June 12, 2011
Business Plan tips: Acknowledge Competition and Attract Investors
When presenting your business plan to potential investors, you want to show that you have complete knowledge over your competition. You must show your investors that the industry your business is in is a large and growing market where you can make your own niche in such industry. Investors believe that competition is healthy and they also want to see that your business has a good share of competitors and how you plan to handle them. Acknowledging your competition is one way of presenting a logical argument to get investors on board your business.
To be able to show that you are a dedicated entrepreneur, include the number of competitors and their market share in the industry. Their market share will stand for their strength as well. If you present a detailed study of your competitors to your investors, this shows that you are up for the challenge and you are determined to make your business develop and grow more. A good share of competitors also means that your market is large and growing, which is perfect for any business.
Click here to download your business plan template <==== When you put competition in your business plan, you can include profit and non-profit competition. If you plan to build a company that is selling bottled water, you can include the city water system as your competition as well. Don't downplay competitors in front of your investors, instead, highlight your top competitors and do your research on their practices and strategies. Look up their most successful products and target market. When presenting your competition analysis, you must distinguish your direct competitors from the indirect ones. Direct competitors are those companies offering the same product and service as you do. An indirect competitor is a company that sells a different product but target the same target market as you do. To give your investor a clearer picture of the competition in the industry, present an independent market and industry research data. You can get a third-party company to do the analysis and research for you, a company that focuses on studying market and industry trends. Presenting any personal analysis or subjective funding may ward off your investors. Now that you have highlighted the strengths of your top competitors, it is time to look for their weakness. Again, the weakness should be based on facts and not just what you see. Indicate how you plan to exploit this weakness to get a hold of your own market share. Click here to download your business plan template <==== Furthermore, also give ways on "barriers to entry" to prevent new competitors from entering your niche. This is one way of showing your investors that you know how to keep your business' customers once you get your market share. An entrepreneur that acknowledges his competition completely will attract more investors for his business. This shows that you are willing to step up to the challenge and fight for your business in a competitive environment.
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