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9 Things You Must Do To Maximize Your Chances Of Obtaining A Small Business Loan
To get approval for your small business loan application, you must be able to meet the lending criteria set down. Some organisations are more risk averse than others, and will therefore have more stringent criteria. To vastly increase your...
A franchise can present a great opportunity for business.
A lucrative option for starting your own business is that of
opening a franchise. For a set fee, you purchase the rights
to offer specified goods or services, according to set
guidelines, in a set location, for a specified timeframe.
In...
Are You Starving Your Home Business Of Lifeblood?
If you've seen Kevin Costner's film the "Field of Dreams" you will remember how he was inspired to build a baseball field with the words "If you build it, they will come". He built the stadium, and with a little faith, streams of visitors were...
How to Write a Business Plan in Five Steps
People often ask "What makes a good business plan? Or, "How do I make my plan attractive to lenders and investors?".
The simple answer is that lenders and investors (I'll call them "readers" from here on out) are looking for "good deals". A...
Seven Basic Steps To Start Your Online Business
1. What to look for first?...A Niche Market
Some people think that they should look for a product first and then look for customers but in reality, it's the other way around.
Make a list of keywords (use the Overture Suggestion Tool) and...
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In Business Planning, Competition is Good
When developing the competition section of your business plan, companies must define competition correctly, select the appropriate competitors to analyze, and explain its competitive advantages.
To start, companies must align their definition of competition with investors. Investors define competition as any service or product that a customer can use to fulfill the same need(s) as the company fulfills. This includes firms 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.
In identifying competitors, companies often find themselves in a difficult position. On one hand, they want to show that they are unique (even under the investors? broad definition) and list no or few 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 customer need to support the company?s products and/or services.
Business plans must detail direct and, when applicable, indirect competitors. Direct competitors are those that serve the same target market with similar products and services. 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.
After
identifying competitors, the business plan must describe them. In doing so, the plan must also objectively analyze each competitor?s strengths and weaknesses and the key drivers of competitive differentiation in the marketplace.
Perhaps most importantly, the competition section must describe the company?s competitive advantages over the other firms, and ideally how the company?s business model creates barriers to entry. ?Barriers to entry? are reasons why customers will not leave once acquired.
In summary, too many business plans want to show how unique their venture is and, as such, list no or few competitors. However, this often has a negative connotation. If no or few companies are in a market space, it implies that there may not be a large enough customer need to support the venture's products and/or services. In fact, when positioned properly, including successful and/or public companies in a competitive space can be a positive sign since it implies that the market size is big. It also gives investors the assurance that if management executes well, the venture has substantial profit and liquidity potential.
Growthink Business Plans has developed over 200 business plans for clients that have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. Growthink Business Plans is the sister site of GT Venture Capital.
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