Describing the Competition

There's no escaping competition in life. That goes double for business. The business environment is very competitive, more so now than ever before. A reader of your plan will want to know who your competitors are, how they compete with you, and how your business is positioned to compete with them.

Pick a dozen or so of your nearest competitors and start a file on them. Find examples of their advertising and promotion materials and their pricing strategy, and toss them in a file folder. Check current and back issues of the Yellow Pages to see if your competitors are increasing, decreasing, or maintaining their promotional exposure. Also, check their websites; search Yahoo! news, website ads, and specials; and sign up for a competitor's newsletter.

Web Resource: Competitive Research Resources

The Internet is filled with resources that can help you find your competition and provide you with the necessary information to evaluate them. You can draw on media sources, Web directories, and competitive intelligence services.

Here are just a few:

• The U.S. Web100, www.metamoney.com/usIndustryListIndex.html.

  This site lists the top 100 companies in the U.S., in more than 50 industry categories cataloging more than 400 of the Fortune 500 U.S. corporations with websites.

• Hoover's Business Links, www.hoovers.com/free/.

  This is a directory of more than 15,000 business-related websites, divided into seven major categories. Hoover's editors select the links based on timeliness, quality, and ease of use.

• CI Seek, www.bidigital.com/ci/.

  This site offers the Competitive Intelligence Resource Index, a search engine and categorical listing of sites related to competitive intelligence. Categories range from associations to software, with books, companies, documentation, education, jobs, and publications in between.

• Business.com, www.business.com/.

  This is a business search engine and directory, including company and industry profiles, news, financials, statistics, and, most important, competitive analysis.

• Dun & Bradstreet, www.dnb.com/.

  This is the granddaddy of all company information.

This is not the place in your plan to toot your own horn. In other words, describe your competition from an objective and unbiased perspective. Analyzing and describing your competition is a double-edged sword. At first, it might seem a dubious addition to your business plan. Why tell the reader you have competition at all?

Here's why: Many first-time business-plan writers don't realize that investors want to know whether there are other profitable and successful businesses in your marketplace. It could help convince an investor to fund you, and you will have a proven market. If your technology, distribution, or USP is better, you've built a good case for success.