to acquire tons of information about them, but you should take that information with a pinch of salt.

How to do a competitive analysis

There is no a single way to do a competitive analysis. In general, a competitive analysis is made up of three fundamental components:

• A shortlist of competitors
• A competitor deep dive
• A holistic overview and strategy

To demonstrate how to do a competitor analysis, we’ll refer back to the example outlined in the introduction.

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Remember, in our example, we’re looking to disrupt the market with an AI-powered e-commerce marketplace app that helps buyers and sellers connect to fulfill highly customized orders. Let’s call our innovative new product AGORA.

1. Create a shortlist of your competitors

There are three types of competitors:

• Direct — Competitors that offer the same product and target the same ideal customer; you are battling direct competitors heads-on
• Indirect — Competitors that either offer a somewhat similar product or target the same ideal customer
• Replacement — Competitors that offer a different product but target the same ideal customer

For a competitive analysis, you need to identify at least your direct and indirect competitors. So how do you do that? By looking inward and researching obsessively .

Look inward

To figure out who your direct and indirect competitors are, you need to look inward first to understand your product positioning: who are you servicing and what is the offering you are providing?

You can answer these questions by doing a self-assessment using the product canvas . Originally introduced by Roman Pichler, the product canvas has since tbeen tweaked and refined.

In its core, the product canvas covers:

• The name of the product
• Objectives and key metrics for success
• The ideal customer
• A high-level overview of what’s required to meet the customer’s needs
• Just enough product details about short-term goals

For our example product, the competitive analysis might look something like this:

Research obsessively

A simple Google search using keywords from your self-assessment can get you pretty far. Other resources that can help you identify your competitors include tools such as Crunchbase, Similarweb, Statista, etc.

As the old saying goes, the customer knows best. If you don’t have many customers yet, review sites such G2, Capterra, Trustpilot, and Google Reviews can help you.

If you do have customers, go ask them. Most customers try and evaluate several products before deciding on the right product to buy. Nothing is stopping you from asking them which other brands they considered and why they ultimately chose yours.

Once you have established who your competitors are, you might find yourself in a market with many direct and indirect competitors. If that is the case, select about seven of the most relevant competitors to include in your competitor deep dive.

2. Do a deep dive on each competitor

From your a shortlist of competitors, choose about seven of your most important and dig up all the relevant information on each one.

The research conducted during the previous step will help you capture the most relevant information about your competitors for the following categories:

Company profile

Ideal customer profile, product information, market approach, swot analysis.

Start by creating a company profile for each of your competitors to gain a better understanding of who they are. Include the following information:

• Name   —  What is the name of your competitor?
• Founding date  —  When was the company founded? How long has it been in the market?
• Company size  —  How many employees does the company have? Are they equipped to service the market and innovate?
• Market share  — The portion of the market controlled by the competitor’s product
• Revenue   —  The income the competitor generates from its product
• Reputation   —  What do customers think of your competitor’s product on a scale from one to five?

Let’s apply this framework to our AGORA competitive analysis example:

It’s important to understand who your competitors are serving and who is buying the product. This not only to reconfirm that the competitor is indeed a direct (or indirect) competitor, but also to understand what customers like and dislike about the competitor’s product.

The information you’re looking for includes:

• Ideal customer   —  Who is the competitor’s target customer and what defines them?
• Motivations   —  What does the customer enjoy about your competitor’s product?
• Frustrations   —  What does the customer hate about the product?
• Primary buyer  —  Who is the primary buyer of the product? Is it the as the ideal customer, or is it a different persona?

Let’s see what this would look like following our AGORA example. Below is an example ideal customer profile for Etsy. First, for the buyer:

And the ideal customer profile for Etsy sellers:

Not to be captain obvious, but you want to capture more details about the product your competitor is offering and its positioning.

The information we’re looking for at this step includes:

• The product   —  What is the tagline your competitor is using to market its product?
• Positioning   —  Based on the quality and price of the product, place the product into a one of several buckets. For example, Economy (low quality, low price), Skimming (low quality, high price), Penetration (high quality, low price), and Premium (high quality, high price)
• Product features   —  What are the key features being marketed and promoted?

Referring to our example AGORA app, the product information associated with Etsy on a competitor analysis might look as follows:

Next, seek to understand how your competitors are bringing the product to market .

List the following information:

• Pricing — What does the product costs? If there is a tiered pricing model, what does it look like?
• Distribution channels — Through which channels is your competitor selling the product?
• Marketing channels — Through which channels is the product being promoted?

In our AGORA competitor analysis example, this section would look something like:

With all the information you’ve collected, you’ll find yourself in a good place to do a SWOT analysis . This is one of the most common and popular competitive analysis frameworks.

SWOT stands for strengths, weaknesses, opportunities, and threats:

• Strengths  —  What is going well for the competitor?
• Weaknesses   —  What is not going well? What obvious flaws are there?
• Opportunities   —  What could give your competitor an advantage?
• Threats  —  What might harm your competitor’s product?

For AGORA, our example competitive analysis might include a SWOT analysis that looks like this:

3. Develop a holistic overview and strategy

Now that you have a better view of your competitors, it’s time to determine how you want to approach them in the market: do you want to avoid your competitors or attack them?

Two extremely useful tools that can help you make this assessment are the competitive matrix and battle cards .

Competitive matrix

One way to operationalize the data you gathered during your competitive analysis is to plot out a four-quadrant competitive matrix.

Define key factors for the and x and y axes and plot yourself and your competition accordingly to see how you stack up. This approach is also known as perceptual mapping.

A competitive matrix for our example would look like this:

Battle cards

You can use the four-quadrant competitive matrix and competitor insights to create battle cards for each of your competitors.

Battle cards are a visual aid that help you compare your product against those of your competitors at a glance. It’s a quick and easy way to see how you stack up in key areas of performance and value. It’s also a neat way to help sales in their conversations with customers.

Here’s what you should include on each battle card:

• Company name — Name of your competitor
• Powers  —  What makes this competitor stand out from the rest?
• How we win   —  What should we do to gain a competitive advantage over this competitor?
• Why we lose   —  What is this competitor better at? What should we avoid so we don’t lose market share?
• Pricing   —  How much of a threat is the competitor’s product to our market share (low, medium, or high)?
• Strategy   — Should we attack or avoid this competitor?

A battle card for our example competitive analysis might look as follows:

Alternative competitive analysis frameworks

If you‘ve followed the framework described above, you should have solid insight into your competitors, your product opportunities, and the best strategy to attack or avoid your competitors in the market.

If you want to dig deeper, you can follow up your competitive analysis by producing a Five Forces analysis and/or customer journey map .

The Five Forces model

You still might want to consider gaining more insights into the competitive structure of the market you are in — in other words, gain a better understanding of how easy it is to either enter or be replaced by a competitor in the market.

A great framework to use for this type of competitor analysis is the Five Forces model , originally conceived by Michael Porter.

According to the Five Forces model, you can assess the market you are in by looking at:

• Intensity of competitive rivalry
• Negotiation power of new buyers
• Negotiation power of suppliers
• Threat of new entrants
• Threat of substitutes

Customer journey map

Instead of zooming out, you can also zoom in on the journey ideal customers make when interacting with the product itself, the distribution, or marketing channels.

On a journey map, your touchpoints are the customer, the activity performed, how the customer experiences the activities, and their expectations.

Free competitive analysis templates

A competitive analysis is a continuously updated document packed with information about your most important competitors to help you determine how to approach them in your target market.

The competitive analysis model described in this article consists of three steps that are designed to produce the insights you need to rule the market once and for all.

Below are free, customizable competitive analysis templates for each step of the process described in this article:

• Competitive analysis template
• Product canvas template
• Competitive matrix template
• Battle card template
• Customer journey map template

NOTE : To use and customize the competitive analysis templates above, after opening, select File > Make a copy from the main menu.

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A Guide to Competitive Analysis: It’s Not Just about Competitors

By Joe Weller | April 16, 2018 (updated February 13, 2024)

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If you were running a cross-country marathon, wouldn’t you want to know something of the terrain and expected weather conditions before you began? The same principle of preparation applies when starting and continuing a business. It’s not enough to focus on your own production and financial goals: You need to understand what’s happening around you, how others create goods or services, the economic forecast, changes in rules and regulations, and more. In other words, you need to conduct a competitive analysis. The thought of searching for and digesting the required information may seem overwhelming, but we make it easy.

In this article, we explain how to focus your analysis by first deciding what questions you want answered. Learn how to find current and potential competitors and how many of them you need to review. Then, we cover the specific aspects of your competitors that you need to consider as well as where to find more information about them. Marketing experts weigh in on how to maintain focus during analysis. We also offer free, downloadable competitive analysis templates to start you on your own information gathering and analysis.

What Is Competitor Analysis?

Competitor analysis (CA) is a process of identifying competitors and gauging their business and marketing strategies to understand both their strengths and weaknesses and those of your own business. Competitive analysis provides a higher-level perspective of the entire marketing landscape and competitive intelligence.

“Competitive analysis is the process of analyzing all collected information to derive some insight for reducing risk and making better decisions,” explains competitive intelligence expert and author Babette Bensoussan .

“It is about your broader competitive environment,” she says. “I always remind my clients that competitors make up only one element of a business’s competitive environment. Other elements include government, technology, buyers, and suppliers, to name a few that impact how well you can compete.”

What Is the Purpose of a Competitive Analysis?

Researching your competitive landscape is essential to business growth and survival, and helps you offer better products or services to customers. You should gain an understanding of how customers view your company, what you’re doing right, and what you’re doing wrong. Therefore, competitive analysis forms a crucial part of marketing plans to help you understand what differentiates your product or service. Particularly when applying for funding, competitive analysis provides valuable insight into business plans. However, competitive analysis offers much more:

• Branding possibilities
• Insight into how competitors design products and messages
• SEO possibilities
• CRO (conversion rate optimization)
• GTM strategies
• User experience (UX) advantages of your and others’ products and websites
• Gaps in the market
• New products and services to develop
• Market trends

According to a Conductor survey , 60 percent of marketers don’t feel proficient in competitive analysis. Many don’t practice it on a regular basis. Knowledge derived from these exercises is critical, and you need to assess competition regularly. Nevertheless, marketing departments often skip competitive analysis, which leaves them with a fragmentary understanding of the landscape and competitors. Being proactive can help you anticipate and prepare for competitor developments and provide you with the agility to take advantage of changes.

According to Bensoussan, “In today’s world of constant change and information overload (whether the information be real or fake), it is critical for any business person to understand the competitive landscape and the forces that impact the profitability and viability of a business.”

What Should Be Included in a Competitive Analysis?

In most cases, a competitive analysis contains a few basic sections, which may vary depending on the size and form of your company and the focus of your analysis:

• A list of your main competitors
• An overview or what you know about them
• Who their target customers are
• A list of their products or services
• What media they use to market their goods and services
• Their current and past marketing strategies
• Their value proposition and effectiveness
• An analysis of all of the strengths and weaknesses of your competition (and your own company)
• An overview of the strategies being used by the competition to achieve their objectives
• An overview of the market and projections for the future

How to Prepare for a Competitive Analysis

One of the crucial prerequisites for a successful competitive analysis is an open mind. Check your beliefs at the door — what you think about your company, your customers, or your competitors isn’t necessarily true. That can be a good thing.

In addition, it is vital to understand why you are conducting an analysis. What are your goals for the business? What are your goals for this analysis? “Always, always be very clear as to what the decision you will be making is all about,” advises Bensoussan. “If you are not clear about your decision, then you will never know if you have good competitive analysis or just some more information.”

She offers these two questions as examples of how different the impact of each answer can be: “Tell me who’s who in the [manufacturing] of zippers?” versus “Should I enter the zipper-manufacturing industry, and can I achieve a return on investment of, say, 15 percent in three years?”

“Which question would help you the most in delivering good quality CA? Which outcome do you think would provide the most value?” Bensoussan asks.

Companies often enlist the help of outside consulting firms dedicated to conducting competitive intelligence research. Guidance on competitive intelligence support, such as database information, software platforms for market program tracking, and more is available through the Society of Competitive Intelligence Professionals .

Competitor Analysis Frameworks

Over the decades, marketing gurus have developed or advocated several competitive analysis frameworks. Here are six well-known methods to consider.

• Porter’s Five Forces Model: First published in 1979 by Harvard Business School professor Michael Porter, the Five Forces model provides a view beyond competitors to factors in your industry landscape that may threaten or strengthen your position. The Five Forces include the following:

• Potential New Entrants: Consider how much money, time, and effort it would take for a company to displace you.
• Competitive Rivalry: Determine who your competitors are, who the closest competitors are, and their products, prices, and quality. Fewer rivals mean more opportunity for your unique qualities to shine; many rivals mean more competitors to steal your customers and potentially better deals to lead customers elsewhere.
• Suppliers: The more potential suppliers you have, the better for you. Consider how having fewer suppliers might impact your operation.
• Buyers: If you have many customers, you have the power. Otherwise, buyers can negotiate more advantageous deals elsewhere or find sources other than yours. Consider how you would treat that situation.
• Substitutes (or Complements): A competitor could create a product or model that replaces yours. On the other hand, a new product or service could also complement yours, which would create a symbiotic sales situation. Complements are sometimes considered the sixth force in the model.

Porter stressed the importance of not confusing these constants with temporary disruptions, such as technological innovations or government interventions in industry.

You can download the Five Forces model below to answer your own questions about an industry or business proposition.

Download Five Forces Model

Excel  |  PDF

Industry Life Cycle Overview: Both industries and individual products have life cycles, which reflect the state of sales, whether robust or diminishing. Understand which stage of the life cycle your industry, company, or product is in to help target your marketing efforts. Product life cycles contain such stages as these:

• Introduction: At the introductory stage, a new industry or product is not well known or proven. It is usually marketed to a few early adopters. Because resources focus on product development, testing, and refinement, few or no profits accrue. Marketing focuses on explaining the product, creating awareness around it, and establishing a niche.
• Growth: As awareness grows and the industry or product becomes established, profits may also grow. However, in the growth stage, rival products may also appear. Although improvements require funds, production efficiencies may also develop. Some products have only a short growth phase. For example, a particular fashion may last for only one season. Other products experience a long or extended growth phase, such as software products, which continue their usefulness through upgrades. During the growth stage, marketing centers on differentiating the product, so it stands out from competing products.
• Maturity: In the maturity stage of a product or industry, sales may expand, but at a less accelerated rate. Fewer competitors may dominate the market and may attempt to differentiate on quality or increase sales by touting low costs.
• Saturation: You reach the saturation stage when every customer who could buy the product already owns the product. A lack of innovation or competition from a superior product could result in saturation.
• Decline/Termination: Industries and products decline for several reasons. Innovations may overtake them and render them obsolete. Businesses and product lines may fail to upgrade and innovate. At the decline or termination stage, companies may fold, continue in a smaller market, or merge with larger, successful businesses.  

Strategic Groups Analysis: You perform strategic groups analysis on companies within a business sector, such as automobiles, to see how they vie for their share of consumer expenditure. By dividing companies into strategic groups, you can understand how businesses of different sizes behave in the marketing landscape. Businesses within groups tend to be competitors, whereas businesses in other groups are related but not competitive. For example, running shoes and high-end women’s dress shoes are in different groups. Analyzing companies in this way can also reveal other significant information: direct competitors and their basis for competition; if and how a company can move to another group; and strategic problems and opportunities. Strategic groups are usually plotted on an x-y axis, where two highly relevant criteria form the axes. Here are some examples of criteria:

• Brand ownership
• Company size
• Capacity utilization
• Cost structure
• Geographical market segmentation
• Marketing activities
• Ownership structure
• Sales channels
• Product diversity
• Product quality
• R&D capability
• Vertical and horizontal integration

First, plot the companies where you think they belong on the graph. Now, with all companies plotted, create groupings. If you want, you can use larger or smaller circles to indicate market share. To gain greater insight, perform a Five Forces analysis on them, or consider the mobility barriers that prevent companies from shifting to other strategic groups.  

SWOT: Perhaps one of the most commonly addressed marketing analyses is SWOT (strengths, weaknesses, opportunities, and threats). In essence, SWOT represents what competitors do and do not do well. As you look at SWOT for competitors, also consider it for your own products and services.

• Strengths: What do they do better than you? What are they known for? Is their pricing, inventory, convenience, and level of service better than yours?
• Weaknesses: How do they fall short of your company’s standards? Can you leverage their shortcomings to improve your standing with customers?
• Opportunities: What in your competitors’ landscape can you exploit to your advantage?
• Threats: What in your competitors’ landscape threatens their business position?

Note that strengths and weaknesses focus on internal characteristics, while opportunities and threats concern external forces. SWOT can be performed separately, but it may provide a useful frame for studying a business’ products and services, marketing, and sales.  

Competitive Array: Competitive arrays, also known as competitive matrices , provide a way to quantify characteristics that may be unquantifiable. For example, if company A sells 500 widgets and company B sells 250, it’s clear which company sold more. But how do you quantify the attractiveness of online and print media or innovation? Creating the competitive array can be an individual or group exercise. To start, list your competitors across the top of your writing surface. In the left-most column, list important characteristics. Next, create a column for weighting the importance of each characteristic so that the sum of the characteristics totals one. The higher the weighting, the more important the characteristic (you may have a few characteristics with the same weight). Next, grade each competitor for each characteristic on a scale, such as from one to 10. Now, multiply the grade by the corresponding weight.  

Competitive Value Proposition Analysis: The characteristics of a value proposition are exclusivity, clarity, and credibility. This method concerns how unique the product or service is, how clearly the product message is conveyed, and whether the message is credibly supported by evidence, such as testimonials, statistics, or test results. Because customers remember only a few key advantages of your product from your media promotion, the main value proposition must be correct and clear and mesh with your actual competitive advantage. To figure out how to differentiate your company, you must determine how competitors differentiate themselves from each other. POPs (points of parity), PODs (points of difference), and POIs (points of irrelevance) help you dissect value propositions.

• Points of Parity (POPs): These are elements of customer benefit that both you and your competitors offer.
• Points of Difference (PODs): These are features of customer benefit that you offer but competitors don’t. Keep in mind that not every point of difference is significant to consumers.
• Points of Irrelevance (POIs): These are characteristics that customers don’t care about.

Your unique value proposition (differentiating characteristics) doesn’t need to appeal to every customer. Don’t make your value proposition too general. You can’t be all things to all customers, just as you can’t do what your competitors are doing.

Otherwise, there's no differentiation. You end up being like teenagers, everybody in the same jeans," says Sonia Schechter, Chief Marketing Officer of Marxent , a provider of virtual reality and augmented reality apps for furniture retailers. Therefore, target your message.

Discover your points of parity by using our POP template.

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Who Are Your Competitors?

As a first step in competitive analysis, marketing guides typically suggest determining who your competitors are. Competitors can be divided into groups of direct competitors, indirect competitors, and future competitors.

• Direct Competitor: These are companies who sell a direct substitute for your product, operate in the same geographic area, and/or offer the same goods (such as groceries) to the same market. Ask who your customers would buy from if you weren’t in business.
• Indirect Competitor: These are companies in the same geographic area whose products occupy the same general, but not specific, category as your own (e.g., a general bakery versus a designer cake store). Indirect competition satisfies the customer’s need for a particular product or service, although that product or service may be different from yours. Similar products operating in different market segments do not represent direct competitors. For example, a high-end seafood restaurant doesn’t compete with a burger place.
• Future Competitor: Future competitors may currently be indirect competitors who change and expand solutions. In the bakery example, the general bakery could hire a high-end designer to compete with the specialty cake maker. Or, the designer cake store could branch out into breads and muffins.

It may be difficult at first to envision what types of organizations you need to analyze and whether you need to analyze all competitors.To identify competitors, ask yourself who your customers would buy from if your product did not exist. Perhaps even more important, consider who your customers think your competitors are. How many competitors you review depends: If only a few companies do what you do, analyze everyone. If you have many competitors, use Pareto analysis to focus on the critical 20 percent. Larger businesses may analyze the top 10, whereas a small business can focus on three. Disregard online competitors unless you plan to sell online.

‌ Download Pareto Chart Template - Excel

How to Find Current Competitors

Some competitors may seem obvious, but sleuthing can reveal challengers you weren’t aware of.

• Google search for a product or service similar to yours. Consider the companies in paid ads and organic returns.
• Try SEMrush to check which domains are using which keywords.
• Ask your current customers who they would choose besides you.
• Check Alexa, Google Trends, or SimilarWeb for general estimates on the popularity of domain names and keywords.
• Review Dun & Bradstreet for new incorporations.
• Consult Derwent for new patent information.
• See who has booths at trade shows.

How to Find Potential Competitors

While you consider the current playing field, you must also keep your eye on what’s coming around the corner. These are the future new entrants in your niche. Consider who might start a  business that would compete with yours. New competitors can be found in related markets, related technologies, or related products. Companies from other geographical areas with similar products may begin to sell in your area, and former employees or managers can start their own companies based on the themes of your business. In addition, consider the following conditions that may encourage competition:

• A company gains competitive advantage.
• Buyers are dissatisfied with suppliers.
• An unmet demand for goods exists.
• Few major barriers to entry exist.
• The industry offers high profit margins.
• The industry offers unrealized growth potential.
• Competitive rivalry is not intense.

It’s Not All about Competitors ( Competitive Doesn’t Always Mean Competitor )

Depending on what your product or service is and where it is in its life cycle, a competitor focus may not be optimal. For example, for emerging technologies, no true competitor may exist.

“Looking too closely at competition is a massive distraction,” Schechter notes. “If you’re selling a commodity or established product, such as a drugstore, which sells the same thing anywhere, you’d be looking at specific issues, like price, location, and assortment.”

Schecter says marketers themselves often don’t understand that what the competition is doing is not important: “Successful marketing is how you define yourself in the landscape. People don’t care about a feature-by-feature description, or even one feature. They buy the package. They like you. You’re different or you’re solving a particular problem. A new business must define and lay out the landscape for the customer.”

To succeed, understanding what customers want is key. “Marketers have nuanced detail, and customers don’t care about that detail,” Schechter continues. “But, you have to listen to their questions and engage in dialogue with them to gain real understanding,” she points out. She cites Apple’s promotion of the camera in the first iPhone as an example of marketers understanding what — out of thousands of potential functions — was important to consumers. “B2B marketing is the same. It’s about listening to customers, figuring out how they’re shopping, and trying to see through their eyes,” Schechter emphasizes.

“Obsessing over competition can get you off track. If you’re listening to customers, you’ll build the right product. But you don’t need to build your dreams on other people’s ideas,” she concludes.

Where to Find Information for a Competitive Analysis

Remember that every department of your business is a potential source for information, including the following areas:

• Sales: Questions for potential, current, and lost customers
• Research and Development: New patents
• Purchasing: Suppliers
• Marketing: Customers and other consumers

Once you’ve determined who your competitors are and what you want to learn about them and from them, you need to go information hunting:

• Visit offices or brick-and-mortar stores. What do they look like? Who’s there?
• Get financial and organizational information from public filings and from sources like Hoovers, Manta, and Dun & Bradstreet.
• Monitor PR Newswire for new developments and changes.
• Some marketing platforms may actually include information about your competitors.

Interviews and Research Surveys

Interviewing competitor customers and consumers who know little about your business is important to overcoming your preconceptions about the business landscape. You probably have specific questions in mind, but here are the basics:

• Why are you shopping for a solution?
• What were the main reasons you chose the company you did?
• Ranked from most important to least important, what are your five shopping criteria?

Media Scanning or Competitor Content Analysis

You can learn much about competitor products and messaging by scanning media. Media doesn’t just include online content (web pages, tweets, and Facebook posts) — it also includes such traditional marketing collateral as white papers, case studies, and data sheets. Moreover, consider reference materials, such as LexisNexis and Hoovers, and trade, business, or news publications for ads, news stories, and press releases. Media and content can reveal not only new products and new branding, but also new positioning and segmentation strategies, pricing, target markets, and promotion strategy.

What Information to Search for in Competitive Analysis

The approach to analysis depends on the questions requiring answers. To organize your analysis, divide it into three aspects: product or services, marketing, and sales. Each aspect contains its own questions and means of analysis.

Download Competitive Analysis Checklist

Products and Services

Your understanding of products and services must be thorough. Investigate the complete product or service line. Try to understand who your competitors’ customers are and what they need. Look at their pricing strategy and see if it differs for online and brick-and-mortar stores. Also, consider how they differentiate from their competitors.

Tracking competitor sales processes can involve more legwork. For public companies, SEC filings provide some financial information about growth or contraction, but, for private companies, information is less readily available. Information about sales channels may be easy to find through a look in the phone book or online. You can also gather details about the sale process by asking current customers why they chose your product over others. You can also acquire valuable information by following up even after you lose a sale in order to understand the customer’s thinking. What do their partner resales programs look like? What are their revenues versus sales volume?

Marketing Efforts in Competitive Analysis

What does the competitor marketing plan entail? How do competitors invest marketing efforts? What can you do even better? A variety of approaches can help you define competitor marketing strategy.

When you identify marketing assets, take a reasonable sample of items — no need to review all of them. Just remember to keep samples consistent among competitors. Also, when reviewing items, consider the quality of the collateral. It should appear professional, with no typos, and in the formal, professional, idiomatic voice. In addition, a solid library of resources, such as consistent blog posts, whitepapers, case studies, videos, webinars, and podcasts may point you to themes and leads you should follow.

E-Marketing Strategy Competitive Analysis

Few businesses today can function without a web presence that helps generate traffic and inquiries or purchases. Some statistics say that prospective buyers visit a website as many as nine times before purchasing and, depending on the product, visit multiple sites before purchasing. Forrester research after 2010 suggests potential customers visit three sites on average before buying. The more sites visited, the more money the customer intends to spend.

Therefore, understanding how your site compares to your nearest competitors can be helpful. To drive eyes to websites, online purveyors use search engine optimization (SEO) to employ the keywords most likely to garner high search ratings in Google (and other search engines). Marketers frequently also use SEM (search engine marketing) to promote a business or product by increasing visits to a website through paid keywords. Look at how saturated their content is with keywords and where they use keywords, whether in H1 and H2 tags, page titles, content, or links. Also, look at the difficulty level of their keywords.

Consider the usability of the steps in the sales funnel as well as the navigation. What do the  landing pages say? Also, look at backlinks (i.e., links from other pages to your competitor’s page) to your web page. See how many backlinks exist — and from which pages — to understand if this is something you can improve for your website.

Structure is important, but quality content also matters. Online marketing collateral appears as blogs, white papers, ebooks, case studies or user stories, videos, webinars, podcasts, and more. But words and pictures themselves are not valuable if they don’t offer any unique information or concise approaches to existing knowledge. Check whether content is shared and which topics attract attention, or, conversely, what that content and those topics are linked to. What do readers comment on, if they do comment? Who else is sharing what your competitors are publishing?

Social Media

Certain social media platforms appeal to some audiences more than others. The channels a company favors can reveal clues to the demographics of their target market. Make note of what social media buttons they include on pages and where on the page they include them.

Software Tools for Understanding Online Competitors

Besides monitoring content, you can monitor the mechanics of competitor websites to glean more data about how marketing strategy and product offerings are changing. Software helps to automate these investigations for you. Following are some of the many products available:

• BuiltWith : See what platform was used to build a page.
• Ghostery : Find trackers on a website.
• SEMrush : Discover company rankings, organic keywords, AdWords, and analyses of backlinks.
• Versionista : Track web page and website changes, SEO changes, and more.
• Visualping : Monitor webpage updates.
• SpyFu : Find competitor keywords and AdWords, including AdWord and keyword variations and history.
• iSpionage : Track PPC and other keywords in competitor campaigns.
• SimilarWeb : Compare competitor websites to your own.
• Heatmaps: Use large amounts of data to provide a visual representation of how users interact with a website. Heatmaps can indicate where users click and look and for how long. Levels of intensity of activity are usually displayed through colors.
• Session Recording Tools: Record user browsing sessions. Session recording tools can yield a wealth of rich data, but raise some privacy concerns.
• Tag Management Systems: Advanced e-marketing implementations use tags to aid analysis and reporting. Tags are snippets of code that are usually added to the <head> tags of a web page.

Web Page User Testing for UX in Competitive Analysis

It’s essential to understand how consumers approach your website, especially for web-based products and marketing. Allow customers to test your site, and even view it yourself from a customer’s perspective, to help eliminate unnecessary steps and streamline your sales funnel. Doing so can also help to illuminate the opportunities for upsells and cross-sells.

Limiting the analysis to two or three competitors offers a manageable amount of insight into usability, which helps you avoid reviewer overload and confusion. For impartial results, don’t reveal to test participants which website is yours.

Ask test participants to enter words in Google or list the words and phrases they would use to find a certain product or service. Not only does this yield potentially fruitful keywords, it also indicates whether your site appears in search returns.

To get a sense of each participant’s impression, have them look at each website for five seconds and answer the following questions:

• What three words would you use to describe the site?
• What is it about? What products or services are offered and for whom?
• How does this website make you feel?

To understand their process, give participants a task to perform on each website. Ask them to answer the following questions:

• What was the worst thing about your visit to this website?
• What aspects of the experience could be improved?
• What did you like about the website?
• What other comments do you have?
• Which website did you like best and why?

How Much Data Do You Need in a Competitive Analysis?

It may seem overwhelming to sit down and search out your competitors’ business situations. That’s why setting a clear intention before you begin an analysis is so important. In addition, Babette Bensoussan advises that you don’t need to analyze everything:

“Over the years, I have learned that once you have 70 percent of the information required for your chosen analytical technique, you can proceed to the analysis,” she explains. “You never really need all the pieces of a jigsaw puzzle to tell you what the picture is. This same philosophy applies to analysis. More information may not yield better insights nor improve predictive accuracy.”

How Do I Write a Competitor Analysis Report?

The format of your analysis depends on individual choice and the audience. You may also choose to use one kind of format while you work through the analysis, and another when you present findings.

Take a sheet of paper. In the left-most column, write the names of your closest competitors. Across the top of the page, list the main attributes of each product, such as target market, price, size, method of distribution, extent of customer service, prospective buyers, and so on. Then, make a check or a note for each attribute the competitor fulfils. An additional column can contain information about service or product availability, the website, a toll-free phone number, and other general information.

A competitor profile helps you make a detailed record about each competitor, and also allows you to capture snapshots of a business over time. Consider listing some of the following information:

• Location of offices and factories
• Key personalities, history, and trends
• Ownership, organizational structure, and corporate governance
• Number of employees and skill sets
• Management and management style
• Compensation, benefits, and retention rates
• Plant capacity, utilization rate, age of plant, capital investment
• Product mix per plant and shipping logistics
• Products and services
• Depth of product line
• New products developed and success rate
• Research and development details
• Brands and brand loyalty and awareness
• Patents and licenses
• Quality control conformance
• Cash flow and liquidity
• Profit growth profile
• Method of growth (organic or acquisitive)
• Objectives, mission statement, growth plans, acquisitions
• Marketing strategies
• Segments served, market shares, customer base, growth rate, and customer loyalty
• Promotional mix, promotional budgets, advertising themes, ad agency used, online promotional strategy
• Distribution channels (direct and indirect) and exclusivity agreements

Here is a step-by-step process for writing a competitor analysis report:

• Write down your competitors.
• Write what you know about them already.
• Discover who their target customers are.
• Discover their pricing methods.
• Investigate their marketing strategy.
• Figure out their competitive advantage.

Download our competitive analysis landscape template to get ideas for gathering information and reporting analysis results.

Download Competitive Analysis Landscape Template

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Competitive Analysis for Small Businesses

Small business can be competitive. Beyond meeting financial targets, you need to understand the competitive landscape (short of allowing it to distract you) and then target a niche market.  Many of the same analyses that apply to large businesses also apply to small businesses. However, if this is your first business, or if you don’t have a marketing background, you may want to pay attention to a few aspects.

First, it is helpful to acknowledge how much or how little you know about your competitors by sketching a profile of your top two or three competitors. Next, try to learn all you can about your competition.

You can use the following template to perform a competitive analysis for your small business.

Download Small Business Competitive Analysis Template

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What Is a Competitive Analysis in a Business Plan?

Competitive analysis should play a key role in the preparation of a business plan. Particularly if you seek outside funding, your knowledge of the competitive landscape will show your understanding of your business and the market forces at play.

When starting a business, consider all the analysis questions described above, but pay particular attention to issues of growth and opportunity. Consider addressing the following circumstances:

• Whether current competitors target a specific niche or offer products to the mass market
• If, how, and why competitors are growing or reducing business
• How your company will be stronger than competitors and better able to exploit changes in the market landscape
• What you will offer customers that no one else does (your competitive advantage)

In the business plan, describe the competitive landscape as it relates to direct and indirect competitors and opportunities and risks, emphasizing your competitive advantage. This competitive analysis can form the basis for your first marketing plan.

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How to Write the Competitor Analysis Section of the Business Plan

Writing The Business Plan: Section 4

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

The competitor analysis section can be the most difficult section to compile when writing a business plan because before you can analyze your competitors, you have to investigate them. Here's how to write the competitor analysis section of the business plan.

First, Find Out Who Your Competitors Are

If you're planning to start a small business that's going to operate locally, chances are you already know which businesses you're going to be competing with. But if not, you can easily find out by doing an internet search for local businesses, looking in the online or printed local phone book, or even driving around the target market area. 

Your local business may also have non-local competitors that you need to be aware of.

If you're selling office supplies, for instance, you may also have to compete with big-box retailers within a driving distance of several hours and companies that offer office supplies online. You want to make sure that you identify all your possible competitors at this stage.

Then Find Out About Them

You need to know:

• what markets or market segments your competitors serve;
• what benefits your competitors offer;
• why customers buy from them;
• as much as possible about their products and/or services, pricing, and promotion.

Gathering Information for Your Competitor Analysis

A visit is still the most obvious starting point - either to the brick and mortar store or to the company's website. Go there, once or several times, and look around. Watch how customers are treated. Check out the prices.

You can also learn a fair bit about your competitors from talking to their customers and/or clients - if you know who they are. Other good "live" sources of information about competitors include a company's vendors or suppliers and a company's employees. They may or may not be willing to talk to you, but it's worth seeking them out and asking.

And watch for trade shows that your competitors may be attending. Businesses are there to disseminate information about and sell their products or services; attending and visiting their booths can be an excellent way to find out about your competition.

You'll also want to search for the publicly available information about your competitors. Online publications, newspapers, and magazines may all have information about the company you're investigating for your competitive analysis. Press releases may be particularly useful. 

Once you've compiled the information about your competitors, you're ready to analyze it. 

Analyzing the Competition

Just listing a bunch of information about your competition in the competitor analysis section of the business plan misses the point. It's the analysis of the information that's important.

Study the information you've gathered about each of your competitors and ask yourself this question: How are you going to compete with that company?

For many small businesses, the key to competing successfully is to identify a market niche where they can capture a  specific target market  whose needs are not being met.

• Is there a particular segment of the market that your competition has overlooked?
• Is there a service that customers or clients want that your competitor does not supply? 

The goal of your competitor analysis is to identify and expand upon your competitive advantage - the benefits that your proposed business can offer the customer or client that your competition can't or won't supply.

Writing the Competitor Analysis Section

When you're writing the business plan, you'll write the competitor analysis section in the form of several paragraphs. 

The first paragraph will outline the competitive environment, telling your readers who your proposed business's competitors are, how much of the market they control and any other relevant details about the competition.

The second and following paragraphs will detail your competitive advantage, explaining why and how your company will be able to compete with these competitors and establish yourself as a successful business.

Remember; you don't have to go into exhaustive detail here, but you do need to persuade the reader of your business plan that you are knowledgeable about the competition and that you have a clear, definitive plan that will enable your new business to successfully compete.

How to Write the Competitive Analysis of a Business Plan

Written by Dave Lavinsky

If you are writing a business plan, hopefully by this point you’ve conducted thorough market research to identify industry trends and identified the target market for your business. Now it’s time to conduct a competitor analysis. This section is included in virtually every simple business plan template , and the information you include will depend on several factors such as how many competitors there are, what they offer, and how large they are in comparison to your company.

Download our Ultimate Business Plan Template here

What is a Competitive Analysis?

A competitive analysis is a type of market research that identifies your competitors, their strengths and weaknesses, the strategies they are using to compete with you, and what makes your business unique. Before writing this section it’s important to have all the information you collected during your market research phase. This may include market data such as revenue figures, cost trends, and the size of the industry.

Why Do You Need the Competitive Analysis?

If you are planning to raise capital, the investor will require a business plan that includes the competitive analysis section. This section will also come in handy while writing a business plan template , if your company is considering increasing prices or adding new products and services. You can use the information you find to determine how well-positioned your business is to perform in the competitive landscape.

3 Steps to Writing a Competitive Analysis

The steps to developing the competitive analysis section of your business plan include:

• Identify your competition.
• Select the appropriate competitors to analyze.
• Determine your competitive advantage.

1. Identify Your Competition

To start, you must align your definition of competition with that of investors. Investors define competition as to any service or product that a customer can use to fulfill the same need(s) as the company fulfills. This includes companies that offer similar products, substitute products, and other customer options (such as performing the service or building the product themselves). Under this broad definition, any business plan that claims there are no competitors greatly undermines the credibility of the management team.

When identifying competitors, companies often find themselves in a difficult position. On one hand, you may want to show that the business is unique (even under the investors’ broad definition) and list few or no competitors. However, this has a negative connotation. If no or few companies are in a market space, it implies that there may not be a large enough base of potential customers to support the company’s products and/or services.

2. Select the Appropriate Competitors to Analyze

Once your competition has been identified, you want to consider selecting the most appropriate competitors to analyze. Investors will expect that not all competitors are “apples-to-apples” (i.e., they do not offer identical products or services) and therefore will understand if you chose only companies that are closest in nature. So, you must detail both direct and, when applicable, indirect competitors.

Direct competitors are those that serve the same potential customers with similar products and services. If you sell your products or services online, your direct competitors would also include companies whose website ranks in the top 5 positions for your same target keyword on Google Search.

For example, if you are a home-based candle-making company , you would consider direct competitors to be other candle makers that offer similar products at similar prices. Online competitors would also include companies who rank for the following keywords: “homemade candles”, “handmade candles”, or “custom candles.”

Indirect competitors are those that serve the same target market with different products and services or a different target market with similar products and services.

In some cases, you can identify indirect competitors by looking at alternative channels of distribution. For example, a small business selling a product online may compete with a big-box retailer that sells similar products at a lower price.

After selecting the appropriate competitors, you must describe them. In doing so, you must also objectively analyze each of their strengths and weaknesses and the key drivers of competitive differentiation in the same market.

For each competitor, perform a SWOT Analysis and include the following information:

• Competitor’s Name
• Overview of Competitor (where are they located; how long have they been operating)
• Competitor’s Product or Service
• Competitor’s Pricing
• Estimated Market Share
• Location(s)
• Potential Customers (Geographies & Segments)
• Competitor’s Strengths
• Competitor’s Weaknesses

By understanding what your competitors offer and how customers perceive them, you can determine your company’s competitive advantage against each competitor.

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3. Determine Your Competitive Advantage

Perhaps most importantly, you must describe your company’s competitive advantages over the other companies in the space, and ideally how the company’s business model creates barriers to entry. “Barriers to entry” are reasons why it would be difficult for new companies to enter into or compete in the same market.

For instance, you may have a patent that provides value to your customers and makes them less likely to switch suppliers, which protects your business from potential competitors. Or, you may have more resources than the competition and thus be able to provide superior customer service.

Below is a list of areas in which you might have a competitive advantage:

• Size of the Company – Large companies have more resources and can usually offer lower prices than smaller businesses. This is a significant barrier to entry, as starting a small business and competing with a larger company may be difficult.
• Product or Service Differentiation – If your product or service is unique in some way, this will make it less likely that customers will switch to a competitor.
• Experience & Expertise – Experience and knowledge are valuable attributes that can help differentiate you from the competition.
• Location – If you are located in an area where there is high demand for your product or service, this can be a barrier to entry because competitors will not want to open new locations.
• Patents & Copyrights – Protecting intellectual property can prevent others from entering the same market and competing with your company.
• Brand Recognition – Customers are loyal to brands they have come to trust, which protects the company from new competitors.
• Customer Service – Providing excellent customer service can help you retain customers and prevent them from switching suppliers.
• Lowest Cost Offerings – If you can offer a lower price than your competitors, this makes it more difficult for them to compete with you.
• Technology – New technology that enables you to provide a better product or service than your competitors can be an advantage.
• Strategic Partnerships & Alliances – Collaborating with a company that your customers want to work with can help keep them from switching.
• Human Resources – If you have a highly skilled and talented workforce, it can be difficult for competitors to find and employ the same skills.
• Operational Systems – Strong operational systems that lead to greater efficiencies can protect your business from the competition.
• Marketing Strategy – Investing in strong marketing campaigns can make your business difficult to compete with.

For instance, you could say that your [enter any of the bullets from above] is better than your competitors because [insert reason].

The competitive landscape is one of the most important considerations in developing a business plan since it sets the stage by providing information on past and current competitors and their respective strengths and weaknesses. A strong understanding of the competitive landscape is needed before you can develop a strategy for differentiating your company from the competition. Follow the above competitive analysis example and you will be well-prepared to create a winning competitor analysis section of your business plan.

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Other Resources for Writing Your Business Plan

How to Write a Great Business Plan Executive Summary

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How to Write the Market Analysis Section of a Business Plan

The Management Team Section of Your Business Plan

Financial Assumptions and Your Business Plan

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Everything You Need to Know about the Business Plan Appendix

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How to Write a Competitive Analysis: a Comprehensive Guide

• March 21, 2024
• Business Plan , How to Write , Uncategorized

Writing a competitive analysis is like mapping out the playing field of your business. It helps you see who you’re up against, what you’re doing well, and where you could do better.

Whether you’re just starting or looking for ways to grow, understanding your competition is crucial. Let’s dive into how you can get a clear picture of your competition, and how to use it in your business plan.

What is a Competitive Analysis?

A competitive analysis is a comprehensive evaluation designed to assess the competitive landscape in which a business operates. It involves identifying your main competitors and critically analyzing their strategies, strengths, weaknesses, products, services, and market positioning.

The purpose of this analysis is not only to understand who your competitors are but also to evaluate how they meet their customers’ needs and how your offerings compare.

Key Components:

Here are the key components we include in a competitive analysis:

• Competitor Identification : Begins with identifying both direct competitors (those offering similar products or services) and indirect competitors (those offering alternative solutions to the same customer needs).
• Product and Service Comparison : Involves comparing your products and services against those of your competitors to identify similarities, differences, advantages, and disadvantages.
• Market Positioning : Examines how each competitor positions themselves in the market, including their marketing strategies , target audiences, and brand messaging.
• Strengths and Weaknesses : Assesses the internal factors that contribute to competitors’ success or shortcomings, such as proprietary technology, brand reputation, financial resources, and operational efficiencies.
• Opportunities and Threats : Identifies external factors that could represent opportunities or threats to your competitors, providing insights into potential market shifts, regulatory changes, technological advancements, and evolving customer preferences.
• Customer Base Analysis : Looks at the type of customers your competitors are attracting, their loyalty programs, customer service strategies, and feedback channels.

Why Do We Conduct Competitive Analysis?

The primary purpose of a competitive analysis is to equip businesses with the knowledge to make strategic decisions that enhance their competitive advantage. It helps in:

• Differentiation : Understanding what competitors offer allows a business to differentiate its products or services more effectively, highlighting unique features or benefits that address gaps in the market.
• Strategy Development : Insights gained can inform strategic decisions around marketing, sales, product development, and customer service, ensuring they are tailored to outmaneuver competitors.
• Anticipating Competitor Moves : By analyzing competitors’ strengths and weaknesses, businesses can better anticipate future moves, whether it’s a new product launch, market expansion, or pricing strategy .
• Market Trends Identification : Keeps businesses informed about broader market trends and customer preferences, ensuring they remain relevant and responsive to market demands.
• Risk Mitigation : Identifying threats in the competitive landscape allows businesses to develop contingency plans to address potential challenges proactively.

Why Do We Use a Competitive Analysis in a Business Plan?

We use a competitive analysis in a business plan for several key reasons:

• Market Understanding : It helps to gain a deep understanding of the market dynamics, including how saturated the market is, what the competitors offer, and where there might be gaps in the market.
• Strategic Positioning : By identifying your competitors’ strengths and weaknesses, you can better position your own business to compete effectively. It allows you to highlight what makes your business unique and attractive to potential customers.
• Opportunity Identification : Competitive analysis can reveal market trends and shifts that present new opportunities for your business, whether through innovation, market expansion, or diversification.
• Risk Management : Understanding the competitive landscape helps in anticipating potential threats and challenges your business might face, allowing you to develop strategies to mitigate these risks.
• Investor Confidence : Including a competitive analysis in your business plan demonstrates to investors and stakeholders that you have a realistic grasp of your industry and are aware of the competitive challenges. It reassures them that you are prepared to navigate these challenges effectively.
• Informed Decision Making : The insights gained from a competitive analysis can inform various aspects of your business strategy, from marketing and pricing to product development and customer service. This ensures that decisions are made based on a comprehensive understanding of the competitive environment.

How to Conduct a Competitive Analysis?

Preparing a competitive analysis involves several structured steps to ensure a comprehensive understanding of your competitive landscape. Here’s how to go about it:

1. Identify Your Competitors

• Direct Competitors : These businesses offer the same products or services as you do to the same target market .
• Indirect Competitors : These businesses offer different products or services that satisfy the same customer needs as yours.

Start with a broad list and then narrow it down to the most significant competitors for a detailed analysis.

2. Gather Information

Collect data on your identified competitors. Useful sources include:

• Competitors’ websites and social media profiles
• Customer reviews and feedback on platforms like Yelp, Google, or industry-specific forums
• Industry reports and market analysis documents
• Press releases and news articles

Look for information on their products, services, pricing, marketing strategies, target customers, market share, and any other relevant data.

3. Analyze Their Offerings

Compare your competitors’ products or services to your own. Consider:

• The range of products or services offered
• Quality and pricing
• Unique features or benefits
• Customer service and support
• Branding and marketing strategies

4. Evaluate Their Strengths and Weaknesses

Based on the information gathered, assess each competitor’s strengths and weaknesses. Consider their operational efficiency, customer loyalty, market positioning, innovation capabilities, and financial stability.

5. Identify Opportunities and Threats

From your analysis, determine:

• Opportunities : Areas where your competitors are not meeting customer needs effectively, market segments they are overlooking, or strategic alliances they haven’t formed.
• Threats : Competitors’ strategies that could pose a challenge to your business, such as aggressive pricing, new product launches, or market expansion plans.

6. Assess Their Marketing Strategies

Look at how your competitors are marketing their products or services:

• Which channels are they using? (e.g., social media, email marketing, SEO, PPC)
• What key messages are they conveying?
• How are they positioning their brand?

7. Summarize Your Findings

Create a detailed report summarizing your findings for each competitor, highlighting their key strengths, weaknesses, the opportunities they present to you, and the threats they pose.

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Competitive Analysis: The Lean Guide (With Template)

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However, the problem is that “traditional” competitive analysis is overkill for most businesses — it requires impractical data and takes too long to complete (and it’s very expensive if you choose to outsource). 

A solution to that is a lean approach to the process — and that’s what this guide is about. 

In other words, we’ll focus on the most important data you need to answer the question: “Why would people choose them over you?”. No boring theory, outtakes from marketing history, or spending hours digging up nice-to-have information.

In this guide, you will find:

• A real-life competitive analysis example.
• Templates: one for input data and one for a slide deck to present your analysis to others.
• Step-by-step instructions.

How to use the template

Our template consists of two documents: a slide deck and a spreadsheet. 

The Slide deck is the output document. It will help you present the analysis to your boss or your teammates.

Click here to get an editable copy in Google Slides .

The spreadsheet is the input document. You will find tables that act as the data source for the charts from the slide deck, as well as a prompt to use in ChatGPT to help you with user review research.

We didn’t focus on aesthetics here; every marketer likes to do slide decks their own way, so feel free to edit everything you’ll find there. 

With that out of the way, let’s talk about the process. The template consists of these six tasks: 

• Identify your direct competitors. 
• Compare share of voice. 
• Compare pricing and features.
• Find strong and weak points based on reviews.
• Compare purchasing convenience.
• Present conclusions.

Going forward, we’ll explain why these steps matter and show how to complete them. 

1. Identify your direct competitors

Direct competitors are businesses that offer a similar solution to the same audience. 

They matter a lot more than indirect competitors (i.e. businesses with different products but targeting the same audience as you) because you’ll be compared with them often (e.g. in product reviews and rankings). Plus, your audience is more likely to gravitate towards them when considering different options. 

You probably have a few direct competitors in mind already, but here are a few ways to find others based on organic search and paid search ads . 

Our basis for the analysis was Landingi, a SaaS for building landing pages (we chose that company randomly). So in our case, we found these 3 direct competitors. 

Look at keyword overlap

Keyword overlap uncovers sites that target the same organic keywords as you. Some sites will compete with you for traffic but not for customers (e.g. G2 may share some keywords with Landingi but they’re a different business). However, in many cases, you will find direct competitors just by looking at this marketing channel. 

• Go to Ahrefs’ Site Explorer and enter your site’s address. 
• Scroll down to Organic competitors . 
• Visit the URLs to pick 3 – 5 direct competitors.

To double-check the choice of competitors, we also looked at who was bidding for search ads on Google.

See who’s advertising 

If someone is spending money to show ads for keywords related to what you do, that’s a strong indication they are a direct competitor. 

• Go to Ahrefs’ Keywords Explorer .
• Type in a few broad keywords related to your niche, like “landing page builder” or “landing page tool”. 
• Go to the Ads history report. 
• Visit the sites that have a high presence of ads in the SERPs (Search Engine Result Pages). 

Once you’re done checking both reports, write down competitors in the deck. 

You can also take screenshots of the reports and add them to your deck to show the supporting data for your argument. 

2. Compare share of voice

Share of voice is a measure of your reach in any given channel compared to competitors. 

A bigger share of voice (SOV) means that your competitors are more likely to reach your audience. In other words, they may be promoting more effectively than you. 

In our example, we found that Landingi’s SOV was the lowest in both of these channels. 

Organic: 

And social media:

Here’s how we got that data using Ahrefs and Brand24 .

Organic share of voice 

Before we start, make sure you have a project set up in Ahrefs’ Rank Tracker . 

• Go to Ahrefs’ Competitive Analysis and enter your and your competitors’s sites as shown below. 

• On the next screen, set the country with the most important market for your business and set the filters like this:

• Select keywords that sound most relevant to your business (even if you don’t rank for them yet) and Add them to Rank Tracker . 

• Go to Rank Tracker , open your project, and look for Competitors/Overview . This report will uncover automatically calculated Share of Voice . 

• Add the numbers in corresponding cells inside the sheet and paste the graph inside the slide deck. 

It’s normal that the numbers don’t add up to 100%. SOV is calculated by including sites that compete with you in traffic but are not your direct competitors, e.g. blogs. 

Social share of voice 

We can also measure our share of voice across social media channels using Brand24.

• Go to Brand24 .
• Start a New project for your brand and each competitor. Use the competitors’ brand name as the keyword to monitor. 
• Go to the Comparison report and compare your project with competitors. 

• Take a screenshot of the SOV charts and paste them into the slide deck. Make sure the charts are set to “social media”.

3. Compare pricing and features

Consumers often choose solutions that offer the best value for money — simple as that. And that typically comes down to two things: 

• Whether you have the features they care about . We’ll use all features available across all plans to see how likely the product is to satisfy user needs.
• How much they will need to pay . Thing is, the topic of pricing is tricky: a) when assessing affordability, people often focus on the least expensive option available and use it as a benchmark, b) businesses in the SaaS niche offer custom plans. So to make things more practical, we’ll compare the cheapest plans, but feel free to run this analysis across all pricing tiers.

After comparing our example company to competitors, we found that it goes head-to-head with Unbounce as the most feature-rich solution on the market. 

Here’s how we got that data. 

• Note down your and your competitors’ product features. One of the best places to get this information is pricing pages. Some brands even publish their own competitor comparisons — you may find them helpful too. 
• While making the list, place a “1” in the cell corresponding to the brand that offers the solution.

• Enter the price of the cheapest plan (excluding free plans). 

• Once finished, copy the chart and paste it inside the deck. 

4. Find strong and weak points based on user reviews

User reviews can show incredibly valuable insight into your competitors’ strong and weak points. Here’s why this matters:

• Improving on what your competitors’ customers appreciate could help you attract similar customers and possibly win some over.
• Dissatisfaction with competitors is a huge opportunity. Some businesses are built solely to fix what other companies can’t fix. 

Here’s a sample from our analysis: 

And here’s how we collated the data using ChatGPT. Important: repeat the process for each competitor.

• Open ChatGPT and enter the prompt from the template.

• Go to G2 , Capterra, or Trustpilot and find a competitor’s reviews with ratings from 2 – 4 (i.e. one rating above the lowest and one below the highest possible). Reason:

businesses sometimes solicit five-star reviews, whereas dissatisfied customers tend to leave one-star reviews in a moment of frustration. The most actionable feedback usually comes in between.

• Copy and paste the content of the reviews into ChatGPT (don’t hit enter yet). 
• Once you’re done pasting all reviews, hit enter in ChatGPT to run the analysis.

• Paste the graphs into the deck. If you want the graphs to look different, don’t hesitate to ask the AI. 

There’s a faster alternative, but it’s a bit more advanced. 

Instead of copy-pasting, you can use a scraping tool like this one to get all reviews at once. The downside here is that not all review sources will a have scraping tool available. 

5. Compare purchasing convenience

Lastly, we’ll see how easy it is to actually buy your products, and compare the experience to your competitors. 

This is a chance to simplify your checkout process, and even learn from any good habits your competitors have adopted.

For example, we found that our sample company had probably nothing to worry about in this area — they ticked almost all of the boxes. 

Here’s how to complete this step:

• Place a “1” if you or any of your competitors offer convenience features listed in the template. 
• Once done, copy the chart and paste it into the deck.

Step 6. Present conclusions

This is the part of the presentation where you sum up all of your findings and suggest a course of action. 

Here are two examples: 

• Landingi had the lowest SOV in the niche, and that is never good. So the conclusion might be to go a level deeper and do an SEO competitive analysis , and to increase social media presence by creating more share-worthy content like industry surveys, design/CRO tips, or in-house data studies.
• Although the brand had a very high purchasing convenience score, during the analysis we found that there was a $850 gap between the monthly full plan and the previous tier. The conclusion here might be to offer a custom plan (like competitors do) to fill that gap. 

We encourage you to take your time here and think about what would make the most sense for your business. 

Final thoughts 

A competitive analysis is one of the most fruitful exercises in marketing. It can show you areas for improvement, give ideas for new features, and help you discover gaps in your strategy. It wouldn’t be an exaggeration to say that it’s fundamental to running a successful business. 

Just don’t forget to balance “spying” on your competitors with innovation. After all, you probably don’t want to become an exact copy of someone else’s brand. 

In other words, use competitive analysis to keep up with your competitors, but don’t let that erase what’s unique about your brand or make you forget your big vision. 

Got comments or questions? Ping me on X . 

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How to Create a Competitor Analysis Report (with Examples)

By Midori Nediger , Nov 09, 2023

Your business will always have competition.

And if you don’t know what that competition is up to, you could be missing out on huge opportunities.

That’s why a competitive analysis is so crucial to your success as a business. It gives you the tools to quickly adapt to any changes in the competitive landscape and potentially capitalize on industry trends that your competitors haven’t even noticed.

So let’s get some basics out of the way…

What is a competitive analysis report?

A competitive analysis report outlines the strengths and weaknesses of your competitors compared to those of your own business.

Typically, a competitive analysis report will contain:

• A description of your business’s target market
• Details about the features of your product compared to your competitors’ products
• A breakdown of current and projected market share, sales, and revenues
• Comparisons of pricing models
• An analysis of marketing strategy and social media strategy
• A description of customer ratings of the features of each competitor

Whether you’re a startup trying to break into the marketplace , a consultant trying to get results for your client, or an established company looking to cement your foothold against the competition, a well-researched competitive analysis gives you the tools you need to make strategic decisions.

Your competitive analysis should inform your marketing plan , your business plan , your consultant report and every part of your high-level business strategy.

But how do you actually create a competitive analysis report?

How to make competitor analysis report :

• Start with a competitor overview
• Conduct market research to uncover customer personas and industry trends
• Compare product features in a feature comparison matrix
• Summarize your strengths and weaknesses with a SWOT analysis
• Show where you fit in the competitive landscape
• Use a competitor analysis template for a professional look and feel

The level of detail you include in each section of your competitive analysis report will vary depending on the stage of your business growth and your goals. For example, a startup might create a report that focuses on market research, while an established business might dive into detail on an emerging competitor.

But let’s talk about the parts of a competitive analysis that every report should include.

1. Start with a competitor overview

A strong report shows exactly what a company must out-compete to be successful.

Meaning you must audit any product or service that currently solves the problem your business is trying to solve for customers and write a quick profile for each competitor.

Like the template below, each competitor profile might include:

• The company’s revenue and market share
• The company’s size and information about their management team
• A broad description of the company’s strengths and weaknesses
• An overview of how the company is perceived by customers

This overview will help your readers get a big-picture view of the market landscape.

2. Conduct market research to uncover customer personas and industry trends

You can’t create a competitive analysis report without doing extensive market research , which is all about gathering information to understand your customers, identify opportunities to grow, and recognize trends in the industry.

This research can help you put together the customer personas that will guide business and marketing decisions down the line, and allow you to plan for any shifts that might disrupt the marketplace.

You can conduct primary market research, with:

• Customer interviews
• Online surveys or questionnaires
• In-person focus groups
• Purchasing a competitor product to study packaging and delivery experience

Or secondary market research, by:

• Reading company records
• Examining the current economic conditions
• Researching relevant technological developments

When assembling your market research you may just want provide a high-level summary of the industry trends, like this competitor analysis example shows:

Or you may want to dive into detail on the demographics of a particular consumer segment, like this:

But if you’re a consultant or advisor struggling to get buy-in from skeptical stakeholders, the report below would be ideal. Covering everything from market forecasts to consumer profiles, it can help you get clients and decision-makers on board.

3. Compare product features in a feature comparison matrix

The feature comparison is arguably the most important part of the competitive analysis. Breaking down your product and your competitors’ products feature-by-feature will allow you to see what really sets everyone apart.

In addition to specific product features, here are some attributes that you might include in a feature comparison matrix:

• Product quality
• Number of features
• Ease of use
• Customer support
• Brand/style/image

The most common format for a features analysis is a simple matrix with you and your competitors along one side and all of the relevant features along the other. You can check off or rate how you perform in each area:

But these tables can get pretty long. Another approach is to focus on the things that provide the most value to the user, like in this competitor analysis example from Mint. It only includes ease of use, costs, and benefits:

If you want to visualize your comparisons in an engaging way, you could use a comparison infographic . 

Great resources for this section of your competitive analysis report are product rating sites like Capterra and G2Crowd . They’ll give you an unbiased view of your company and your competitors.

And as with any market research, it’s critical that you speak with real people who use your product and your competitors’ products. That’s the only way to get an accurate picture of how your target customers rate the competition .

4. Summarize your strengths and weaknesses in a SWOT analysis

When you’re conducting research for your competitive analysis, it’s going to be messy. You’ll have a lot of data and it’ll be hard for an outsider to understand.

That’s what makes the SWOT analysis so essential.

A SWOT analysis is a framework for evaluating your competitive position by listing your key strengths, weaknesses, opportunities, and threats.

It can act like a short summary of the rest of your competitive analysis report for anyone who doesn’t have time to dig into the details.

Click the template above to enter our online SWOT analysis maker tool. Customize the template to your liking–no design no-how required.

Here are some questions to kickstart your SWOT analysis:

• Strengths: What are we doing really well (in terms of marketing, products, sales, branding, technology, etc.)?
• Weaknesses: What are we struggling with? What’s holding us back?
• Opportunities: What’s the weakest area for our biggest competitor? Are there any gaps in the market that aren’t current being addressed? What has recently changed in our business or the market?
• Threats: What is our biggest competitor doing much better than us? What new products/features are they working on? What problems aren’t we currently addressing?

In your report, you could arrange your SWOT analysis in a simple list, but it can be helpful to use color-coded quadrants, like the competitor analysis example below. Note how each quadrant is paired with an icon:

5. Show where you fit in the competitive landscape

After summarizing your strengths, weaknesses, opportunities, and threats, it’s time to look at the bigger picture. It’s time to figure out where every major competitor currently fits into the competitive landscape.

The most popular way of doing this is to identify the two dimensions that are most important for being competitive in your industry and plot them on a matrix, like this one from the Boston Consulting Group:

And this one from G2 Crowd (which looks at market presence and customer satisfaction):

You may want to focus on where you fit in the market landscape based on your own biggest strengths and weaknesses, or the biggest threats and opportunities you identified in the SWOT analysis.

Or, it may be enough just to summarize in words the features and benefits that set your apart from your competitors (which is a great way to end your report on a high note).

Competitor analysis examples for strategic planning

Let’s delve into some competitor analysis examples that can empower your organization to navigate the market effectively.

1. Competitor analysis example for marketing specialists

Imagine this: You are a Marketing Specialist and your goal is to establish a strong online presence and attract a diverse user base. However, you face stiff competition from established players in the market. Here are some things you should look into when doing your competitor analysis:

Competitor analysis focus:

• SEO strategies: Analyze competitors’ websites to understand their SEO strategies. Identify high-ranking keywords, backlink strategies, and content optimization techniques . Alternatively, if you’re running a local business, you might want to analyze and scrape Google Maps listings to better assess how companies are optimizing Google My Business to generate leads.
• Social media engagement: Examine competitors’ social media presence. Evaluate the type of content that garners engagement, the frequency of posts, and audience interactions.
• Online advertising: Investigate competitors’ online advertising campaigns. Are they leveraging Google Ads, social media ads, or other platforms? Assess the messaging, visuals, and targeting criteria.
• Content marketing: Scrutinize competitors’ content marketing efforts. Identify the topics that resonate with their audience, the formats they use (blogs, videos, infographics), and the platforms they prioritize.

Here’s a SWOT analysis template to help you get started:

2. Competitor analysis example for SME business development managers

Imagine this: As the business development manager for a medium sized start up, you are tasked with expanding the client base. The market is crowded with similar service providers, and differentiation is key. When doing your competitor analysis report, look into:

• Client testimonials and case studies: Explore competitors’ websites for client testimonials and case studies. Identify success stories and areas where clients express satisfaction or dissatisfaction.
• Service offerings: Analyze the range of services offered by competitors. Identify gaps in their offerings or areas where you can provide additional value to clients.
• Pricing models: Investigate competitors’ pricing structures. Are they offering packages, subscription models, or customized solutions? Determine whether there’s room for a more competitive pricing strategy .
• Partnerships and collaborations: Explore potential partnerships or collaborations that competitors have formed. This can provide insights into untapped markets or innovative service delivery methods.

Here’s a competitor analysis comparison chart template that you could use:

3. Competitor analysis example for product managers

Imagine this: You are a Product Manager for a consumer electronics company tasked with improving your company’s products and services. The market is buzzing with innovation, and staying ahead requires a deep understanding of competitor products.

• Feature comparison: Conduct a detailed feature-by-feature comparison of your product with competitors. Identify unique features that set your product apart and areas where you can enhance or differentiate.
• User experience (UX): Evaluate the user experience of competitors’ products. Analyze customer reviews, app ratings, and usability feedback to understand pain points and areas for improvement.
• Technological advancements: Investigate the technological capabilities of competitors. Are they integrating AI, IoT, or other cutting-edge technologies? Assess whether there are emerging technologies you can leverage.
• Product lifecycle management: Examine competitors’ product release cycles. Identify patterns in their product launches and assess whether there are opportunities for strategic timing or gap exploitation.

To help you get started, use this competitive analysis report template to identify the strengths, weaknesses, opportunities and threats of the product or service

How to present a competitor analysis

Presenting a competitor analysis effectively involves organizing and communicating information about your competitors in a clear and concise manner. Here’s a step-by-step guide on how to present a competitor analysis:

• Introduction: Start with a brief introduction to set the stage. Outline the purpose of the competitor analysis and its significance in the current market context.
• Competitor identification: Clearly list and identify the main competitors. Include both direct and indirect competitors. Briefly describe each competitor’s core business and market presence.
• Key metrics and performance: Present key metrics and performance indicators for each competitor. This may include market share, revenue, growth rate, and any other relevant quantitative data.
• SWOT analysis: Conduct a concise SWOT analysis for each competitor. Summarize their strengths, weaknesses, opportunities, and threats. Use a simple visual representation if possible.
• Market positioning: Discuss how each competitor is positioned in the market. This could include their target audience, unique selling propositions, and any specific market niches they occupy. Also, focus on finding keywords , as your competitor’s targeted keywords are the main source of information on their online market performance.
• Strategic moves: Highlight recent strategic moves made by your competitors. This could include product launches, partnerships, mergers, acquisitions, or changes in pricing strategy. Discuss how these moves impact the competitive landscape.
• Recommendations and implications: Based on the analysis, provide recommendations and implications for your company. Identify opportunities to capitalize on competitors’ weaknesses and outline potential threats that need to be addressed. Discuss any adjustments to your own strategy that may be necessary in response to the competitive landscape.

3 tips to improve your competitive analysis report design

How you design your competitive analysis report can have a significant impact on your business success. The right report design can inspire stakeholders to take action based on your findings, while a mediocre design may reflect poorly on your hard work.

Here are a few report design best practices to keep in mind when designing your competitive analysis report:

• Start with a competitive analysis report template
• Keep core design elements like colors and fonts consistent
• Use visuals to summarize important information and keep your audience engaged

1. Start with a competitor analysis template

The quickest way to lose the confidence of your stakeholders is to present a messy, amateur report design. Besides distracting from the content of the report, it might even put your credibility at risk.

Starting with a pre-designed competitor analysis template, like the one below, takes almost all of the design work out of the mix so you can focus on the content (while still impressing your stakeholders).

And if you’re a consultant competing for a project, a pre-designed template may just give you the edge you need to land that client.

Click on any of our templates; you’ll enter our online drag and drop report maker tool. No design know-how required.

2. Keep core design elements like colors and fonts consistent

If you take a look at the competitor analysis template below, you might notice that the designer has switched up the layout from page to page, but many of the other design elements are kept consistent.

That consistency helps the report design feel cohesive while making it easier for readers to quickly skim for key pieces of information.

Here are a few quick guidelines for keeping important design elements consistent:

• Use the same color scheme throughout your report (with one highlight color to draw attention to key takeaways and important numbers)
• Use the same font styles for your headers, subheaders, and body text (with no more than 2-3 font styles per report)
• Use the same style of visuals throughout your report (like flat icons or illustrated icons… but not both)

3. Use visuals to summarize important information and keep your audience engaged

The challenge with a competitive analysis report is that you collect heaps of background research, and you have to condense it into a brief report that your client will actually read.

And written summaries will only get you so far.

Visuals like charts and tables are a much better way to communicate a lot of research quickly and concisely, as seen in the market research summary below.

Even lists can be made more engaging and informative by spacing out list items and giving more emphasis to headers:

The more you can replace descriptive paragraphs and long lists with thoughtful visuals, the more your readers will thank you.

A competitive analysis will allow you to think up effective strategies to battle your competition and establish yourself in your target market.

And a report that communicates the findings of your competitive analysis will ensure stakeholders are on board and in the know.

Now that you know how to design a competitive analysis report, you’re ready to get started:

How To Write A Competitive Analysis For Your Business Plan

A solid competitive analysis is your way of showing that you know exactly where you stand among your fiercest competitors — and that you have a way to out-maneuver them..

October 1st, 2018    |    By: The Startups Team     |    Tags: Idea Validation

The competitive analysis section of your market analysis in your business plan is essential. Knowing your competition is as important as knowing your product and your customer. Market gaps tell you where to develop your product and internal weaknesses tell you where you’re vulnerable to losing customers.

A solid competitive analysis is your way of showing that you know exactly where you stand among your fiercest competitors — and that you have a way to out-maneuver them. The best way to think of the argument you’re trying to articulate is:

“Here is where we can gain the most customers (offense) and here’s where we could potentially lose them (defense).”

Your competitive analysis should start with your SWOT Analysis — Strengths, Opportunities, Weaknesses and Threats — to borrow a grad school MBA’s favorite acronym.

Inside the Investor’s Mind

Your investor is probably thinking something like this:

“This idea sounds good, but I’m worried that current or future competition will simply crush this company. I need to know where they are going to stay ahead of their competition in the minds of their customers. I also need to know how they plan on defending whatever market position they capture.”

So here’s what you can do to reassure them.

Lead with your strengths . Talk about what aspects of your product are the best in class and why your customers will fall in love. Companies win based on their ability to win over customers.

You don’t eat at Wendy’s because it’s less terrible than McDonald’s. You eat there because you like their food a lot more. You also eat there because the Baconator cheeseburger is sooo good!

Talk about why customers love your Baconator. Talk about what you offer that just blows people’s minds. Be very descriptive and dig into how those strengths really stand out. Don’t assume for a moment that because you understand the strengths that anyone else does.

“Ruth’s Chris Steakhouse” Customers dine at Ruth’s Chris Steakhouse primarily because it is considered the most upscale dining experience in their city. This lends itself well to special events that command a higher price point.

“Tinder” Our customers use Tinder over traditional dating sites because they get immediate responses from potential matches and the interface is so simple it’s fun.

“Local Boutique” Customers shop in our local boutique because they want the experience of interacting with our staff and the enjoyment of trying on clothes in person.

The best way to present your strengths is to start with your number one greatest strength. If investors don’t think your greatest strength is interesting, you can be assured that your third greatest strength isn’t going to make up for that!

In each of these sections of the SWOT Analysis, begin with a few introductory sentences, like the examples above, and then offer a longer narrative explanation below. If the investor understands the point you’re making in just a couple sentences you don’t want to belabor their attention with a crazy novel of an explanation.

Opportunities

Your opportunities are all about expansion. You realize your competition is sleeping on the job and you’re ready to pounce on that opportunity to eat up some delicious market share.

Your opportunities typically come in three flavors:

1. Areas your competition is currently weak

2. Expansion of your customer’s current needs

3. Untapped markets

Ideally, you can tap into all three opportunity categories or you have some special flavors of your own. Your goal here isn’t to list every last opportunity; it’s to show that the market has obvious room for expansion that viable startup (like you) could build a real business in.

Areas of Weak Competition

This is one of the few times in life where it’s OK to pick on someone else! If you’ve made it this far into the plan, it’s because you’ve found a good reason that your would-be competition is dropping the ball.

When sizing up your competition it’s important to have a balanced assessment. You want to avoid the straw man argument. The straw man argument is one when you act like you’re refuting someone’s argument, but in reality that argument was never made by that person.

Instead, focus on how well you know the weakness exists. Show that you have done your homework and that you have a real inside track on why this weakness is legitimate.

The more convincing your research on competitor weakness the more excited investors will get. Don’t skimp here.

Expansion of Current Needs

It’s your job to not only paint a picture of what your customer needs now, but also of what your customer needs next. These needs may not be something you can fulfill now, and that’s fine. What’s important here is that you’re showing that you’re thinking further down the road.

“Our customers who purchase our iPhone will need apps to download, music to listen to, additional cables to charge with, and listening accessories like headphones and Bluetooth speakers.”

Your expansion of current needs should start with obvious extensions of need and then include a few bigger picture potential areas that you may not even get to. It’s good to show what’s more probable and then what’s possible.

Untapped Markets

If you’re not expanding into current markets then you’re moving into the great unknown — untapped markets.

Untapped markets are equally exciting and terrifying to investors. On the one hand, it gets everyone pumped to think about a ton of low-hanging fruit that can be gobbled up easily. On the other hand, that fruit is often sitting in a grove that may or may not even exist.

Your challenge is to show that these untapped markets do in fact exist (read: show your research) and that you can tackle them quickly and efficiently before your competition does.

“We believe that the market for a low cost version of iPhones in underdeveloped countries is even bigger than the U.S. market, because over two thirds of citizens have no access to land lines or cabled Internet. Our iPhone Lite, combined with a global reach for cellular service, will make this critical line of communication both affordable and accessible to millions.”

Don’t let the idea of untapped markets be a golden ticket to make wild claims. Untapped markets only exist if you can build a cogent case around them. The quality of your case is the difference between an investor nodding their head and shaking it.

Demonstrating your weaknesses isn’t the same as saying “we’re so painfully vulnerable we’re not even viable!” Every business has weaknesses, especially in the startup phase. You can bet anyone leaning into your plan is going to jump on these immediately.

Your goal here isn’t to sugar coat the nature of your weaknesses – it’s to articulate them in exact detail to show that you know precisely where to build a defensible position. Articulating your weaknesses well allows you to talk about what you’re going to do about them.

“Our company, Amazon, is particularly concerned about the fact that customers will want to see higher ticket electronics firsthand before making a buying decision. We believe that retailers such as Best Buy will consistently get customers through their doors first before they elect to make a buying decision with us.

Therefore, we have to create guarantees on the lowest price that will entice customers to view at Best Buy but purchase on Amazon because the savings are so significant.”

In this example, we aren’t sugar-coating the concern. We’re highlighting the fact that Amazon will lose customers to Best Buy, but they’re working toward a strategy to curb that customer loss with a lower price. An investor reading that narrative would feel this is a balanced assessment of a weakness coupled with a viable counter-strategy.

Similar to the Strengths section, a great way to present this is with a few declarative scenarios where you’re most concerned, so that your readers get the gist. Thereafter, craft a more detailed description of why and how those weaknesses and threats are important.

Sooner or later (hopefully later) your competition is going to pose some serious threats to your business. In some cases, it may not even be your competition directly. It could be looming legal issues or governance that you’ll have to contend with.

Similar to weaknesses, founders get nervous about being bold about threats. They think “That will scare investors away!” when in fact being up front about how you identify and mitigate threats is the best way to make investors confident about potential issues.

Your best bet is to get in front of your threats first. Similar to your strengths, list the most painful threats first, then explain how you plan on using some Judo-style moves to take them down.

“The biggest single threat to our Amazon business is the lack of control we have around delivery costs. If UPS and FedEx decide to increase costs exponentially, our ability to deliver products at a total price lower than retailers will evaporate.

To combat this, we will negotiate very long term deals with major carriers. We will offer them an exclusivity on volume in exchange for a predetermined rate plan that we can predict for five to 10 years at a time.”

In this example, we’re pointing out (before our investors can) that an increase in delivery costs for a business that relies on delivery is a big deal. But we’re immediately supporting that concern by providing a credible mechanism to offset the threat.

Investors may still have concerns around what the mechanics of the deals with delivery providers may be, but at least now the conversation is about deal mechanics, not whether delivery as a whole will destroy Amazon.

Think of your presentation of threats in two columns — Threat and Mitigation. List your threat in detail, then list your mitigation strategy. In the best case scenario, you can show investors that you’ve thought of threats they haven’t even considered and already have a plan of attack waiting. It’s that type of presentation that builds much-needed trust during the formative stages of that relationship.

Competitors

Your competition can be represented as both “categories of competition” as well as “actual competition.”

Categories of Competition allow you to create groups of competitors that may share some of the same attributes such as “online retailers” or an emotional category such as “People who hate to shop in stores.” You may in fact have many different categories that you compete with and then a few specific competitors that you’re concerned about in each. The category approach works well if you have tons of competitors; for example, if you were an online retailer.

Action competition is more specific to who you can count on your fingers. In this case, you want to be very detailed about who they are, what about them is particularly challenging, and what you plan to do about it.

In each case, the goal is to be very clear about why each competitor has strengths and weaknesses that you’re concerned about. You’re better off listing fewer competitors that are a more direct threat and showing that you know how to compete than creating a giant list of every person that has a website that’s tangentially related to you.

The competitive analysis is just one part of your market analysis. Check out our guides  to each section of your market analysis in order to create a document that will blow your investors away.

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What is a Competitive Analysis — and How Do You Conduct One?

Published: April 24, 2024

Every time I work with a new brand, my first order of business is to conduct a competitive analysis. 

A competitive analysis report helps me understand the brand’s position in the market, map competitors’ strengths/weaknesses, and discover growth opportunities. 

In this article, I’ll break down the exact steps I follow to conduct competitor analysis and identify ways to one-up top brands in the market. 

We’ll cover:

What is competitive analysis?

What is competitive market research, competitive analysis in marketing.

• How To Conduct Competitive Analysis in 5 Steps

How to Do a Competitive Analysis (the Extended Cut)

Competitive product analysis, competitive analysis example, competitive analysis templates.

• Competitive Analysis FAQs

Competitive analysis is the process of comparing your competitors against your brand to understand their core differentiators, strengths, and weaknesses. It’s an in-depth breakdown of each competitor’s market position, sales & marketing tactics, growth strategy, and other business-critical aspects to see what they’re doing right and find opportunities for your business.

Competitive analysis gives you a clearer picture of the market landscape to make informed decisions for your growth. 

That said, you have to remember that competitive analysis is an opportunity to learn from others. It isn’t:

• Copying successful competitors to the T.
• Trying to undercut others’ pricing.
• A one-and-done exercise.

Let’s look at how this exercise can help your business before breaking down my 5-step competitive analysis framework.

4 Reasons to Perform Competitive Analysis 

If you’re on the fence about investing time and effort in analyzing your competitors, know that it gives you a complete picture of the market and where you stand in it.

Here are four main reasons why I perform a competitive analysis exercise whenever working with a brand for the first time:

• Identify your differentiators. Think of competitor analysis as a chance to reflect on your own business and discover what sets you apart from the crowd. And if you’re only starting out, it helps you brainstorm the best opportunities to differentiate your business.
• Find competitors’ strengths. What are your competitors doing right to drive their growth? Analyzing the ins and outs of an industry leader will tell you what they did well to reach the top position in the market.
• Set benchmarks for success. A competitor analysis gives you a realistic idea of mapping your progress with success metrics. While every business has its own path to success, you can always look at a competitor’s trajectory to assess whether you’re on the right track.
• Get closer to your target audience. A good competitor analysis framework zooms in on your audience. It gives you a pulse of your customers by evaluating what they like, dislike, prefer, and complain about when reviewing competing brands.

The bottom line: Whether you’re starting a new business or revamping an existing one, a competitive analysis eliminates guesswork and gives you concrete information to build your business strategy.

10 Free Competitive Analysis Templates

Track and analyze your competitors with these ten free planning templates.

• SWOT Analysis
• Battle Cards
• Feature Comparison
• Strategic Overview

You're all set!

Click this link to access this resource at any time.

Competitive market research is a vital exercise that goes beyond merely comparing products or services. It involves an in-depth analysis of the market metrics that distinguish your offerings from those of your competitors.

A thorough market research doesn't just highlight these differences but leverages them, laying a solid foundation for a sales and marketing strategy that truly differentiates your business in a bustling market.

In the next section, we’ll explore the nuts and bolts of conducting a detailed competitive analysis tailored to your brand.

10 Competitive Analysis Templates

Fill out the form to access the templates., essential aspects to cover in competitive analysis research .

Before we walk through our step-by-step process for conducting competitor analysis, let’s look at the main aspects to include for every competitor:

• Overview. A summary of the company — where it’s located, target market, and target audience.
• Primary offering. A breakdown of what they sell and how they compare against your brand.
• Pricing strategy. A comparison of their pricing for different products with your pricing.
• Positioning.  An analysis of their core messaging to see how they position themselves. Customer feedback: A curation of what customers have to say about the brand.

Now, it’s time to learn how to conduct a competitive analysis with an example to contextualize each step. 

Every brand can benefit from regular competitor analysis. By performing a competitor analysis, you'll be able to:

• Identify gaps in the market.
• Develop new products and services.
• Uncover market trends.
• Market and sell more effectively.

As you can see, learning any of these four components will lead your brand down the path of achievement.

Next, let's dive into some steps you can take to conduct a comprehensive competitive analysis.

How to Conduct Competitive Analysis in 5 Quick Steps

As a content marketer, I’ve performed a competitive analysis for several brands to improve their messaging, plan their marketing strategy, and explore new channels. Here are the five steps I follow to analyze competitors.

1. Identify and categorize all competitors.

The first step is a simple yet strategic one. You have to identify all possible competitors in your industry, even the lesser-known ones. The goal here is to be aware of all the players in the market instead of arbitrarily choosing to ignore a few.

As you find more and more competitors, categorize them into these buckets:

• Direct competitors. These brands offer the same product/service as you to the same target audience. People will often compare you to these brands when making a buying decision. For example, Arcade and Storylane are direct competitors in the demo automation category.
• Indirect competitors. These businesses solve the same problem but with a different solution. They present opportunities for you to expand your offering. For example, Scribe and Whatfix solve the problem of documentation + internal training, but in different ways.
• Legacy competitors. These are established companies operating in your industry for several years. They have a solid reputation in the market and are a trusted name among customers. For example, Ahrefs is a legacy competitor in the SEO industry.
• Emerging competitors. These are new players in the market with an innovative business model and unique value propositions that pose a threat to existing brands. For example, ChatGPT came in as a disruptor in the conversational AI space and outperformed several brands. 

Here’s a competitive matrix classifying brands in the community and housing space:

Testing It Out

To help you understand each step clearly, we’ll use the example of Trello and create a competitor analysis report using these steps.

Here’s a table of the main competitors for Trello:

able of the main competitors for Trello:

2. Determine each competitor’s market position.

Once you know all your competitors, start analyzing their position in the market. This step will help you understand where you currently stand in terms of market share and customer satisfaction. It’ll also reveal the big guns in your industry — the leading competitors to prioritize in your analysis report.

Plus, visualizing the market landscape will tell you what’s missing in the current state. You can find gaps and opportunities for your brand to thrive even in a saturated market.

To map competitors’ market positions, create a graph with two factors: market presence (Y-axis) and customer satisfaction (X-axis). Then, place competitors in each of these quadrants:

• Niche. These are brands with a low market share but rank high on customer satisfaction. They’re likely targeting a specific segment of the audience and doing it well.
• Contenders. These brands rank low on customer satisfaction but have a good market presence. They might be new entrants with a strong sales and marketing strategy.
• Leaders. These brands own a big market share and have highly satisfied customers. They’re the dominant players with a solid reputation among your audience.
• High performers. These are another category of new entrants scoring high on customer satisfaction but with a low market share. They’re a good alternative for people not looking to buy from big brands.

This visualization will tell you exactly how crowded the market is. But it’ll also highlight ways to gain momentum and compete with existing brands.

Here’s a market landscape grid by G2 documenting all of Trello’s competitors in the project management space. For a leading brand like Trello, the goal would be to look at top brands in two quadrants: “Leaders” and “High Performers.” 

Image Source

3. Extensively benchmark key competitors.

Step 2 will narrow down your focus from dozens of competitors to the few most important ones to target. Now, it’s time to examine each competitor thoroughly and prepare a benchmarking report.

Remember that this exercise isn’t meant to find shortcomings in every competitor. You have to objectively determine both the good and bad aspects of each brand.

Here are the core factors to consider when benchmarking competitors:

• Quality. Assess the quality of products/services for each competitor. You can compare product features to see what’s giving them an edge over you. You can also evaluate customer reviews to understand what users have to say about the quality of their offering.
• Price. Document the price points for every competitor to understand their pricing tactics. You can also interview their customers to find the value for money from users’ perspectives.
• Customer service. Check how they deliver support — through chat, phone, email, knowledge base, and more. You can also find customer ratings on different third-party platforms.
• Brand reputation. You should also compare each competitor’s reputation in the market to understand how people perceive the brand. Look out for anything critical people say about specific competitors.  
• Financial health. If possible, look for performance indicators to assess a brand's financial progress. You can find data on metrics like revenue growth and profit margins. 

This benchmarking exercise will involve a combination of primary and secondary research. Invest enough time in this step to ensure that your competitive analysis is completely airtight.

Check out this example of a competitor benchmarking report for workforce intelligence tools:

Here’s how I benchmarked Asana based on these criteria using the information I could find:

4. Deep dive into their marketing strategy.

While the first few steps will tell you what you can improve in your core product or service, you also need to find how competitors market their products.

You need to deep-dive into their marketing strategies to learn how they approach buyers. I analyze every marketing channel, then note my observations on how they speak to their audience and highlight their brand personality.

Here are a few key marketing channels to explore:

• Website. Analyze the website structure and copy to understand their positioning and brand voice.
• Email. Subscribe to emails to learn their cadence, copywriting style, content covered, and other aspects.
• Paid ads. Use tools like Ahrefs and Semrush to find if any competitor is running paid ads on search engines.
• Thought leadership. Follow a brand’s thought leadership efforts with content assets like podcasts, webinars, courses, and more.
• Digital PR. Explore whether a brand is investing in digital PR to build buzz around its business and analyze its strategy.
• Social media. See how actively brands use different social channels and what kind of content is working best for them.
• Partnerships. Analyze high-value partnerships to see if brands work closely with any companies and mutually benefit each other.

You can create a detailed document capturing every detail of a competitor’s marketing strategy. This will give you the right direction to plan your marketing efforts. 

5. Perform a SWOT analysis.

The final step in a competitive analysis exercise is creating a SWOT analysis matrix for each company. This means you‘ll take note of your competitor’s strengths, weaknesses, opportunities, and threats. Think of it as the final step to consolidate all your research and answer these questions:

• What is your competitor doing well?
• Where do they have an advantage over your brand?
• What is the weakest area for your competitor?
• Where does your brand have the advantage over your competitor?
• In what areas would you consider this competitor a threat?
• Are there opportunities in the market that your competitor has identified?

You can use tools like Miro to visualize this data. Once you visually present this data, you’ll get a clearer idea of where you can outgrow each competitor. 

Here’s a SWOT analysis matrix I created for Asana as a competitor of Trello:

• Determine who your competitors are.
• Determine what products your competitors offer.
• Research your competitors' sales tactics and results.
• Take a look at your competitors' pricing, as well as any perks they offer.
• Ensure you're meeting competitive shipping costs.
• Analyze how your competitors market their products.
• Take note of your competition's content strategy.
• Learn what technology stack your competitors use.
• Analyze the level of engagement on your competitors' content.
• Observe how they promote marketing content.
• Look at their social media presence, strategies, and go-to platforms.
• Perform a SWOT Analysis to learn their strengths, weaknesses, opportunities, and threats.

To run a complete and effective competitive analysis, use these ten templates, which range in purpose from sales to marketing to product strategy.

Featured Resource: 10 Competitive Analysis Templates

1. Assess your current product pricing.

The first step in any product analysis is to assess current pricing.

Nintendo offers three models of its Switch console: The smaller lite version is priced at $199, the standard version is $299, and the new OLED version is $349.

Sony, meanwhile, offers two versions of its PlayStation 5 console: The standard edition costs $499, and the digital version, which doesn’t include a disc drive, is $399.

2. Compare key features.

Next is a comparison of key features. In the case of our console example, this means comparing features like processing power, memory, and hard drive space.

3. Pinpoint differentiators.

With basic features compared, it’s time to dive deeper with differentiators. While a glance at the chart above seems to indicate that the PS5 is outperforming its competition, this data only tells part of the story.

Here’s why: The big selling point of the standard and OLED Switch models is that they can be played as either handheld consoles or docked with a base station connected to a TV. What’s more, this “switching” happens seamlessly, allowing players to play whenever, wherever.

The Playstation offering, meanwhile, has leaned into market-exclusive games that are only available on its system to help differentiate them from their competitors.

4. Identify market gaps.

The last step in a competitive product analysis is looking for gaps in the market that could help your company get ahead.

When it comes to the console market, one potential opportunity gaining traction is the delivery of games via cloud-based services rather than physical hardware.

Companies like Nvidia and Google have already made inroads in this space, and if they can overcome issues with bandwidth and latency, it could change the market at scale.

How do you stack up against the competition? Where are you similar, and what sets you apart? This is the goal of competitive analysis.

By understanding where your brand and competitors overlap and diverge, you’re better positioned to make strategic decisions that can help grow your brand.

Of course, it’s one thing to understand the benefits of competitive analysis, and it’s another to actually carry out an analysis that yields actionable results. Don’t worry — we’ve got you covered with a quick example.

Sony vs. Nintendo: Not all fun and games.

Let’s take a look at popular gaming system companies Sony and Nintendo.

Sony’s newest offering — the Playstation 5 — recently hit the market but has been plagued by supply shortages.

Nintendo’s Switch console, meanwhile, has been around for several years but remains a consistent seller, especially among teens and children.

This scenario is familiar for many companies on both sides of the coin; some have introduced new products designed to compete with established market leaders, while others are looking to ensure that reliable sales don’t fall.

Using some of the steps listed above, here’s a quick competitive analysis example.

In our example, it’s Sony vs Nintendo, but it’s also worth considering Microsoft’s Xbox, which occupies the same general market vertical.

This is critical for effective analysis; even if you’re focused on specific competitors and how they compare, it’s worth considering other similar market offerings.

PlayStation offers two PS5 versions, digital and standard, at different price points, while Nintendo offers three versions of its console.

Both companies also sell peripherals — for example, Sony sells virtual reality (VR) add-ons, while Nintendo sells gaming peripherals such as steering wheels, tennis rackets, and differing controller configurations.

When it comes to sales tactics and marketing, Sony and Nintendo have very different approaches.

In part thanks to the recent semiconductor shortage, Sony has driven up demand via scarcity — very low volumes of PS5 consoles remain available. Nintendo, meanwhile, has adopted a broader approach by targeting families as its primary customer base.

This effort is bolstered by the Switch Lite product line, which is smaller and less expensive, making it a popular choice for children.

The numbers tell the tale : Through September 2021, Nintendo sold 14.3 million consoles, while Sony sold 7.8 million.

Sony has the higher price point: Their standard PS5 sells for $499, while Nintendo’s most expensive offering comes in at $349. Both offer robust digital marketplaces and the ability to easily download new games or services.

Here, the key differentiators are flexibility and fidelity. The Switch is flexible — users can dock it with their television and play it like a standard console or pick it up and take it anywhere as a handheld gaming system.

The PS5, meanwhile, has superior graphics hardware and processing power for gamers who want the highest-fidelity experience.

5. Analyze how your competitors market their products.

If you compare the marketing efforts of Nintendo and Sony, the difference is immediately apparent: Sony’s ads feature realistic in-game footage and speak to the exclusive nature of their game titles.

The company has managed to secure deals with several high-profile game developers for exclusive access to new and existing IPs.

Nintendo, meanwhile, uses brightly lit ads showing happy families playing together or children using their smaller Switches while traveling.

6. Analyze the level of engagement on your competitor's content.

Engagement helps drive sales and encourage repeat purchases.

While there are several ways to measure engagement, social media is one of the most straightforward: In general, more followers equates to more engagement and greater market impact.

When it comes to our example, Sony enjoys a significant lead over Nintendo: While the official Playstation Facebook page has 38 million followers, Nintendo has just 5 million.

Competitive analysis is complex, especially when you’re assessing multiple companies and products simultaneously.

To help streamline the process, we’ve created 10 free templates that make it possible to see how you stack up against the competition — and what you can do to increase market share.

Let’s break down our SWOT analysis template. Here’s what it looks like:

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• The Role of Franchising
• The Best Ways to Follow Up on a Buisiness Plan
• The Best Books, Sites, Trade Associations and Resources to Get Your Business Funded and Running
• How to Hire the Right Business Plan Consultant
• Business Plan Lingo and Resources All Entrepreneurs Should Know
• How to Write a Letter of Introduction
• What To Put on the Cover Page of a Business Plan
• How to Format Your Business Plan
• 6 Steps to Getting Your Business Plan In Front of Investors

How to Identify and Research Your Competition Emphasizing your competitive advantage is an essential part of any business plan.

By Eric Butow • Oct 27, 2023

Key Takeaways

• Why competitive analysis matters
• Questions to ask about your industry
• How to find similar companies

Opinions expressed by Entrepreneur contributors are their own.

This is part 2 / 8 of Write Your Business Plan: Section 4: Marketing Your Business Plan series.

Successful entrepreneurs are renowned for intuitively feeling a market's pulse, project trends before anyone else detects them, and identifying needs that even customers are unaware of. After you are famous, perhaps you can claim a similar psychic connection to the market. But for now, you'll need to reinforce your claims to market insight by presenting solid research in your plan.

Market research aims to understand the reasons consumers will buy your product. It studies consumer behavior, specifically how cultural, societal, and personal factors influence that behavior. For instance, market research aiming to understand consumers who buy in-line skates might study the cultural importance of fitness, the societal acceptability of marketing directed toward children and teens, and the effect of personal influences such as age, occupation, and lifestyle in directing a skate purchase.

Related: 4 Effective Ways To Accomplish This Missing Step That Most Entrepreneurs Overlook

Market research is often split into two varieties: primary and secondary. Primary research studies customers directly, whereas secondary research studies information others have gathered about customers. Primary research might be telephone interviews or online polls with randomly selected target group members. You can also study your own sales records to gather primary research. Secondary research might come from reports on other organizations' websites or blogs about the industry.

Conducting market research provides answers to those unknown elements. It will greatly reduce risk as you start your business. It will help you understand your competitive position and the strengths and weaknesses of your competitors. And it will improve your marketing and sales process."

Related: You Need Consumer Insights To Ensure The Success Of Your Business. Here Are Five Ways To Find Them.

Questions to Ask About Your Industry

To start preparing your industry analysis and outlook, dig up the following facts about your field:

• What is your total industry-wide sales volume? In dollars? In units?
• What are the trends in sales volume within your industry?
• Who are the major players and your key competitors? What are they like?
• What does it take to compete? What are the barriers to entry?
• What technological trends affect your industry?
• What are the main modes of marketing?
• How does government regulation affect the industry?
• In what ways are changing consumer tastes affecting your industry?
• What are recent demographic trends affecting the industry?
• How sensitive is the industry to seasons and economic cycles?
• What are key financial measures in your industry (average profit margins, sales commissions, etc.)?

Related: 5 Essential Elements of Your Industry Trends Plan

How to Find Similar Companies

Find a close match when looking at comparable businesses (and their data). For comparative purposes, consider:

• Companies of relative size.
• Companies serving the same geographic area could be global if you plan to be a web-based business.
• Companies with a similar ownership structure. If you are two partners, look for businesses run by a couple of partners rather than an advisory board of twelve.
• Relatively new companies. While you can learn from long-standing businesses, they may be successful today because of their twenty-five-year business history and reputation.

You will want to use the data you have gathered to determine how much business you could do and to figure out how you will fit into and adapt to the marketplace.

Related: How to Make Your Business Stand Out

How To Do Original Research

One limitation of in-house market information is that it may not include exactly what you're looking for. For instance, if you'd like to consider offering consumers financing for their purchases, it's hard to tell how they'd like it since you don't already offer it.

You can get around this limitation by conducting original research—interviewing customers who enter your store, for example, or counting cars that pass the intersection where you plan to open a new location—and combining it with existing data. Follow these steps to spending your market research dollars wisely:

Determine what you need to know about your market. The more focused the research, the more valuable it will be.

• Prioritize the results of the first step. You can't research everything, so concentrate on the information that will give you the best (or quickest) payback.
• Review less expensive research alternatives. Small Business Development Centers and the Small Business Administration can help you develop customer surveys. Your trade association will have good secondary research. Be creative.
• Estimate the cost of performing the research yourself. Keep in mind that with the internet you should not have to spend a ton of money. If you're considering hiring a consultant or a researcher, remember this is your dream, these are your goals, and this is your business.
• Don't pay for what you don't need.

Related: The One Simple Task That Will Help Your Startup Succeed

More in Write Your Business Plan

Section 1: the foundation of a business plan, section 2: putting your business plan to work, section 3: selling your product and team, section 4: marketing your business plan, section 5: organizing operations and finances, section 6: getting your business plan to investors.

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Mastering Competitive Analysis in Business Plan

6 minutes read

In an ever-competitive business world where agility and innovation reign supreme, understanding the landscape in which your business operates is more than a mere advantage - it's a necessity. Thriving in today's dynamic environment demands a keen understanding not just of your business, but of the ecosystem within which it co-exists. This requires comprehensive awareness of who your competitors are, what they're doing, and how they're doing it. And this is precisely where competitor analysis comes into play.

In this article, you’ll know what competitive analysis is, why it is important and how to perform the analysis in a better way. Let’s dive in.

What Is Competitor Analysis

Competitor analysis is a strategic business practice that involves evaluating and understanding the strengths and weaknesses of competitors in the same industry or market. The primary goal is to gain insights into the competitive landscape, identify opportunities, and make informed decisions to improve your own business performance.

Key Aspects of Competitor Analysis in Business Plan

Competitor analysis is an essential part of any business plan, providing key insights that drive decision making and strategic planning. Understanding your competition can position your business favorably within the market and give you a competitive edge. This part highlights the critical aspects of competitor analysis you should focus on for effective business planning.

• Identification of Competitors: Recognizing who your competitors are is the first step. This includes both direct competitors offering similar products or services and indirect competitors who may fulfill the same need in a different way.
• SWOT Analysis: Assessing the strengths, weaknesses, opportunities, and threats (SWOT) of your competitors helps in understanding their internal capabilities and external challenges. This analysis aids in developing strategies to capitalize on weaknesses and counteract threats.
• Market Share and Positioning: Understanding the market share of your competitors and their positioning in the market relative to yours provides valuable insights. It helps identify areas where you can differentiate your products or services.
• Product and Service Offerings: Analyzing the features, quality, and pricing of your competitors' offerings helps you benchmark your own products or services. It can also reveal areas for improvement or innovation.
• Marketing and Branding Strategies: Evaluating the marketing and branding strategies of competitors provides insights into how they are reaching and engaging with their target audience. This information can be valuable for refining your own marketing approach.
• Customer Reviews and Feedback: Examining customer reviews and feedback for your competitors' products or services can highlight areas where they excel or fall short. This information can guide your efforts to meet or exceed customer expectations.
• Technological Advancements: Keeping track of technological advancements adopted by competitors can inform your own technology strategy. It ensures that you stay competitive in terms of innovation.
• Financial Performance: Analyzing the financial health of your competitors can provide an understanding of their stability and growth potential. This information is crucial for strategic planning.

Overall, competitor analysis is an ongoing process that helps businesses stay informed about industry trends, anticipate changes, and make well-informed decisions to maintain or improve their competitive position.

Why Is Competitive Analysis Important in Business Plan

Conducting a competitor analysis is not just about observing and replicating what others are doing. It's about leveraging this knowledge to formulate a unique and superior strategy that distinguishes your business from the rest. The importance of competitive analysis in a business plan can be seen in the following points:

• Identify Market Gaps: Through competitor analysis, we can identify unmet needs in the market or gaps in competitors' offerings that can be leveraged as potential business opportunities.
• Inform Decision Making: By understanding what strategies are working for competitors and why, we can make more informed decisions about our own strategic direction.
• Predict Competitor Moves: A detailed understanding of competitors can help predict their future actions based on their past behavior. This allows businesses to proactively devise counter-strategies.
• Benchmark Performance: Comparing key performance indicators (KPIs) against industry competitors helps determine how well your business is doing and where improvements can be made.
• Reduce Risks: By regularly analyzing competitors, businesses can detect threats early and take preventive measures to reduce potential risks.

Competitor analysis is a critical component of any business strategy. It's not just about keeping tabs on competitors but using this knowledge as a strategic tool for growth and improvement. 

How to Conduct a Great Competitive Analysis in Business Plan

The ability to stay ahead of the competition is vital in the ever-changing business landscape. Boardmix understands that importance and has made it a mission to equip businesses with the right tools to navigate this competitive environment. In this part, you will be led through a step-by-step process on how to conduct a great competitive analysis for your business plan.

Phase 1: Identifying Competitors

Every great competitive analysis starts with identifying your competitors. They can be direct (companies that offer the same products or services as yours) or indirect (companies that offer different products or services that serve the same purpose). With Boardmix's in-depth AI analysis tools, you can easily identify these competitors. Start with a list of 4-10 primary competitors in your market segment and then narrow down to those that directly impact your business.

Phase 2: Analyzing Competitor Products and Services

Once you've identified your competitors, it's time to scrutinize their products or services. Are there features that stand out? Are they priced higher or lower? What is their perceived value among customers? Boardmix provdies a feature can help streamline this process by offering a side-by-side comparison of your products and services with those of your competitors.

Phase 3: Assessing Competitors' Sales and Marketing Strategies

Understanding your competitors' sales and marketing strategies can provide crucial insights into their target audience, key messages, pricing strategy, and distribution channels. Leverage Boardmix's AI and infinite canvas capabilities to gather information about competitors' advertising, public relations, content marketing, SEO strategies, and more.

Phase 4: Examining Competitors’ Strengths and Weaknesses

This step involves analyzing each competitor's strengths, weaknesses, opportunities, and threats a SWOT analysis. Their strengths might be superior customer service, unique technology, or robust distribution networks. Weaknesses could be high prices or outdated offerings. Boardmix’s SWOT analysis tool can make this step seamless, helping you uncover potential areas where you can outshine your competition.

Phase 5: Studying Competitors' Market Positioning

How do your competitors position themselves in the market? Boardmix can help answer this by providing insights into competitors' branding strategy, unique selling propositions (USPs), and value proposition. Such an understanding will help you identify gaps you could fill to differentiate yourself in the market.

Phase 6: Ongoing Monitoring of Competitors

Competitive analysis should be an ongoing process due to ever-evolving markets and strategies. That's why Boardmix offers regular updates about changes in the competitive landscape so that you can adapt your strategies accordingly.

In conclusion, competitive analysis is pivotal in staying ahead of the game in business. It informs strategic decisions, helps exploit competitors' weaknesses, identifies market gaps, and creates unique value propositions. With Boardmix by your side, conducting a competitive analysis is made effortless and intuitive, ensuring your business carves out a unique and competitive space in the market.

Join Boardmix to collaborate with your team.

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How to Write a Competitor Analysis for a Business Plan (with AI in 2023)

Competitor analysis is a critical component of any business plan. It helps you understand the landscape of your industry, identify opportunities for growth and differentiation, and craft strategies that take advantage of your competitors' weaknesses.

Here's a step-by-step guide on how to conduct a comprehensive competitor analysis, including how to leverage AI tools like Bizway to make the process more efficient and effective.

Step-by-Step Guide to Performing a Competitor Analysis

1. identify your competitors.

Understanding your competitive landscape begins with pinpointing who your direct and indirect competitors are.

Points to Consider

• Direct Competitors : Those who offer similar products/services in the same market.
• Indirect Competitors : Businesses targeting your customer base with different offerings.
• Utilize market research and customer feedback to list competitors.
• Identify geographical considerations - local, regional, or global competitors.

2. Analyze Their Products/Services

A thorough examination of competitors’ offerings unveils potential areas for differentiation and enhancement in your product/service line.

• Feature comparisons.
• Pricing structures.
• Unique Selling Propositions (USPs).
• Adopt a customer-centric approach to understand how consumers perceive competitors’ offerings.
• Identify gaps in their product/service lines that you could explore.

3. Assess Their Marketing Strategy

Understanding competitors’ marketing approaches aids in crafting a superior, data-driven marketing strategy.

• Target audience.
• Key messages and value propositions.
• Channel effectiveness and presence.
• Use social listening tools to gauge their social media effectiveness.
• Analyze the SEO performance of competitors’ websites.

4. Examine Their Sales Strategy

Investigating sales channels and tactics employed by competitors reveals market penetration strategies and potential areas for diversification.

• Distribution channels.
• Pricing and sales tactics.
• Customer relationship management.
• Secret shop to observe sales tactics and customer experiences.
• Review customer feedback on their purchasing experience.

5. Analyze Their Strengths and Weaknesses

Identifying what competitors excel in and fall short on enables strategic decision-making in exploiting market opportunities.

• Operational efficiency.
• Customer service quality.
• Brand reputation and loyalty.
• Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) for each competitor.
• Leverage customer reviews and testimonials to gauge reputation.

Using AI for Competitor Analysis

Automated data collection.

AI automates the harvesting of data from myriad sources, ensuring robust research while saving time.

• Use AI tools to scrape and aggregate data from competitors' websites, social media, and customer review platforms.
• Ensure the data is categorized and stored systematically for easy analysis.

Real-Time Updates

AI provides a competitive edge by monitoring and reporting real-time updates on competitor activities.

• Set up AI monitoring for specific competitor activity: product launches, PR releases, or marketing campaigns.
• Ensure to leverage real-time data to inform swift strategic adjustments.

Predictive Analytics

Predictive analytics via AI deciphers patterns and anticipates future competitor moves, positioning your business proactively.

• Leverage AI to analyze historical data for predicting future trends.
• Utilize these insights to anticipate and formulate preemptive strategies.

Using Bizway for Competitor Analysis and Business Planning

One such AI tool that can revolutionize your competitor analysis process is Bizway . Bizway is an AI-powered business planning and research app that can help you research your competitors and write your entire competitor analysis with just a few clicks. Moreover, Bizway can assist you in writing your entire business plan, saving you time and providing you with expert-level planning documents.

With Bizway, you can automate the process of generating clear, concise planning docs across all areas of business, from an SEO Content Plan to User Onboarding Plan. It also helps fill knowledge gaps in areas of business you're not well-versed in.

So, whether you're a solopreneur, a small business owner, or an aspiring entrepreneur still in school, Bizway is the AI assistant you need to take your business planning to the next level.

Gerrard + Bizway AI Assistant

Start automating your business growth, today⚡

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Bizway is brought to you by Landmark Labs Ltd.

©2024 Bizway Labs

Small Business Trends

How to create a business plan: examples & free template.

This is the ultimate guide to creating a comprehensive and effective plan to start a business . In today’s dynamic business landscape, having a well-crafted business plan is an important first step to securing funding, attracting partners, and navigating the challenges of entrepreneurship.

This guide has been designed to help you create a winning plan that stands out in the ever-evolving marketplace. U sing real-world examples and a free downloadable template, it will walk you through each step of the process.

Whether you’re a seasoned entrepreneur or launching your very first startup, the guide will give you the insights, tools, and confidence you need to create a solid foundation for your business.

Table of Contents

How to Write a Business Plan

Embarking on the journey of creating a successful business requires a solid foundation, and a well-crafted business plan is the cornerstone. Here is the process of writing a comprehensive business plan and the main parts of a winning business plan . From setting objectives to conducting market research, this guide will have everything you need.

Executive Summary

The Executive Summary serves as the gateway to your business plan, offering a snapshot of your venture’s core aspects. This section should captivate and inform, succinctly summarizing the essence of your plan.

It’s crucial to include a clear mission statement, a brief description of your primary products or services, an overview of your target market, and key financial projections or achievements.

Think of it as an elevator pitch in written form: it should be compelling enough to engage potential investors or stakeholders and provide them with a clear understanding of what your business is about, its goals, and why it’s a promising investment.

Example: EcoTech is a technology company specializing in eco-friendly and sustainable products designed to reduce energy consumption and minimize waste. Our mission is to create innovative solutions that contribute to a cleaner, greener environment.

Our target market includes environmentally conscious consumers and businesses seeking to reduce their carbon footprint. We project a 200% increase in revenue within the first three years of operation.

Overview and Business Objectives

In the Overview and Business Objectives section, outline your business’s core goals and the strategic approaches you plan to use to achieve them. This section should set forth clear, specific objectives that are attainable and time-bound, providing a roadmap for your business’s growth and success.

It’s important to detail how these objectives align with your company’s overall mission and vision. Discuss the milestones you aim to achieve and the timeframe you’ve set for these accomplishments.

This part of the plan demonstrates to investors and stakeholders your vision for growth and the practical steps you’ll take to get there.

Example: EcoTech’s primary objective is to become a market leader in sustainable technology products within the next five years. Our key objectives include:

• Introducing three new products within the first two years of operation.
• Achieving annual revenue growth of 30%.
• Expanding our customer base to over 10,000 clients by the end of the third year.

Company Description

The Company Description section is your opportunity to delve into the details of your business. Provide a comprehensive overview that includes your company’s history, its mission statement, and its vision for the future.

Highlight your unique selling proposition (USP) – what makes your business stand out in the market. Explain the problems your company solves and how it benefits your customers.

Include information about the company’s founders, their expertise, and why they are suited to lead the business to success. This section should paint a vivid picture of your business, its values, and its place in the industry.

Example: EcoTech is committed to developing cutting-edge sustainable technology products that benefit both the environment and our customers. Our unique combination of innovative solutions and eco-friendly design sets us apart from the competition. We envision a future where technology and sustainability go hand in hand, leading to a greener planet.

Define Your Target Market

Defining Your Target Market is critical for tailoring your business strategy effectively. This section should describe your ideal customer base in detail, including demographic information (such as age, gender, income level, and location) and psychographic data (like interests, values, and lifestyle).

Elucidate on the specific needs or pain points of your target audience and how your product or service addresses these. This information will help you know your target market and develop targeted marketing strategies.

Example: Our target market comprises environmentally conscious consumers and businesses looking for innovative solutions to reduce their carbon footprint. Our ideal customers are those who prioritize sustainability and are willing to invest in eco-friendly products.

Market Analysis

The Market Analysis section requires thorough research and a keen understanding of the industry. It involves examining the current trends within your industry, understanding the needs and preferences of your customers, and analyzing the strengths and weaknesses of your competitors.

This analysis will enable you to spot market opportunities and anticipate potential challenges. Include data and statistics to back up your claims, and use graphs or charts to illustrate market trends.

This section should demonstrate that you have a deep understanding of the market in which you operate and that your business is well-positioned to capitalize on its opportunities.

Example: The market for eco-friendly technology products has experienced significant growth in recent years, with an estimated annual growth rate of 10%. As consumers become increasingly aware of environmental issues, the demand for sustainable solutions continues to rise.

Our research indicates a gap in the market for high-quality, innovative eco-friendly technology products that cater to both individual and business clients.

SWOT Analysis

A SWOT analysis in your business plan offers a comprehensive examination of your company’s internal and external factors. By assessing Strengths, you showcase what your business does best and where your capabilities lie.

Weaknesses involve an honest introspection of areas where your business may be lacking or could improve. Opportunities can be external factors that your business could capitalize on, such as market gaps or emerging trends.

Threats include external challenges your business may face, like competition or market changes. This analysis is crucial for strategic planning, as it helps in recognizing and leveraging your strengths, addressing weaknesses, seizing opportunities, and preparing for potential threats.

Including a SWOT analysis demonstrates to stakeholders that you have a balanced and realistic understanding of your business in its operational context.

• Innovative and eco-friendly product offerings.
• Strong commitment to sustainability and environmental responsibility.
• Skilled and experienced team with expertise in technology and sustainability.

Weaknesses:

• Limited brand recognition compared to established competitors.
• Reliance on third-party manufacturers for product development.

Opportunities:

• Growing consumer interest in sustainable products.
• Partnerships with environmentally-focused organizations and influencers.
• Expansion into international markets.
• Intense competition from established technology companies.
• Regulatory changes could impact the sustainable technology market.

Competitive Analysis

In this section, you’ll analyze your competitors in-depth, examining their products, services, market positioning, and pricing strategies. Understanding your competition allows you to identify gaps in the market and tailor your offerings to outperform them.

By conducting a thorough competitive analysis, you can gain insights into your competitors’ strengths and weaknesses, enabling you to develop strategies to differentiate your business and gain a competitive advantage in the marketplace.

Example: Key competitors include:

GreenTech: A well-known brand offering eco-friendly technology products, but with a narrower focus on energy-saving devices.

EarthSolutions: A direct competitor specializing in sustainable technology, but with a limited product range and higher prices.

By offering a diverse product portfolio, competitive pricing, and continuous innovation, we believe we can capture a significant share of the growing sustainable technology market.

Organization and Management Team

Provide an overview of your company’s organizational structure, including key roles and responsibilities. Introduce your management team, highlighting their expertise and experience to demonstrate that your team is capable of executing the business plan successfully.

Showcasing your team’s background, skills, and accomplishments instills confidence in investors and other stakeholders, proving that your business has the leadership and talent necessary to achieve its objectives and manage growth effectively.

Example: EcoTech’s organizational structure comprises the following key roles: CEO, CTO, CFO, Sales Director, Marketing Director, and R&D Manager. Our management team has extensive experience in technology, sustainability, and business development, ensuring that we are well-equipped to execute our business plan successfully.

Products and Services Offered

Describe the products or services your business offers, focusing on their unique features and benefits. Explain how your offerings solve customer pain points and why they will choose your products or services over the competition.

This section should emphasize the value you provide to customers, demonstrating that your business has a deep understanding of customer needs and is well-positioned to deliver innovative solutions that address those needs and set your company apart from competitors.

Example: EcoTech offers a range of eco-friendly technology products, including energy-efficient lighting solutions, solar chargers, and smart home devices that optimize energy usage. Our products are designed to help customers reduce energy consumption, minimize waste, and contribute to a cleaner environment.

Marketing and Sales Strategy

In this section, articulate your comprehensive strategy for reaching your target market and driving sales. Detail the specific marketing channels you plan to use, such as social media, email marketing, SEO, or traditional advertising.

Describe the nature of your advertising campaigns and promotional activities, explaining how they will capture the attention of your target audience and convey the value of your products or services. Outline your sales strategy, including your sales process, team structure, and sales targets.

Discuss how these marketing and sales efforts will work together to attract and retain customers, generate leads, and ultimately contribute to achieving your business’s revenue goals.

This section is critical to convey to investors and stakeholders that you have a well-thought-out approach to market your business effectively and drive sales growth.

Example: Our marketing strategy includes digital advertising, content marketing, social media promotion, and influencer partnerships. We will also attend trade shows and conferences to showcase our products and connect with potential clients. Our sales strategy involves both direct sales and partnerships with retail stores, as well as online sales through our website and e-commerce platforms.

Logistics and Operations Plan

The Logistics and Operations Plan is a critical component that outlines the inner workings of your business. It encompasses the management of your supply chain, detailing how you acquire raw materials and manage vendor relationships.

Inventory control is another crucial aspect, where you explain strategies for inventory management to ensure efficiency and reduce wastage. The section should also describe your production processes, emphasizing scalability and adaptability to meet changing market demands.

Quality control measures are essential to maintain product standards and customer satisfaction. This plan assures investors and stakeholders of your operational competency and readiness to meet business demands.

Highlighting your commitment to operational efficiency and customer satisfaction underlines your business’s capability to maintain smooth, effective operations even as it scales.

Example: EcoTech partners with reliable third-party manufacturers to produce our eco-friendly technology products. Our operations involve maintaining strong relationships with suppliers, ensuring quality control, and managing inventory.

We also prioritize efficient distribution through various channels, including online platforms and retail partners, to deliver products to our customers in a timely manner.

Financial Projections Plan

In the Financial Projections Plan, lay out a clear and realistic financial future for your business. This should include detailed projections for revenue, costs, and profitability over the next three to five years.

Ground these projections in solid assumptions based on your market analysis, industry benchmarks, and realistic growth scenarios. Break down revenue streams and include an analysis of the cost of goods sold, operating expenses, and potential investments.

This section should also discuss your break-even analysis, cash flow projections, and any assumptions about external funding requirements.

By presenting a thorough and data-backed financial forecast, you instill confidence in potential investors and lenders, showcasing your business’s potential for profitability and financial stability.

This forward-looking financial plan is crucial for demonstrating that you have a firm grasp of the financial nuances of your business and are prepared to manage its financial health effectively.

Example: Over the next three years, we expect to see significant growth in revenue, driven by new product launches and market expansion. Our financial projections include:

• Year 1: $1.5 million in revenue, with a net profit of $200,000.
• Year 2: $3 million in revenue, with a net profit of $500,000.
• Year 3: $4.5 million in revenue, with a net profit of $1 million.

These projections are based on realistic market analysis, growth rates, and product pricing.

Income Statement

The income statement , also known as the profit and loss statement, provides a summary of your company’s revenues and expenses over a specified period. It helps you track your business’s financial performance and identify trends, ensuring you stay on track to achieve your financial goals.

Regularly reviewing and analyzing your income statement allows you to monitor the health of your business, evaluate the effectiveness of your strategies, and make data-driven decisions to optimize profitability and growth.

Example: The income statement for EcoTech’s first year of operation is as follows:

• Revenue: $1,500,000
• Cost of Goods Sold: $800,000
• Gross Profit: $700,000
• Operating Expenses: $450,000
• Net Income: $250,000

This statement highlights our company’s profitability and overall financial health during the first year of operation.

Cash Flow Statement

A cash flow statement is a crucial part of a financial business plan that shows the inflows and outflows of cash within your business. It helps you monitor your company’s liquidity, ensuring you have enough cash on hand to cover operating expenses, pay debts, and invest in growth opportunities.

By including a cash flow statement in your business plan, you demonstrate your ability to manage your company’s finances effectively.

Example:  The cash flow statement for EcoTech’s first year of operation is as follows:

Operating Activities:

• Depreciation: $10,000
• Changes in Working Capital: -$50,000
• Net Cash from Operating Activities: $210,000

Investing Activities:

•  Capital Expenditures: -$100,000
• Net Cash from Investing Activities: -$100,000

Financing Activities:

• Proceeds from Loans: $150,000
• Loan Repayments: -$50,000
• Net Cash from Financing Activities: $100,000
• Net Increase in Cash: $210,000

This statement demonstrates EcoTech’s ability to generate positive cash flow from operations, maintain sufficient liquidity, and invest in growth opportunities.

Tips on Writing a Business Plan

1. Be clear and concise: Keep your language simple and straightforward. Avoid jargon and overly technical terms. A clear and concise business plan is easier for investors and stakeholders to understand and demonstrates your ability to communicate effectively.

2. Conduct thorough research: Before writing your business plan, gather as much information as possible about your industry, competitors, and target market. Use reliable sources and industry reports to inform your analysis and make data-driven decisions.

3. Set realistic goals: Your business plan should outline achievable objectives that are specific, measurable, attainable, relevant, and time-bound (SMART). Setting realistic goals demonstrates your understanding of the market and increases the likelihood of success.

4. Focus on your unique selling proposition (USP): Clearly articulate what sets your business apart from the competition. Emphasize your USP throughout your business plan to showcase your company’s value and potential for success.

5. Be flexible and adaptable: A business plan is a living document that should evolve as your business grows and changes. Be prepared to update and revise your plan as you gather new information and learn from your experiences.

6. Use visuals to enhance understanding: Include charts, graphs, and other visuals to help convey complex data and ideas. Visuals can make your business plan more engaging and easier to digest, especially for those who prefer visual learning.

7. Seek feedback from trusted sources: Share your business plan with mentors, industry experts, or colleagues and ask for their feedback. Their insights can help you identify areas for improvement and strengthen your plan before presenting it to potential investors or partners.

FREE Business Plan Template

To help you get started on your business plan, we have created a template that includes all the essential components discussed in the “How to Write a Business Plan” section. This easy-to-use template will guide you through each step of the process, ensuring you don’t miss any critical details.

The template is divided into the following sections:

• Mission statement
• Business Overview
• Key products or services
• Target market
• Financial highlights
• Company goals
• Strategies to achieve goals
• Measurable, time-bound objectives
• Company History
• Mission and vision
• Unique selling proposition
• Demographics
• Psychographics
• Pain points
• Industry trends
• Customer needs
• Competitor strengths and weaknesses
• Opportunities
• Competitor products and services
• Market positioning
• Pricing strategies
• Organizational structure
• Key roles and responsibilities
• Management team backgrounds
• Product or service features
• Competitive advantages
• Marketing channels
• Advertising campaigns
• Promotional activities
• Sales strategies
• Supply chain management
• Inventory control
• Production processes
• Quality control measures
• Projected revenue
• Assumptions
• Cash inflows
• Cash outflows
• Net cash flow

What is a Business Plan?

A business plan is a strategic document that outlines an organization’s goals, objectives, and the steps required to achieve them. It serves as a roadmap as you start a business , guiding the company’s direction and growth while identifying potential obstacles and opportunities.

Typically, a business plan covers areas such as market analysis, financial projections, marketing strategies, and organizational structure. It not only helps in securing funding from investors and lenders but also provides clarity and focus to the management team.

A well-crafted business plan is a very important part of your business startup checklist because it fosters informed decision-making and long-term success.

Why You Should Write a Business Plan

Understanding the importance of a business plan in today’s competitive environment is crucial for entrepreneurs and business owners. Here are five compelling reasons to write a business plan:

• Attract Investors and Secure Funding : A well-written business plan demonstrates your venture’s potential and profitability, making it easier to attract investors and secure the necessary funding for growth and development. It provides a detailed overview of your business model, target market, financial projections, and growth strategies, instilling confidence in potential investors and lenders that your company is a worthy investment.
• Clarify Business Objectives and Strategies : Crafting a business plan forces you to think critically about your goals and the strategies you’ll employ to achieve them, providing a clear roadmap for success. This process helps you refine your vision and prioritize the most critical objectives, ensuring that your efforts are focused on achieving the desired results.
• Identify Potential Risks and Opportunities : Analyzing the market, competition, and industry trends within your business plan helps identify potential risks and uncover untapped opportunities for growth and expansion. This insight enables you to develop proactive strategies to mitigate risks and capitalize on opportunities, positioning your business for long-term success.
• Improve Decision-Making : A business plan serves as a reference point so you can make informed decisions that align with your company’s overall objectives and long-term vision. By consistently referring to your plan and adjusting it as needed, you can ensure that your business remains on track and adapts to changes in the market, industry, or internal operations.
• Foster Team Alignment and Communication : A shared business plan helps ensure that all team members are on the same page, promoting clear communication, collaboration, and a unified approach to achieving the company’s goals. By involving your team in the planning process and regularly reviewing the plan together, you can foster a sense of ownership, commitment, and accountability that drives success.

What are the Different Types of Business Plans?

In today’s fast-paced business world, having a well-structured roadmap is more important than ever. A traditional business plan provides a comprehensive overview of your company’s goals and strategies, helping you make informed decisions and achieve long-term success. There are various types of business plans, each designed to suit different needs and purposes. Let’s explore the main types:

• Startup Business Plan: Tailored for new ventures, a startup business plan outlines the company’s mission, objectives, target market, competition, marketing strategies, and financial projections. It helps entrepreneurs clarify their vision, secure funding from investors, and create a roadmap for their business’s future. Additionally, this plan identifies potential challenges and opportunities, which are crucial for making informed decisions and adapting to changing market conditions.
• Internal Business Plan: This type of plan is intended for internal use, focusing on strategies, milestones, deadlines, and resource allocation. It serves as a management tool for guiding the company’s growth, evaluating its progress, and ensuring that all departments are aligned with the overall vision. The internal business plan also helps identify areas of improvement, fosters collaboration among team members, and provides a reference point for measuring performance.
• Strategic Business Plan: A strategic business plan outlines long-term goals and the steps to achieve them, providing a clear roadmap for the company’s direction. It typically includes a SWOT analysis, market research, and competitive analysis. This plan allows businesses to align their resources with their objectives, anticipate changes in the market, and develop contingency plans. By focusing on the big picture, a strategic business plan fosters long-term success and stability.
• Feasibility Business Plan: This plan is designed to assess the viability of a business idea, examining factors such as market demand, competition, and financial projections. It is often used to decide whether or not to pursue a particular venture. By conducting a thorough feasibility analysis, entrepreneurs can avoid investing time and resources into an unviable business concept. This plan also helps refine the business idea, identify potential obstacles, and determine the necessary resources for success.
• Growth Business Plan: Also known as an expansion plan, a growth business plan focuses on strategies for scaling up an existing business. It includes market analysis, new product or service offerings, and financial projections to support expansion plans. This type of plan is essential for businesses looking to enter new markets, increase their customer base, or launch new products or services. By outlining clear growth strategies, the plan helps ensure that expansion efforts are well-coordinated and sustainable.
• Operational Business Plan: This type of plan outlines the company’s day-to-day operations, detailing the processes, procedures, and organizational structure. It is an essential tool for managing resources, streamlining workflows, and ensuring smooth operations. The operational business plan also helps identify inefficiencies, implement best practices, and establish a strong foundation for future growth. By providing a clear understanding of daily operations, this plan enables businesses to optimize their resources and enhance productivity.
• Lean Business Plan: A lean business plan is a simplified, agile version of a traditional plan, focusing on key elements such as value proposition, customer segments, revenue streams, and cost structure. It is perfect for startups looking for a flexible, adaptable planning approach. The lean business plan allows for rapid iteration and continuous improvement, enabling businesses to pivot and adapt to changing market conditions. This streamlined approach is particularly beneficial for businesses in fast-paced or uncertain industries.
• One-Page Business Plan: As the name suggests, a one-page business plan is a concise summary of your company’s key objectives, strategies, and milestones. It serves as a quick reference guide and is ideal for pitching to potential investors or partners. This plan helps keep teams focused on essential goals and priorities, fosters clear communication, and provides a snapshot of the company’s progress. While not as comprehensive as other plans, a one-page business plan is an effective tool for maintaining clarity and direction.
• Nonprofit Business Plan: Specifically designed for nonprofit organizations, this plan outlines the mission, goals, target audience, fundraising strategies, and budget allocation. It helps secure grants and donations while ensuring the organization stays on track with its objectives. The nonprofit business plan also helps attract volunteers, board members, and community support. By demonstrating the organization’s impact and plans for the future, this plan is essential for maintaining transparency, accountability, and long-term sustainability within the nonprofit sector.
• Franchise Business Plan: For entrepreneurs seeking to open a franchise, this type of plan focuses on the franchisor’s requirements, as well as the franchisee’s goals, strategies, and financial projections. It is crucial for securing a franchise agreement and ensuring the business’s success within the franchise system. This plan outlines the franchisee’s commitment to brand standards, marketing efforts, and operational procedures, while also addressing local market conditions and opportunities. By creating a solid franchise business plan, entrepreneurs can demonstrate their ability to effectively manage and grow their franchise, increasing the likelihood of a successful partnership with the franchisor.

Using Business Plan Software

Creating a comprehensive business plan can be intimidating, but business plan software can streamline the process and help you produce a professional document. These tools offer a number of benefits, including guided step-by-step instructions, financial projections, and industry-specific templates. Here are the top 5 business plan software options available to help you craft a great business plan.

1. LivePlan

LivePlan is a popular choice for its user-friendly interface and comprehensive features. It offers over 500 sample plans, financial forecasting tools, and the ability to track your progress against key performance indicators. With LivePlan, you can create visually appealing, professional business plans that will impress investors and stakeholders.

2. Upmetrics

Upmetrics provides a simple and intuitive platform for creating a well-structured business plan. It features customizable templates, financial forecasting tools, and collaboration capabilities, allowing you to work with team members and advisors. Upmetrics also offers a library of resources to guide you through the business planning process.

Bizplan is designed to simplify the business planning process with a drag-and-drop builder and modular sections. It offers financial forecasting tools, progress tracking, and a visually appealing interface. With Bizplan, you can create a business plan that is both easy to understand and visually engaging.

Enloop is a robust business plan software that automatically generates a tailored plan based on your inputs. It provides industry-specific templates, financial forecasting, and a unique performance score that updates as you make changes to your plan. Enloop also offers a free version, making it accessible for businesses on a budget.

5. Tarkenton GoSmallBiz

Developed by NFL Hall of Famer Fran Tarkenton, GoSmallBiz is tailored for small businesses and startups. It features a guided business plan builder, customizable templates, and financial projection tools. GoSmallBiz also offers additional resources, such as CRM tools and legal document templates, to support your business beyond the planning stage.

Business Plan FAQs

What is a good business plan.

A good business plan is a well-researched, clear, and concise document that outlines a company’s goals, strategies, target market, competitive advantages, and financial projections. It should be adaptable to change and provide a roadmap for achieving success.

What are the 3 main purposes of a business plan?

The three main purposes of a business plan are to guide the company’s strategy, attract investment, and evaluate performance against objectives. Here’s a closer look at each of these:

• It outlines the company’s purpose and core values to ensure that all activities align with its mission and vision.
• It provides an in-depth analysis of the market, including trends, customer needs, and competition, helping the company tailor its products and services to meet market demands.
• It defines the company’s marketing and sales strategies, guiding how the company will attract and retain customers.
• It describes the company’s organizational structure and management team, outlining roles and responsibilities to ensure effective operation and leadership.
• It sets measurable, time-bound objectives, allowing the company to plan its activities effectively and make strategic decisions to achieve these goals.
• It provides a comprehensive overview of the company and its business model, demonstrating its uniqueness and potential for success.
• It presents the company’s financial projections, showing its potential for profitability and return on investment.
• It demonstrates the company’s understanding of the market, including its target customers and competition, convincing investors that the company is capable of gaining a significant market share.
• It showcases the management team’s expertise and experience, instilling confidence in investors that the team is capable of executing the business plan successfully.
• It establishes clear, measurable objectives that serve as performance benchmarks.
• It provides a basis for regular performance reviews, allowing the company to monitor its progress and identify areas for improvement.
• It enables the company to assess the effectiveness of its strategies and make adjustments as needed to achieve its objectives.
• It helps the company identify potential risks and challenges, enabling it to develop contingency plans and manage risks effectively.
• It provides a mechanism for evaluating the company’s financial performance, including revenue, expenses, profitability, and cash flow.

Can I write a business plan by myself?

Yes, you can write a business plan by yourself, but it can be helpful to consult with mentors, colleagues, or industry experts to gather feedback and insights. There are also many creative business plan templates and business plan examples available online, including those above.

We also have examples for specific industries, including a using food truck business plan , salon business plan , farm business plan , daycare business plan , and restaurant business plan .

Is it possible to create a one-page business plan?

Yes, a one-page business plan is a condensed version that highlights the most essential elements, including the company’s mission, target market, unique selling proposition, and financial goals.

How long should a business plan be?

A typical business plan ranges from 20 to 50 pages, but the length may vary depending on the complexity and needs of the business.

What is a business plan outline?

A business plan outline is a structured framework that organizes the content of a business plan into sections, such as the executive summary, company description, market analysis, and financial projections.

What are the 5 most common business plan mistakes?

The five most common business plan mistakes include inadequate research, unrealistic financial projections, lack of focus on the unique selling proposition, poor organization and structure, and failure to update the plan as circumstances change.

What questions should be asked in a business plan?

A business plan should address questions such as: What problem does the business solve? Who is the specific target market ? What is the unique selling proposition? What are the company’s objectives? How will it achieve those objectives?

What’s the difference between a business plan and a strategic plan?

A business plan focuses on the overall vision, goals, and tactics of a company, while a strategic plan outlines the specific strategies, action steps, and performance measures necessary to achieve the company’s objectives.

How is business planning for a nonprofit different?

Nonprofit business planning focuses on the organization’s mission, social impact, and resource management, rather than profit generation. The financial section typically includes funding sources, expenses, and projected budgets for programs and operations.

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