I have gone through various funding application guidelines by South African institutional financiers and lenders including the major banks, Standard Bank, Nedbank, FNB and Absa.
As part of a business plan, financing parties require an understanding of who the business’ competitors are as well as how the business would enhance its competitive capacity in the face of competition. There is a strong reason why all financiers require this. As business plan consultants with strong exposure to the South African markets we can safely state that competition, also referred to as business rivalry, is the downfall of many small businesses.
What should be done?
The first step to survive competition is to know who your competitors are. This knowledge should be professionally presented in your business plan following the formats and guideline questions raised by your targeted financier.
Where to get information
Information on your competitors can be acquired through 2 broad ways:
This involves “going into the field” and studying your competitors. Caution must be taken as there are laws against industrial espionage. Information gathered from competitors must be that which is publicly available or volunteered by the organisation under study.
This involves the use of publicly available documents and online information. The list of information sources under this category can be broken down into the following:
- Newspaper releases
- Flyers, brochures and pamphlets
- Annual and interim results for listed companies
- Website contents
What information will you have?
An effective competitor analysis would give you answers to questions like:
- Who are your competitors?
- What are their brands, products and product ranges?
- Who supplies them?
- How are their products priced?
- What are their competitive advantages?
And then what?
After you have collected this information you can make it part of your competitor analysis section of the business plan. But more importantly you must use it to craft competitive strategies to dislodge your competitors and gain your own piece of the market share pie. With the right levels of commitment and assistance, you can do this!