How to write the competitive edge section of your business plan?
Drafting the competitive edge section of your business plan requires a deep understanding of your competitive environment.
Competitive edge, also referred to as competitive advantage, is defined as the unique attribute or set of attributes that allows your business to outperform its competitors in the marketplace.
The competitive edge section is an essential part of the overall business plan. It helps convince lenders and investors to fund your business by demonstrating how your unique qualities or advantages may contribute to the business's profitability and long term success.
In this guide, we’ll have a look at the objectives of this section in more detail, explain what information you should include and assess how long it should be, among other things.
Let’s start!
What is the objective of the competitive edge section of your business plan?
The competitive edge section follows both the products and services and market analysis sections of your business plan.
The products and services section highlights what your business does, and the market analysis section describes and analyses your overall market and competitors (both direct and indirect).
So at this point, your reader is familiar with your market and what you sell, and they are now wondering how you will differentiate yourself from competitors.
The competitive edge section, therefore, aims to communicate to the investors, lenders, and potential business partners:
- The key attributes that make your business unique or different from competitors in the market.
- Why you believe your business will succeed in a market full of businesses offering similar products and services.
- The key competitive advantages your business has over its potential competitors.
- How you plan on maintaining this competitive edge over a sustained period of time.
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What information should I include in the competitive edge section of my business plan?
The competitive advantage section of your business plan should first introduce your unique selling proposition (USP), which is a clear statement that communicates to your target customers why they should choose to do business with you over your competitors.
Your USP will highlight:
- The benefits your offer will provide customers
- How your offer addresses the needs and problems of the customer
- What makes your offer different from your competitors
Then, your competitive edge section needs to explain how your business fits into the competitive landscape and how the competitive advantages you are planning to build will help you penetrate the market and gain market share.
To do so, you will need to refer back to the competitive analysis included in the preceding market analysis section of your plan. You can use the competitive analysis to explain how you identified gaps between what customer needs and what competitors currently offer.
Investors, lenders, and other partners are aware that your competitors are well-established and have loyal customers and brand recognition. You need to communicate to them how your business attributes are unique and why those loyal customers will be tempted to switch to your products and services.
In red-ocean markets, the only way for your business to gain customers is to take market share from competitors, which is not easy to do unless you have a clear advantage. Your competitive edge section must mention that advantage in clarity.
For example, if you are planning to start a hairdresser, you need to highlight in the competitive edge section why potential clients should leave their existing hairdressers and pick your hair salon instead. Maybe most of your competitors offer clipper cuts only, enabling you to carve out a niche as the scissor cut specialist for men on the local market.
How long should the competitive edge section of your business plan be?
There is no hard and fast rule as to what the length of your competitive edge section should be. However, most competitive edge sections are between 1 and 3 pages long.
This length allows you to delve into the key points without overwhelming your readers with excessive detail. Focus on highlighting your strengths, such as innovative products or services, proprietary technology, strategic partnerships, unique market positioning, and any other factors that give your business a competitive advantage.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
Example of a competitive edge section in a business plan
Below is an example of how the competitive edge or competitive advantage section of your business plan might look like. As you can see, it precedes the pricing section and is part of the overall business strategy.
This example was taken from one of our business plan templates.
What tools can you use to write your business plan?
The most efficient way to write your plan is to use online business plan software.
There are several advantages to using specialized software:
- You are guided through the writing process by detailed instructions and examples for each part of the plan
- You can be inspired by already written business plan templates
- You can easily make your financial forecast by letting the software take care of the financial calculations for you without errors
- You get a professional document, formatted and ready to be sent to your bank
- The software will enable you to easily track your actual financial performance against your forecast and update your forecast as time goes by
If you're interested in using this type of solution, you can try The Business Plan Shop's software for free by signing up here.
You've reached the end of our guide, we hope it helped you get a better understanding of how to write a competitive advantage section in a business plan.
If you have feedback or any questions, please reach out to our friendly team.
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- How to present your business location in a business plan
- How to present your management team in a business plan
- Is it worth using a business plan writer?
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