What Is a Competitor Analysis?
A competitor analysis is a simple, honest look at the other options your customers have. The U.S. Small Business Administration suggests looking at competitors' strengths and weaknesses, the barriers to entering the market, and indirect competitors that could affect your success (SBA).
Direct and Indirect Competitors
| Type | What it means | Bakery example |
|---|---|---|
| Direct | Sells the same thing to the same customers | Another bakery nearby |
| Indirect | Solves the same need in a different way | A supermarket, a café, or breakfast at home |
How to Do a Competitor Analysis in 5 Steps
1. List your competitors
Include nearby and online options, direct and indirect. Use their real names. Two to five is usually enough for a small business.
2. Note the basics
For each one: where they work (local, online, national), their size, which customers they serve, and how their prices compare with yours.
3. Find their strengths and weaknesses
Visit them, try their product, and read their customer reviews. Reviews often show real problems customers have.
4. Spot the gap
What do customers want that nobody does well? That gap is your opportunity.
5. Decide how you will be different
Turn the gap into your unique value proposition.
Free Competitor Analysis Template
Copy this table and fill in one row per competitor:
| Competitor | Where | Size | Price vs yours | Strengths | Weaknesses |
|---|---|---|---|---|---|
| [Name] | [Local / online / national] | [Small / medium / large] | [Lower / similar / higher] | [2–3 points] | [2–3 points] |
| [Name] | […] | […] | […] | […] | […] |
Example (Illustrative)
| Competitor | Where | Price vs ours | Strengths | Weaknesses |
|---|---|---|---|---|
| Supermarket bakery | Local, large | Lower | Low prices; well known | Bread baked early, not fresh by lunch; long queues |
| Corner café | Local, small | Higher | Comfortable seating; good coffee | Slow at rush hour; small food choice |
The gap: nobody offers fresh bread and fast service at rush hour. That becomes the bakery's advantage.
Common Mistakes
- "We have no competitors." Customers always solve their problem somehow today.
- Only listing weaknesses. Be fair — knowing their strengths keeps you realistic.
- Guessing. Use visits, prices you have checked, and real reviews.
Where It Fits in Your Business Plan
Competitor analysis belongs in the Market Analysis section. It also feeds your SWOT (opportunities and threats) and your pricing. In Founderplat, you add each competitor, then list their strengths and weaknesses side by side.
Sources
- U.S. Small Business Administration — Write your business plan (checked November 2026).
Frequently Asked Questions
What is a competitor analysis?
A simple review of the businesses your customers could choose instead of you, with each one's strengths and weaknesses.
How many competitors should I include?
Two to five is usually enough for a small business plan. Include the ones your customers really use.
What is an indirect competitor?
A business that solves the same customer need in a different way, such as a supermarket instead of a bakery.
Where can I find information about competitors?
Visit them, try their product, check their prices, and read their online customer reviews.
Build your plan with Founderplat
Founderplat walks you through all eight sections, one small step at a time, with tips and examples for every part.
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