Building Your Business Plan: Part 1 – Introduction
Building Your Business Plan: Part 2 – Business Overview
Building Your Business Plan: Part 3 – Products and Services
Building Your Business Plan: Part 4 – Studying the Market
Building Your Business Plan: Part 5 – Identify Your Market
Building Your Business Plan: Part 6 – Competition and Industry SWOT
This article is written to provide you with tools to assist in developing your Business Plan as it relates to conducting a SWOT Analysis within your Competition and Industry.
In part 5 of this series, we discussed the importance of identifying your business’s market region and your target audience. In this part of the series, we are going to discuss conducting a SWOT Analysis within your Competition and Industry.
Conducting a SWOT Analysis is a leading practice and one vital way to understand your competitors’ and industry’s Strengths, Weaknesses, Opportunities, and Threats (SWOT) that are established in business.
This analytical framework is designed for evaluating various facets of an organization such as performance, competition, risks, and future potential which facilitates a realistic and fact-based snapshot. SWOT is extremely popular in business today and when conducted properly, it will give you a clear snapshot of where your business fits in the market and what strategic direction your business needs to go in order to stand out from your competitors within the industry.
Please keep in mind while you are completing the downloadable form below that you are not restricted by the size of the box that you are able to write in. Each box in the template can be readjusted to fit the size you need.
Section 5.1 Competition
New businesses or established small businesses often underestimate what their competitors are executing, which often leads to falling short by the time they reach the market. It is crucial to your SWOT analysis that you incorporate the critical thinking skillset that you have built throughout the process of building your business plan and think outside of the box when completing the following.
Please keep in mind that you can always source out support from external market consultants or other market professionals. This can be extremely helpful as they will gather the information you require, which saves you time from putting in that extra effort! These external professionals and businesses set you up for success!
When you are conducting a comparative analysis between your business and competitors using SWOT, you are examining 4 distinct features.
When you are completing these questions, you can select as many competitors as you like, however, it might be beneficial to only select your Top 3 competitors, which are generally going to be the topmost successful businesses.
For each SWOT, it is important to ask yourself questions such as:
Strengths: the characteristics that give a business a competitive advantage, which are things the businesses do well that distinguishes them from competitors.
- If you were a customer, what do you think your business and competitors do well?
- What are their USPs?
- What is each business’s competitive advantage?
- What performs well? What is working?
- Why are your competitors considered a leader or the consumer’s first choice?
Weaknesses: the characteristics that a business needs to overcome in order to improve its performance or competitive advantage. Instead of thinking of these as negatives, think about them as areas for improvement.
- What are the areas they need to improve on? (What are the weaknesses?)
- What is not performing well? What is not working?
- What is causing them to not meet the needs of the consumers?
Opportunities: the elements that the business sees in the external environment that could support the future growth and value of the organization.
- Do you see an opportunity to fill consumers’ needs or requirements?
- What does the competition not offer that you could?
- Can you expand into a new market or increase value?
- Should considerations be taken to consider other market regions?
Threats: the elements that the business sees in the external environment which could prevent the business from moving forward in its strategic direction or achieving its organizational goals and objectives.
- How are your competitors a threat to your business’s success?
- What factors make it difficult for your business to succeed?
- Does their business size and consumer reach make them a further threat?
- Are there outside influences (government, environment, or social issues) that create a threat?
- What are the consumer trends that threaten the business?
Section 5.2 Industry
What is the industry’s SWOT according to the general public’s opinion? In this section, you will want to keep your critical thinking cap on and ask yourself questions such as:
A. What is the industry’s growth rate?
When completing this question, you will want to conduct an analysis on whether the industry is growing or not. There might be instances where the industry has no change at all. You can begin searching for this information on the Government of Saskatchewan GDP or Statista websites.
B. How does Supply and Demand compare? What does the forecast look like?
It is vital when looking at the industry’ s growth rate, to put consideration into supply and demand in the market region(s) you want to start your business in. You can begin searching for this information on the Government of Saskatchewan website.
C. What are the current and future market/industry trends? Are there any major changes to prepare for?
When looking into market trends, there are various sources where you can find this information. Preparing for future trends is critical for any business as you will want your business to be a success and to start on the right foot. You can begin searching for this information on the Saskatchewan Market Trends or Economic Reports and Statistics websites. Another valuable resource that many people can overlook is your local library! For example, the University of Saskatchewan Library or Saskatoon Public Library librarians can offer great insight into researching past, current, and possible future market trends. All it takes is signing up for that library card, and a world of knowledge can be at your fingertips.
D. Is the industry regulated or is it self-regulated by competitors?
Regulated industries means that businesses in operation are Federally Regulated, Private Sectors.
Self-regulating industries are businesses which monitor their own adherence to legal, ethical, or safety standards, rather than having an outside agency or regulatory body overseeing their operations.
E. Are there difficult barriers to enter this industry? How will you overcome this?
Barriers to entry is an economics and business phrase describing factors that can prevent or impede newcomers from entering a market or industry sector, and so limit competition. For more information on this, we recommend visiting Investopia or Mvorganizing to get a further explanation on what this means in order to answer this question.
Once you have a good understanding of the industry and are thinking critically on what barriers might exist, it is important to consider how you are going to overcome the obstacles which might be in place. To begin your research on overcoming barriers, the Interaction Design Foundation has written a great article on “How to Break Barriers to Market Entry.”
With all the questions you have answered, as they relate to your business, you will have a great indication of your business’s (and competitors’) Strengths, Weaknesses, Opportunities, and Threats (SWOTS), including further information as it relates to the Industry you desire your business to operate in.
Stay tuned for part 7 of this series when we discuss The Business Environment.