As you develop your business plan, one of the most important components will be a honest and thorough analysis of the competition your service or technology will face in the open market. One of the most common mistakes made while writing a business plan is to make the blanket claim that since your idea is so innovative, it has no actual competition. Such statements are patently false and will significantly harm your chances in the competition. There is always someone or something else competing for the same customers and resources as you.
DIRECT COMPETITION VERSUS INDIRECT COMPETITION
Your direct competition are those companies that are pursuing the exact type of customer as you, and are offering a similar product to solve the same problem. For example, if you wished to sell your own brand of sneakers, your direct competitors would be other manufacturers of sneakers such as Converse and Nike.
Your indirect competition are those companies that are pursuing the same type of customer, but offer a different type of product. Again returning to the sneaker example, your indirect competitors would be manufacturers of other types of footwear, such as hiking boots or sandals.
When writing your business plan, it is a good idea to make a clear distinction between your direct competitors and your indirect competitors
IF YOU REMEMBER ANYTHING, REMEMBER THIS…
Everything you find here is designed to help you write a better business plan. Take what you like, ignore what you do not. The most important thing to remember is that there is no single “right way” to write a business plan.