Business Plan and Market Research: How to Assess Competition

The Business Plan allows you to tackle both financing needs and, above all, to highlight your strengths in relation to the market you want to integrate. We were able to see through the SWOT how you could position yourself, but we will see how to identify the competition.

Market research: analysis of competition factors

One of the best known and most recognized models to analyze the competition and model of Michael Porter and the 5 forces. Indeed, beyond the competition that exists within a market, you have to analyze the somewhat hidden competitions.

Porter's strengths are thus:

• Competition in the sector
• The arrival of new players
• The bargaining power of suppliers
• The bargaining power of clients
• The presence of alternatives

We can also take into account a sixth force that is the pressure of the state (legislation, licensing, subsidies, tax pressure).

Let's analyze these points that allow you in your business plan to show that you know your market.

What are the market forces

Competition in the sector is certainly the easiest to analyze. You just have to see which companies offer the same benefits as yours. In the world of furnishing for example, you will have GOAL, IKEA, GOAL or even Conforama.

The arrival of new players is also important to take into account. In the world of furniture always, we can thus take into account the arrival of start-ups like mycosy.fr which offers furniture "made in France" of medium and high-end.

Regarding substitute products, how not to talk about the Good Corner. The furniture is not new, but it remains a piece of furniture above all. The advantage is the price and the proximity of the furniture. We can also talk about clients who build their own furniture. Thus, do-it-yourself stores represent a certain threat giving access to material and tutorials.

Regarding the power of customers, it is clear: the possibility to choose according to price, range, provenance etc. The customer is spoiled for choice. Mycosy has distinguished itself by offering almost exclusively products made in France.

With more and more suppliers, a furnishing company has the choice of the best provider, at the best price. If in any market, if the number of suppliers is smaller, then the pressure on the purchase price would be greater.

The business plan shows you know your environment

The value of highlighting this competition in your business plan is to have a synthetic vision of your market and the ferocity of your market. So you can better define your place in this market and show how you stand out. The SWOT analysis will support this position by demonstrating the value of your positioning in the market you want to integrate.

Finally, studying the competition on your business plan will show your financial partner and your associates that you know your environment and how you will develop in this universe. It is obvious that only your idea can convince the investment of third parties. You will be convincing, but above all you must be honest with the existing competition and the one that will happen. You can only better justify your financial needs to start and for your development.

This analysis of the competition in your Business Plan also allows you to review your speech, to better identify your own positioning, even to correct it, and thus to have a more coherent document, better argued and therefore more convincing.