If you are a business like Real Estate Funding Solutions in the mortgage broker business, who is your competition?
Every business has competition. In this section of the business plan you have to describe in summary form what it is that you do and given that, who you consider to be the competition in your particular space in the mortgage broker business? You have to be careful when writing out this section of the business plan, not to be too broad or too narrow in the scope of defining your space. For example if you are a deli, at some level every eating establishment in your target market is your competition because they are vying for the same consumer dollars spent on food away from home that you are - and yet to say that you compete directly with say a full service restaurant would not be accurate - be specific when looking at competition.
How does a business owner like Ryan Armstrong measure his competition in Monroe County, New York?
Understanding how many businesses you compete with can be a very simple or a very complicated task depending on your industry. Again taking the example of the deli above, if you drive around five square miles of your neighborhood and spot the number of delicatessens that are present, you can get a fairly good idea of the competition. The reason is that customers will seldom travel more than five miles from their home to grab a sandwich no matter how good the sandwich is! You could even conduct a more rudimentary count of your competition by looking at the yellow pages online where you are bound to find a listing of most of your competition. We recommend that you list the number of businesses that you compete with but are in the similar or overlapping industries.
Is it good for the banks and potential partners to see all the competition in the business plan for a mortgage broker business?
Just as in the case of Real Estate Funding Solutions Banks, non-bank lenders and venture capitalists will do a thorough background check and fact finding about your business. They have access to databases that let them see how many businesses are there in your area using NAICS metrics. You may as well go ahead and put down your real competition in your business plan - it shows you have nothing to hide and are confident about doing well yourself in spite of the competition from others in your industry. It also shows that you have taken the time to understand your competitive landscape are not worried by it. What you will also have to explain in different sections of the business plan is how, given your competition, do you tend to compete in the local market place.
Competition has been around since the beginning of time - the only business that does not have competition is a monopoly and with the exception of the United States government there are vey few examples of true monopolies in the business world! Thus even the mortgage broker business has its share of competitors and it will have to come up with a strategy to do well in a competitive environment like Monroe County, New York.
What if my business is online?
In the event you have a business that does not have a brick and mortar presence but does all its business online, then your competition could well be all the websites that compete in your space. For example if you selling books online, then your competition will be large online booksellers like Amazon as well as smaller booksellers. You will have to explain to the reader of the business plan how you intent to compete with these other booksellers by perhaps having a special niche like selling rare books, text books and so on..
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