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Creating a Business Plan - Parts 9 through 12

Creating a business plan requires that you understand your competitors. Failure to do so will make your small business ideas more difficult to implement than what need be.

Understanding your customers is more important than understanding your competitors, but you can't underestimate your competitors in the marketplace.

This is especially true if you have to penetrate a tough market where your competition is well entrenched.

Knowing your competitors is a key to business planning, because they're "the other game in town."

Instructions and suggestions for completing Parts 9 through 12 of the business plan template are addressed on this page.

Example discussion for XYZ Lawn Care and Landscape Maintenance Service is shown in blue text.

Understanding your competitors

Part 9 - Who are your competitors?

Knowledge of your competitors is essential for creating a business plan and being an effective player in the marketplace. Think of this knowledge in much the same way a coach studies a rival team to see how they play. It is the only way to be an effective player and hold your own against the competition.

Do you know why Wal-Mmart is the largest retailer in the world? Do you know why they are among the fastest growing, largest and most successful companies in the world? The answer is simple, they know their competitors and the marketplace, and that helps them in creating a business plan for successfully taking market share away from Kmart, Sears, JC Penny your local grocery store and others.

That's just what we want to do with this portion of our planning. On our way to creating a business plan, it's now time to focus on who your competitors are and what they are all about. The more you know about your competitors, the better you'll be at competing with them.

Not everyone that offers a similar product or service is your competitor. You have carefully defined your business and marketplace. That also narrows the field of potential competitors.

Identify those individuals and organizations that will be offering a competing product or service in your defined marketplace. If you have defined the business and marketplace well, then this should be relatively straight forward.

If you plan to operate a large landscape maintenance firm, you won't consider kids on the block cutting grass to be your competitor. They can only cut a few small lawns. So, when creating a business plan, you won't spend time devising a plan to compete with them.

Your marketplace consists of larger estates and businesses that need the specialized equipment you'll likely have, and the trained staff required to run it. Your competitors are other large landscape firms that have small business ideas that are similar to yours.

When creating a business plan, ask yourself about who your competitors are and why they might be selected as preferred product/service providers. Consider many aspects of your competitors including:

  • knowledge
  • experience
  • maturity
  • understanding of the marketplace
  • connection to the marketplace
  • understanding customer needs
  • responsiveness
  • flexibility
  • reputation
  • discretion
  • warranty
  • price or rate structure/schedule
  • availability
  • corporate culture

In this part of the plan, I've introduced a couple of elements that might not be self-explanatory. They are connection with the marketplace, and corporate culture. Let's discuss these a little to see how they related to small business ideas that you might have.

Connection with the marketplace is an advantage that some businesses enjoy because they are involved in civic groups, industry groups and associations, and charities that give them a position in the marketplace and sometimes a "window on the world".

For example, I used to be a contractor for a national research organization, and that gave me a tremendous connection with the marketplace. I was able to be involved with research that connected me with individuals with decision-making authority, and that directly contributed to the success of my business.

Corporate culture is something that you cultivate in your organization much like you raise your children. It is how you think, behave, make decisions and treat others. Think of how people from countries act, believe and think. Now you're getting the idea of what I mean by corporate culture.

A local building supply company here in Cheyenne is known for being easy to deal with when it comes to returning an item, but they are frequently out of stock on various items and have lousy customer service.

Another local building supply company has higher prices, and a return policy that is painless, but almost always has things in stock, and they provide great customer service.

Two different cultures. One business is counting on lower prices to attract customers, and the other is counting on superior customer service.

Knowing the culture of your competitor will make you a better competitor against them. This is one of the facets that you need to explore while creating a business plan.

In our example of XYZ Lawn Care and Landscape Maintenance Service, we have eight main service providers that are competitors of ours. Three are larger outfits, three are smaller outfits, and there are two specialty service providers.

Our lead competitor is Green Lawn, an efficient outfit with several crews that service banks, shopping centers and hotels. They are local and professional in nature. This is the type of organization that we would like to be. They have been in business for several years and they have a good reputation.

The next two largest competitors are Allen's Lawn Care and Ron's Landscape Maintenance. They are about at the same level. Both organizations have a couple of crews and take care of apartment buildings, businesses, and a few larger residential accounts.

The next three competitors are "onezees and twozees" that have a pickup truck and a trailer, and they cut lawns at grocery stores, local businesses and some larger residential accounts.

Other competitors in the marketplace provide specialty services such as fertilizing, aerating, de-thatching, tree trimming and landscape installation.

Part 10 - What are the strengths of your competitor?

Now that you know something about your competitors, it's time to sort out their strengths. When creating a business plan and laying out a strategic approach to success in the marketplace, you'll need to "dodge" your competitors' strengths, so you better know what they are.

Creating a business plan that is first rate means you have to be honest in your assessment of the competition. Your honesty will help form the basis of strategies to avoid or neutralize your competitor's strengths.

Consider your competitor's:

  • knowledge
  • experience
  • maturity
  • understanding of the customer's situation
  • understanding of and connection to the marketplace
  • responsiveness
  • flexibility
  • reputation
  • discretion
  • warranty
  • price or rate structure
  • availability
  • corporate culture

List each competitor and associate a brief statement about their strengths in this part of the business plan.

When creating a business plan, we note that Green Lawn has the strength of good crew supervision. We've watched the crews cut lawns and it is clear that they have a crew lead that is efficient and careful, something customers like. They are also neat and clean about their work, and produce nice results for their customers.

Lastly, they seem to have a good knack for customer relations, and this is a definite strength. They often are seen communicating with their customers and word around town is their customers enjoy doing business with them.

Allen's Lawn Care and Ron's Landscape Maintenance offer about the same level of service. They're strength is the market share they command. They seem to have lots of work for the size of their organization. They appear to be all over town doing work at a variety of locations, and they offer landscape maintenance services as well as lawn care.

As part of creating a business plan, we note that the "one-zees and two-zees" have no clear strengths other than low overhead for their business. Their equipment and vehicles are basic and they hire seasonal help from younger laborers. Other than that, nothing about them stands out, and customers we have talked to don't have anything remarkable to say about their service.

Specialty service providers have a recognized brand and perform services that XYZ Lawn Care and Landscape Maintenance Service will not offer as a regular service. They are efficient in their work and have specialized equipment.

Part 11 - What are their weaknesses?

Creating a business plan that leads to success also means identifying the weaknesses of your competition. This is where you might be able to take advantage of them and win over customers because of your natural strengths.

Remember, since you are a small or home based business, some of your competitors will have a weakness due to their size - they will be large and cumbersome when it comes to responding to customer needs. They may even ignore smaller business opportunities because of their high overhead costs.

Consider the following as potential weak points for competitors when creating a business plan:

  • knowledge
  • experience
  • maturity
  • understanding of the customer's situation
  • understanding of and connection to the marketplace
  • responsiveness
  • flexibility
  • reputation
  • discretion
  • warranty
  • price or rate structure
  • availability
  • corporate culture

Green Lawn doesn't offer snow removal in the off season, nor do they offer trimming of bushes or other landscape maintenance. They stay narrowly focused on lawn care.

Allen's Lawn Care and Ron's Landscape Maintenance have the same weaknesses; they are scrubby outfits with personnel that aren't attractive in their appearance. They also don't have advanced equipment for tackling large jobs with efficiency.

They are also not known for their attention to detail with respect to cleanup after the work is done. (This is one of the distinguishing characteristics of our service that we'll note while creating a business plan.) Their jobs don't look bad, but they certainly could look much nicer.

The "one-zees and two-zees" largely have a different crew each season, and they just don't have the horsepower to take on large jobs or many of them. They are most certainly at a pedestrian level when it comes to lawn care and landscape maintenance.

Specialty service providers don't offer a wide range of services. That requires a broader base of customers to keep a regular supply of work coming in. Their specialty equipment represents a large overhead as well, so they have to charge more to cover the expenses associated with trucks for transporting their special service equipment and materials.

Part 12 - How do you differentiate yourself among the competitors?

Now that you have examined the pros and cons of your business and that of your competition, it's time to get busy creating a business plan that describes how you intend to differentiate yourself in the marketplace.

If the customer can't differentiate between product and service providers, then they aren't likely to switch from the one they have now. In order to be a good competitor, you have to differentiate yourself.

While creating a business plan that reflects this differentiation, try to think of how your customers might see you when matched up against your competition:

  • friendly
  • physically appealing
  • responsive
  • knowledgeable
  • prompt
  • courteous
  • efficient
  • honest
  • good and clear communicator
  • reliable
  • diligent
  • lower cost provider
  • easy to work with

And, the list goes on and on. Use this portion of the business plan to identify what might be important to your customers in distinguishing yourself from others in the marketplace.

We're not talking about slogans and images so much as we want to focus on real measurable or noticeable differences between you and your competitors. Differences that would be appreciated in the marketplace.

One important distinction between you and your competitors might simply be that you offer a choice. Especially in a smaller community, your new business might offer the only new choice that customers have had in a long time. That's a big difference, especially for customers that are looking for a choice.

First and foremost, XYZ Lawn Care and Landscape Maintenance Service will offer a new choice of service provider in the marketplace. We will be a refreshing new offering in the marketplace that provides great professional services at reasonable prices.

In creating a business plan, we'll distinguish ourselves from Green Lawn by offering full landscape maintenance service and snow removal, with the same quality that Green Lawn customers have come to expect.

Our services will be easy to differentiate from Allen's Lawn Care and Ron's Landscape Maintenance because we will do our work with much more attention to detail and cleanliness. This will be reflected in the simple and clean uniforms our service providers will wear. We will also have equipment that can handle larger jobs. Our service vehicles will be newer and have a neat and consistent appearance as well. Our customers won't see our vehicles as an "eye sore" parked in front of their house.

Standing out from the "one-zees and two-zees" will be easy to do. Our costs will be competitive, and we'll offer a consistent crew from one season to the next. We'll also be able to handle any size job that comes our way.

Differentiating ourselves from specialty service providers won't be essential when creating a business plan as they are only marginal competitors. We'll offer some of the same services, only on a smaller more cost-effective scale, so our customers will have the convenience of one stop shopping. For larger jobs, we can build a service relationship with specialty service providers to meet customer needs.

For purposes of providing you with an example of creating a business plan for small business ideas, I have completed parts 9 through 12 of the business plan template for XYZ Lawn Care and Landscape Maintenance Service. See my example here.

Done with Creating a Business Plan, take me back to Business Plan Template

The only business you'll really ever be part of is your own.

Wondering about what to do with your savings so inflation doesn't eat it up? Start your own enterprise. It's a good way to invest your capital and make it work for you. Who will be better at keeping an eye on your investment than you?