Your business' competitive advantages should resonate throughout your business plan. From acknowledging your competitors to the detailed product description section, identify where you have a leg up.
To figure out your competitive advantage, start by asking yourself:
1. Why do people buy from me instead of my competitors? Think about this question in terms of product characteristics. Ask your customers why they buy from you. Ask noncustomers why they don’t. Ask suppliers, colleagues, and anybody you can find.
Use online surveys, read reviews on places like Yelp or Angie’s List, and get a feel for what people like and don’t like about the places that do what you do ... or are planning to do.
2. What makes me different and, I hope, better? Your competitive advantage is not quite as important if your company operates in the beginning stages of a new industry. When interest and sales in a new field are growing fast, you can survive and prosper even if you aren’t clearly better than the rest. If, however, you plan to take market share away from established competitors in a mature industry, then competitive edge is all-important. Without a convincing case for being very different and much better than the rest, your business plan will have a hard time swaying anybody.
In this video, we discuss a small cafe in Waco, Texas as a case study in identifying competitive advantages. For more guidance, check out Entrepreneur Press' newest book, Write Your Business Plan.