A competitor analysis in a business plan identifies who else serves your target market, evaluates their strengths and weaknesses relative to yours, and explains how your business will carve out its own position. It’s one of the sections investors and lenders read most carefully because it shows you understand the market you’re entering. Writing one well comes down to choosing the right competitors, gathering useful data, organizing it clearly, and drawing conclusions that support your strategy.
Identify Your Three Types of Competitors
Most business plans fall short by listing only the obvious rivals. A thorough analysis covers three categories. Direct competitors target the same customers with the same type of product or service. Think McDonald’s and Burger King: same menu category, same customer demographic, same price tier. These are the businesses a customer would choose instead of yours for the exact same reason.
Indirect competitors solve the same underlying problem your customer has, but with a different product or service. A bicycle shop and a car dealership both offer transportation, but in very different forms. If you’re opening a meal-kit delivery service, a nearby grocery store with a prepared-foods section is an indirect competitor. These matter because your customers are weighing all the ways they could solve their problem, not just the ones that look like your solution.
Replacement competitors (sometimes called potential or future competitors) offer alternative solutions that could disrupt your market entirely. E-books replacing printed books is a classic example. For your business plan, think about emerging technologies, shifting consumer habits, or entirely new business models that could change the competitive landscape. You don’t need a long list here, but naming one or two replacement threats shows investors you’re thinking beyond today’s market.
For most business plans, aim to profile three to five direct competitors in detail, two or three indirect competitors, and at least one replacement competitor. More than that becomes unwieldy; fewer makes it look like you haven’t done your homework.
Where to Find Competitor Data
Publicly traded companies publish financial results, but most of your competitors are probably private. That means you’ll need to piece together information from multiple sources. Start with what’s freely available online: company websites, pricing pages, social media profiles, and job postings (which reveal what roles they’re hiring for and where they’re expanding).
Customer review sites like Google Reviews, Yelp, and Consumer Reports are goldmines. Read what customers praise and complain about. Patterns in negative reviews often reveal weaknesses you can position against. If dozens of reviews mention slow customer service at a competitor, that’s a concrete data point for your analysis.
For local or regional businesses, check your area’s Chamber of Commerce directory and the Better Business Bureau for basic company information and complaint histories. Local business publications often cover expansions, leadership changes, and revenue milestones that won’t appear in national databases. The U.S. Census Bureau’s County Business Patterns survey, which is free, reports how many businesses of a given type operate in a specific ZIP code or metro area, giving you a sense of market density.
Database tools can help you go deeper. Data Axle Reference Solutions (available through many public libraries) provides detailed directory information on millions of U.S. businesses. BizMiner offers industry-specific data including startup market share and total sales figures for businesses in specific locations. For online competitors, tools like Semrush or SimilarWeb can surface website traffic estimates, top-performing content, and paid advertising strategies.
Don’t overlook old-fashioned research either. Visit competitor locations. Buy their product. Call their sales team. The firsthand experience will give you insights no database can.
Build a Competitive Matrix
A competitive matrix is a table that compares your business against each competitor across the same set of criteria. It’s the centerpiece of your competitor analysis because it makes complex information scannable, and it’s the format most business plan readers expect to see.
List competitors as rows (or columns) and comparison criteria as the other axis. The criteria you choose should reflect what actually drives customer decisions in your market. Common dimensions include:
- Pricing: their price points, pricing model (subscription, one-time, freemium), and where they sit relative to the market average
- Product or service quality: features, customization options, and any notable limitations
- Target customer: the demographic, geographic area, income level, or business size they serve
- Distribution channels: how they sell (online, retail, direct sales, partnerships)
- Customer experience: average review ratings, support availability, return policies
- Market share or scale: number of locations, estimated revenue, employee count, or social media following as a proxy for brand awareness
- Innovation: recent product launches, patents, or technology investments
You don’t need every dimension for every business. Pick six to ten criteria that matter most in your industry. A restaurant’s matrix might emphasize price range, cuisine type, seating capacity, average Yelp rating, and delivery options. A SaaS startup might focus on feature sets, monthly pricing tiers, integrations, customer support channels, and free trial length.
Fill in the matrix with specific data wherever possible. “$49/month” is more useful than “mid-range pricing.” “4.2 stars on Google with 340 reviews” is more convincing than “good reputation.” When you can’t find exact numbers, use ranges or qualitative ratings, but flag them honestly.
Run a SWOT Analysis on Yourself
After mapping the competitive landscape, turn the lens on your own business. A SWOT analysis organizes your findings into four categories: strengths, weaknesses, opportunities, and threats. The value here is connecting what you learned about competitors to your own strategic position.
Strengths are internal advantages: proprietary technology, a lower cost structure, a founding team with deep industry expertise, or a location with high foot traffic. Weaknesses are internal gaps: limited funding, no brand recognition yet, a smaller product line than established competitors.
Opportunities come from what you spotted in the competitive matrix. If every competitor in your area has poor online reviews for customer service, that’s an opportunity to differentiate. If none of them offer a subscription model and your research suggests customers want one, that’s a gap you can fill. Threats are external forces that could hurt you: a well-funded competitor expanding into your territory, changing regulations, or the replacement competitors you identified earlier.
Keep each quadrant to three to five bullet points. The SWOT should feel like a distillation of everything you’ve researched, not a separate exercise. Every item should trace back to evidence from your competitive matrix or market research.
Write the Narrative
The competitive matrix and SWOT are visual tools. Your business plan also needs a written narrative that walks the reader through your conclusions. This is where you connect the dots and make your case.
Start with a brief overview of the competitive landscape: how many businesses serve this market, whether the market is crowded or underserved, and whether it’s growing or mature. Then introduce your key competitors by name, summarizing what each does well and where they fall short. Be specific and fair. Investors distrust founders who claim they have no real competition or who dismiss competitors as inferior across the board.
Next, explain your competitive advantage. This should flow naturally from the gaps and weaknesses you’ve documented. If your matrix shows that competitors charge premium prices but offer limited customization, and your business model delivers both affordability and flexibility, say so with the data to back it up. Tie each advantage to a specific customer need.
Finally, address how you’ll defend that advantage over time. A lower price alone isn’t a sustainable edge if a larger competitor can undercut you. Think about what’s hard to replicate: relationships, expertise, technology, brand loyalty, network effects, or exclusive partnerships. This is the part that turns your analysis from a snapshot into a strategy.
Formatting Tips for Business Plans
Place the competitor analysis in the market analysis section of your business plan, typically after you’ve described your target market and before you lay out your marketing strategy. The competitive matrix should appear as a clean table, not buried in paragraph text. If you have more than five competitors, consider including the most important ones in the main body and putting the full matrix in an appendix.
Keep the entire competitor analysis section to two to four pages. Investors want evidence that you’ve done the work, but they don’t want to read a research paper. Lead with insights, not raw data. Every paragraph should answer an implied “so what?” If a fact about a competitor doesn’t influence your strategy or help the reader understand your positioning, cut it.
Update your analysis before any major pitch or loan application. Competitor pricing changes, new entrants appear, and businesses close. A competitor analysis with outdated information undermines your credibility faster than almost anything else in a business plan.