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A competitive
analysis explains specifically and in detail
1) the players
in your market, including their names,
2) how they're positioned, and
3) how you're going to compete with them. This is a critical component of your business
plan.
Why It's Important
Any investor will either
personally investigate the competition or arrange to have it done by someone else.
If there are any competitors that you haven't mentioned, you will trigger concern
as to why you didn't name them and/or if you really understand the market you're
going after. Count on this: It will come up. The investors will investigate. So do
the competitive analysis up front.
How It Works
Here's the basic premise
for your competitive analysis. If you're projecting in your business plan that people
are going to spend money on your product, then
1) either they're already spending
money on this type of product, and you have a better answer
2) or your product is something that doesn't exist at the moment, and no one is spending
money on it.
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