Writing a Business Plan Part 5 – Competition

What kind of competition do you have for your donut business? How does your business and your product measure up to theirs? Evaluate what your competition does so you can copy what works for them and discard what does not. In other words, learn from those who are trying to get your customers. How do competitors define the product (donuts) in your area? How much market share does each have?

In the competitive analysis of your business plan you will want to look at donut businesses similar to yours including national chains that also operate storefront businesses. If you operate a trailer and move between fairs and festivals your competition is not necessarily other donut businesses (although those count too) but those next to you selling other vending items. Granted, it will be difficult to research these other businesses on wheels before hand. When you get to a fair and set up observe everything the other vendors do that attracts customers and everything they do that has no effect.

Also consider how likely other competitors may enter the market at a later date. Investors will want you to research how saturated the market is and what the barriers are to people who want to make donuts like you do. Do not let your emotion get in the way of your analysis. It is easy to assume that your product will be superior to everybody else’s, but there is much more to consider. Taste, size, price, and service are all important things to look at but are only part of the picture. Try to learn the internal business practices behind the scenes to gage the strength of your competition. Are they creative, motivated, and financially secure? Do they have high employee turnover? These are keys to success as well.

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How to Start a Spa Salon Business Plan

I’ve said it before and I’ll say it again (with thanks to the inimitable J. Woden): ‘Failure to prepare is preparing to fail.’ For most things in life you need a plan – you wouldn’t drive your car somewhere new without a road directory, so avoid heading into uncharted financial territory without a business plan.

When I decided to open my first salon I was flat broke, in debt and had nothing but a great business idea. The bank turned down my first loan application and, because my parents were far from wealthy, my father approached his boss for a loan on my behalf. It was then, at the age of 20, that I learned the importance of a structured business plan. My father’s boss made me put my idea down on paper. At the time I thought this was lame but, as it turned out, he did me the biggest favour of all time.

To succeed in stating a salon, you need a PLAN. It’s your blueprint, a step-by-step guide to fully understanding everything it takes to put your business together, track its growth and ensure its survival. Many stylist’s and therapist’s devote too much time to thinking about (and discussing) their amazing salon or spa concept, while too few bother with the formality of a business plan.

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Seven Business Plan Questions to Ask Yourself

Once you present a business plan to an investor or lender, questions may begin to fly at you. If this happens, do not be alarmed! It is evidence that they are truly interested in your business. You can prepare for these questions by running through potential questions, like these seven, ahead of time.

“Why did you choose to begin with this target market?”

“We have to start somewhere” is not a great answer. Consider why the costs are lower or returns greater with your chosen first target market, or, better yet, how tackling that market first will make entry into additional markets easier later on.

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