Market Analysis 2: Your Advantage or Why Do Business with You?

This continues our series describing how to conduct a market analysis section for your business plan.
One section of your market analysis describes your business advantage; or why clients do business with you. Defining your business advantage may become the most difficult part of your business plan.  If you do not understand why someone does business with you. You cannot explain it to potential clients. Without an advantage, your business may flounder or struggle.
Process of Identifying Your Business Advantage
You examine your business idea, your competition, and current and potential clients to define your competitive business advantage.
Your analysis may employ a variety of methods to gather the information:

• Internet Searches
• Small-business resources (SBDC, SBA, SCORE, Centers for Entrepreneurship, Chambers of Commerce, and others)
• On-site observation of competitors either from their parking lot, in store, or other
• Surveying, interviewing, or inviting current and potential clients to focus groups
• Hiring a professional analysis consultant to share existing, or discover new, data

Questions to Answer

• What does your business offer better than competitors?
• Price?
• Service?
• Relationship?
• Quality?
• Timeliness?
• Availability?
• Convenience?
• A completely unique product/service no one else offers?
• How can you offer this better than competitors?
• Lower manufacturing, labor, or shipping costs?
• Better trained staff oriented to providing exceptional service?
• Do you—or the competition—know something the other doesn’t?
• What do clients like about your product or service better than your competitors?
• What do they wish you would improve?
• What new products would they like?
• What do they like better about your business?
• Location?
• Staff? You?
• “The Experience you provide”?
• What would happen if you lost any of those advantages?
• Which loss would hurt your business most?
• Which loss would affect client loyalty or profits least?

Even More In-depth Considerations
Check out the following:

• Industrial Marketing Solutions: Defining a Competitive Advantage for Your Business
• About.com: “What’s Your Competitive Advantage?”
• Smart Advantages: “What business are you really in? Define Your Competitive Advantage
• GoEntreprenuers “Define your Market and Your Competitive Advantage
• Larry Lim “Unique Selling Proposition (USP)—Your Competitive Advantage”

Join me Saturday when we explore resources that can help your market analysis