Cafe Business Plan

We know that writing a Cafe Business Plan is probably not something you are looking
forward to and we know that buying complicated software will not make the prospect any
brighter!

Therefore we have created a product that is different.

Our Cafe Business Plan is about helping you build and grow your Cafe business. It is about
helping you manage and grow your

Our business plans include

An Executive Summary for a Cafe Business Plan setting out

• Objectives
• Mission
• Keys to Success

What start up costs you can expect for your Cafe business

Examples of Products you may sell in your Cafe business

Market Analysis for your Cafe business including

• What are the key issues affecting the market?

• Competition and Buying Patterns - Who will you be competing against?
• Who are your customers likely to be?

Strategy and Implementation Summary for your Cafe business

How you can promote your Cafe business including

• Your Marketing Strategy

• Your Pricing Strategy
• Your Promotion Strategy
• Your Distribution Strategy

Management Summary for your Cafe business

• Are you suited to running your Cafe business?

Your BUSINESSPLANNAME Strategic Plan including

• Setting out your SWOT analysis

• Financial Highlights
• Strategy Diary and timings
Writing a Cafe Business Plan is one of the most important tasks when starting or running
your Cafe business .

It will help you

• set targets
• collate all your ideas
• plan for the future of your enterprise, and
• verify that your idea for a Cafe business is realistic and workable.

… and we will give you ideas for your Cafe business. We will add to your knowledge and help
you in areas where you need help and support your ideas in others.

The Cafe Business Plan is an essential tool in attracting funding to get started. It is a
dynamic document that should be reviewed regularly in order to monitor and measure the
performance of your business.

The benefits of writing a Cafe Business Plan

The Cafe Business Plan is principally for you and your business partners and it can help you
to:

• Bring together your ideas and research into a structured format.

• Decide whether or when your business will be commercially viable.
• Clarify your business purpose to yourself and communicate it to any partners or staff.
• Predict future scenarios and pitfalls and address them before they threaten the success
of your business.
• Set out the strategy for your business, and particularly your marketing strategy.
• Set targets and objectives, including sales and financial targets, so you can monitor
your business' performance on an ongoing basis.

All our products and free gifts (other than the free web-site) are editable MSWord and MSExcel
documents; please ensure that you have the relevant programs. Our products are delivered,
within 24 hours of you placing your order, by e-mail. No software or hard copies are provided
due to the prohibitive cost this would entail.

How to set up and run an Internet Cafe Business

If you want to start an Internet cafe, The first thing you are going to need is a
Business Plan. This plan enables you to obtain financing, and provides the
following information: 1. Company Description 2. Product or Service 3. Market
Analysis(You need to know your market, customer needs, where they are, how to
reach them, etc.) 4. Strategy and Implementation 5. Management Team 6.
Financial Plan 7. Executive Summary The second thing is Internet Software for
managing time on the computers, and the third thing is merchant client software
unless you will be cash only. All of this software is available free. See links under
"things You'll Need" Capital investment is usually required, and usually not
obtainable through a business loan. Capital Investment can be obtained usually
through Venture Capital and Angel Investers. Again, this is were the importance
of a well done Business plan comes into play. Be prepared though to give up a
percent of your new company, and to share in the management with your
investors. That capital to infuse lifeblood into your CyberCafe comes with strings
attached. For more information on how to apply for business grants see the
following article:

A person walking around any city in the world would be sure to find an
internet café somewhere. The internet café is one of the
establishments made indispensable in an increasingly interconnected
world. Sometimes it leads one to wonder though: with the proliferation
of wireless devices, notebook computers, mobile email, smart phones,
portable digital assistants and other gadgets, what need is there for in
internet café in a wireless world?

Enter an internet café and usually the first thing one notice that more
than half of the clientele are playing online or network games. There
are more things to do in an internet café though, than surfing the net,
playing online games and checking email. An internet café may also
offer other services to its clients.
The most common service offered is typing or encoding. This usually
appeals to customers who are too lazy to type, or who have little no
access to a computer. This service also appeals to busy people who
don’t have time to type and edit their material. These customers would
simply leave their work to be typed and pick it up after it is completed.

An internet café can also provide specialized or sophisticated software

to be available for use by its customers. These software may be kind
that the hard to find, or expensive, or utilizes a large amount of
memory. An example would be the high end design software that can
go for a few thousand dollars per legal copy. The most common users
of high end software in internet cafes are students who need access to
the latest software for their schoolwork but can’t afford to buy them.

Another service that an internet café can offer is photo editing. The
client might have a picture that can be scanned or digitally edited,
fixed up, or restored. While photo editing can be done at home, it
takes time to do the more difficult or complicated jobs, and people
would rather pay somebody to do the job properly rather that bungle it
themselves. Video editing is also another service that can be offered
by the internet café, in much the same way as photo editing.

Internet cafés can also offer simple programming solutions. They can
offer programs for the home offices or small business, like basic
databases or inventory software. Alternatively, these clients can have
their software fixed or updated by the techs in the café. The internet
café may also offer program installation or software repair to pc or
notebook owners.

The internet café may also offer workshops or lessons. These lessons
may range from simple familiarization with the computer to more
difficult subjects. One-on-one tutorials by the café staff may also be
provided to clients who require the service.

The internet café can also offer to rent out equipment such as LCD
projectors and video editing tools to events like weddings or
presentations.

Some internet cafés have amenities that make them more like
meeting places or boardrooms, where they offer videoconferencing,
group discussion tables, and other facilities for meetings and group
work.

Getting A Good Location

There are three important concepts in marketing: location, location and location. Location
can be a boon or a bane. An Internet café business must be located in a place easily
accessible to prospective customers. Prospective customers are basically everybody—
students doing their projects or research, gamers who’re dying to have the most superior
scores, people whose relatives or loved ones are at abroad and find it very convenient
communicating with them through chat and email and let’s not forget those who have
sugar-daddies offshore.

The first prospective location to look out for is where you’re currently residing. Look
around your area—do you think it’s feasible to build one in your neighborhood? Do you
think that people in your area have habitual routines of going to an Internet café but it’s
just too far? Do you think there are gamers and would-be gamers? Do you think that
majority of people in your neighborhood would get a kick out of your Internet shop?

If your answer to all of these is yes, then go build your Internet Café shop—either right
on your garage or right beside your house. Otherwise you just have to go out and hunt for
a prospective location and prepare extra bucks for the rental fees. Most of these locations
should be highly-strategical and very much accessible by a lot of people. In other
words,they have to be heavy in “foot-traffic”. Examples are near schools and malls.

Mall rates and conditions varies depending on the mall itself. It is better if you go directly
to the mall’s general manager and inquire. Have your own letter of intent ready. Usually
they are contract-basis and always renewable.

Site Planning and Construction

At first I’ve got no idea how I want my internet cafe shop to look like. To solve this case,
I went on spying to other internet shops around to gather ideas. Most of them have all
glass doors out front either sliding or push/pull mechanism. With regards to tables, some
have their tables constructed in an extended-style while some are individually
constructed. Even the lazier internet cafe owners just bought themselves read-made ones
which I think are more expensive. If I were you, I’ll go for the first option which is have
them constructed manually. I opted for individual tables instead of the elongated style.
My reason? To modify space easily and the ease of moving them around. I had them for
just 800 pesos each.
A typical table is like 4-5 feet high. To check this, simply sit on a char and estimate the
measurement using a ruler. Tell your carpenter or whoever is making your tables to put a
simple horizontal foot-rest at the bottom. Then make sure that the keyboard and mouse
would rightly fit on the flat where the future customer would lay his/her hands on to surf
the cyberspace. I also recommend that you put the CPU on top of the table instead of
right beside the monitor. Reason? So that the eyes of the customer won’t divert towards
the CPU and won’t do anything stupid in it. They’ll just simply concentrate on the
monitor,keyboard and mouse.

As with chairs, it’s up to you if you want to start out first with monoblock chairs(I did) or
you could go straight with comfortable but pricey ones.

There should be a seperate table for the cashier. Either you have it manually constructed
or just buy a ready-made. As for me,I was already lazy for it so I just opted for a ready-
made. It has drawers with locks where I’ll put the money and some important files. A
computer should also be placed here because that’s where you or your employee sits to
manage the billing and also a printer and a scanner should also be placed right on that
table. The modem and the router/switch hub should also be near this table. If they no
longer fit on the table, you can just improvise by placing a small piece of plywood
punched against the wall beside your table and then place your modem and router/switch
hub. When a technician from your preferred Internet Service Provider(ISP) arrives and
asks you where to put the modem,tell him to place it right near your table.

Your floor should be covered with thick vinyl tiles—not the roll-up one that easily gets
teared. Thick vinyl tiles are not just durable. you could also mop it easily and sweep it
with ease.
A good electrical wiring is essential. A good electrical bill relies on how good the wiring
was set up by your chosen electrician. Plan on how many electrical outlets to put around
your shop and then make sure that they are near to where your computers will be placed.

It’s up to you if you want to have an airconditioner in the first place. As with me, I never
had one in my shop when I started out. I know that based from the experiences of others,
airconditioners eat up most of the energy and it’s responsible of how high the electric bill
is. So instead, I just had a big exhaust fan installed and some wall electricfans as well.
Make sure that the switches of this appliances such as the fans should not be accessible to
the customers or else,it might give them the right to turn them on and off.

For the front, you should have a good signage. You should give bypassers that you are an
internet cafe and how cozy it is inside. Have a panaflex with your internet cafe’s name
printed on it. Posters can help too—for example,posters of online games and computer
related images. You should also post the list of services you offer inside.Make sure that
you really lure them.You are projecting a lasting impression here.

COMPLETE WIFI HOTSPOT AND IP INTERNET BILLING SOLUTIONS

iSurfCentral ··· Selling Internet Access ··· Starting is Easy!

Hotel and Apartment Solutions ··· Printable Version (PDF)

Tourism is probably the biggest industry in the Caribbean Islands. A vast majority of tourists come from
environments which heavily utilise internet services. Many people like to keep in touch via email while on
holiday, or send photos to friends and family. Business visitors like to keep a close eye on their business
while on vacation, running reports, accessing corporate information, emailing colleagues or even holding
online meetings using web cameras and virtual meeting software.

For island business this can only be good. Giving people the facility to communicate while miles away from
home, makes them all the more likely to actually book their holiday, therefore increasing the number of
potential visitors. If your business offers these services, you are increasing your marketability over your
competitors. Soon, if you do not offer these services, you will be behind your competition, and you will be
losing out on valuable revenue.

iSurfCentral

iSurfCentral is the internet billing and wifi hotspot product that we use. We are the exclusive authorized
dealer in the Caribbean for iSurfCentral.

The iSurfCentral billing system is a new IP billing product that is yet to hit the market, but already has
superior capabilities. Some of these features include:

• Full radius authentication.

• Gateway access and cache controller devices.
• Pre-configured WiFi subscriber gateway devices.
• End-user web portal for customer account management.
 • Client web portal for account management
o Customer Credit Card Payments
o Online SurfCard orders
o Searchable Knowledge Base and FAQs
o Support Ticketing System
o User Account Enquiry System
o Full Account/User/System Status Reports
o ...and much more

We install and support all iSurfCentral systems in the Caribbean area.

Selling Internet Access

Charging for Internet Access is a valuable revenue generator. Imagine that you run a small internet cafe
with 4 internet kiosks, your 512Kbps broadband connection costs you say $60 per month, and on an
average day you have 5 internet users per kiosk, each using the service for 1 hour. Assume that you
charge $8 per hour and you are open 6 days a week.

That is a total revenue of $4,128, and a net profit of $4,068 per month (4.3 weeks on average). If you put
aside some for maintenance, support etc, then you have a clear $3,700 per month profit! Scale these
estimates up to a 200-room hotel and you are looking at a valuable revenue source. The actual impact is
more than these figures represent because you are getting more visitors to your business, therefore more
additional revenue (an internet user perhaps will have a coffee and something to eat while using the
internet). Even when you take into account the capital outlay, you can still break even and start making
profit after only a few weeks!

Starting is Easy!

You do not need a cafe to make this revenue from internet access. In fact any business that has a public
area where customers will be can earn revenue from selling internet access. You could go the whole way
and build an dedicated internet cafe with 20 computers and a WiFi Hotspot, or you could simply install a
wireless hotspot in your bar or restaurant.

Caribbean Systems offers complete wireless internet cafe and hotspot solutions, including the hardware,
software, networking, installation, setup and training. You can choose from a complete internet cafe
starter package which gives you one secure internet kiosk for customers that do not have a computer, and
a hotspot for those wireless customers that do. We will provide you with pre-paid pre-printed SurfCards,
and you just sell those on to your customers. We will also work alongside you and give you complete
after-care and support, so that you do not ever need to involve yourself with the technical side of the
service.

Hotel and Apartment Solutions

If you were a tourist, imagine being able to use the internet without even leaving the hotel, in fact without
even leaving your room! Guest room internet access is fast becoming a worldwide standard, and if you do
not offer this service soon then you will be losing out against your competition.

Through our partners iSurfCentral we provide robust, scaleable and future-proof internet access billing
systems for the largest requirements.

We can deliver internet access to any location within your site through your existing telephone lines,
gigabit wired network or using wifi/wireless technologies. We install every aspect of the system for you,
guide and train your staff through the 1st level support responsibilities and manage the billing system for
you.

Whatever IP billing solution you need for your business, we can provide it! With over 60 years of collective
experience, we will always find the best solution for any requirement. Please contact us for more
information, even if you only have ideas - let us help you to decide if they are feasible or not.

Basic Steps of Business Registration

1. DTI-BTRCP Registration - It is necessary to register a sole proprietorship with the
Department of Trade and Industry (DTI) and the Bureau of Trade Regulation and
Consumer Protection (BTRCP) because you will gain the exclusive right to establish and
use your business name. It also offers protection from those could take advantage of your
name. These government agencies see to it that there is no duplication in the use of
names.

2. Barangay Clearance - The Local Government Code requires all local businesses to
register at the barangay level. This is easy to do and a minimal fee is required.

3. Registration with the Local Government - Permits and licenses required to ensure that
standards are met and that businesses comply with the specific requirements of the
business locale.
Business Permit and License
Locational Clearance
Barangay Micro Business Enterprise

4. B.I.R. Registration - The Bureau of Internal Revenue (BIR) will furnish your business
with its own tax identification number and the authority to print receipts, invoices, etc.

5. SSS Registration - The Social Security System offers your employees many benefits. It
also benefits you, as employer, in cases of employees’ disability or death.

6. DOLE Registration - Registering with the Department of Labor and Employment

(DOLE) is required for businesses with 5 or more workers.

Business Plans

Forecasting your sales

Developing your sales forecast isn't as hard as most people think. Think of your sales forecast as an educated
guess.

Forecasting takes good working knowledge of your business, which is much more important than advanced
degrees or complex mathematics. It is much more art than science.

Whether you have business training or not, don't think you aren't qualified to forecast. If you can run a business,
then you can forecast its sales. Most people can guess their own business' sales better than any expert device,
statistical analysis, or mathematical routine. Experience counts more than any other factor.

Break your sales down into manageable parts, and then forecast the parts. Guess your sales by line of sales,
month by month, then add up the sales lines and add up the months.

The illustration gives you an example of a simple sales forecast that includes simple price and cost forecasts which
are used to calculate projected sales and direct cost of sales and estimate total pound value for each category of
sales.

Use Text to Explain the Forecast and Related Plans and Background
Although the charts and tables are great, you still need to explain them. A complete business plan should normally
include some detailed text discussion of your sales forecast, sales strategy, sales programs, and related
information. Ideally, you use the text, tables, and charts in your plan to provide some visual variety and ease of
use. Put the tables and charts near the text covering the related topics.

In this standard business plan text outline, the discussion of sales goes into Chapter 5.0, Strategy and
Implementation. You can change that to fit whichever logic and structure you use. In practical terms, you'll probably
prepare these text topics as separate items, to be gathered into the plan as it is finished.

Sales Strategy
Somewhere near the sales forecast you should describe your sales strategy. Sales strategies deal with how and
when to close sales prospects, how to compensate sales people, how to optimise order processing and database
management, how to manoeuvre price, delivery, and conditions.

How do you sell? Do you sell through retail, wholesale, discount, mail order, phone order? Do you maintain a sales
force? How are sales people trained, and how are they compensated? Don't confuse sales strategy with your
marketing strategy, which goes elsewhere. Sales should close the deals that marketing opens.

Business planning

Ten things to do before writing a

business plan
Before writing a business plan, it is best to undertake some research to help you develop the various sections in
the plan.

1. Research All the Relevant Sections

Before commencing with your business plan, make sure you understand the sections that are required, the
purpose of the various sections, and the objectives of the plan. Products such as Business Plan Pro® 2005 help to
ensure all sections are covered. However, if you chose to go it alone, websites like www.bplans.co.uk and
www.businessplanhelp.co.uk can help you fully understand the various components required to write a compelling
business plan without any obvious gaps!

2. Decide the Legal Structure

While, understandably, the focus of most entrepreneurs is on their 'idea,' it is vitally important that the operational
and logistical requirements are not neglected. For example, decisions regarding whether you intend to trade as a
sole trader, partnership or limited company are very important. Prior to deciding, enlist the help of a local
accountant or business link or research the characteristics of the different options on websites such as
www.startups.co.uk. Similarly, issues such as understanding your VAT obligations, registering a Trade mark or
trade name and drafting employment contracts have to be covered.

3. Manage the Numbers

Whether you like figures or not, having a thorough understanding of 'the numbers' that impact your business is a
crucial component to running a successful business, particularly at the planning stage. At the outset, it will be
important to understand:
• Your Start-up Costs
• Your Break-even point
• Your funding requirements
• Your cash flow forecast for the following months
Free Calculators that can assist you with these calculations are available in this section of the site. It is also highly
recommended that you set the business up with a basic accountancy package from the likes of QuickBooks®
(www.intuit.co.uk) or Sage® (www.sage.co.uk).

4. Obtain Industry Reports

Despite the unique characteristics of your business, there will be similar companies elsewhere and undertaking
some market research on these will help you understand your target market a little better. Companies have been
classified into various categories by the U.K. government under the Standard Industrial Classification (SIC)
system; start by identifying your particular class and identifying your SIC code. This will then help you search for
data on your competitors and other industry participants. Then, seek some data from sources such as Cobweb
(www.cobwebinfo.com), which produces various business profiles. This will enable you to obtain an external
perspective on the characteristics of similar firms in your field.

5. Research the Market

When seeking to advertise it is worth using the Key Word Assistant on www.overture.com to see which terms
related to your business or service are most heavily searched. This will give you some help with headlining your
adverts or securing a URL or understanding the key words you should use in Search Engine Optimization once
you have a website set up. You will also be able to plug these terms into a Search Engine, which will help you
identify competitors.

6. Assess Demand Levels Prudently

In contrast to assessing costs, one of the most difficult things to predict is the level of demand for your
products or services. The general rule is to use conservative estimates on likely demand and to use
proxies where data is hard to come by. One should also use proxies to help even when the idea is
innovative or unique, rather than plucking figures from the air, or claiming there are no comparative
figures available. A classic example relates to a recent tourist development in London which failed
spectacularly after a short time in existence. One serious issue was that visitor numbers were far lower
than those predicted and hence revenues failed to cover the large cost base. If the owners had
researched the visitor numbers of the top attractions in the U.K. beforehand, they would have found
figures that represented the upper limit of likely potential visitors. By predicting a visitor figure far in
excess of these, they badly miscalculated, and these wildly optimistic assumptions contributed to their
ultimate downfall as costs and revenues were far out of sync.
7. Secure a Route to Market

In an increasingly competitive landscape, it is vital that the entrepreneur has researched his route to market or how
he intends to access his customer base. Most new businesses will consider a multi-channel route--however, this is
not only costly but is significantly more expensive than single-channel routes, for non-established brands. Internet
marketing is one attractive route, as marketing spending can be tracked carefully. Alternatively, identifying current
suppliers who service a similar market niche can give some indication as to which marketing activities are most
effective. Of course, this assumes the incumbent has got it right!

8. Hire the Right People

Along with financial predictions, the people entrusted with putting the plan into action will be subject to particular
scrutiny by potential financiers. Regardless of the entrepreneur's/founder's skill set, he will invariably need help.
While many non-core activities can be outsourced, certain functions, such as sales, will need full-time attention.
You should outline the various skills required to run the business, price them into the model, and also identify any
gaps and prospective candidates to fill them.

9. Clearly Define and Articulate the Customer Benefits

Many entrepreneurs fail to clearly articulate the benefits of their new venture. As a result, the term "elevator pitch"
was introduced into modern lexicons as a proposed solution to this--an elevator pitch is your idea, supported by
your business model, company solution, marketing strategy, and competition, all stated in the length of time it
takes for a short elevator ride. This simple idea seeks to force entrepreneurs to think carefully about the language
they use when describing their new venture (particularly technology ones). It is also used to remind them that they
should remain customer-focused and ensure that they concentrate on describing the benefits.

10. Get a Mentor

Many start-up entrepreneurs are paranoid that their idea will be taken and often behave irrationally prior to launch.
Usually the idea is closely guarded and only discussed with close confidantes. However, these confidantes (often
family or friends) find it difficult to pose sufficiently rigorous questions as (a) they do not want to offend or (b) lack
the relevant experience or judgment to critically analyze the new venture.
Hence, an idea with serious flaws which could have been rectified early on in the process can progress before the
wheels come off at the most important phase. It is highly recommended that the entrepreneur engage an
independent mentor or plan reviewer at an early stage. This person can help hone the idea before it is presented
to financiers or bankers.
Finally, in stark contrast, some entrepreneurs take the view that the more input they can get the better, and they
enter every business plan competition they can to gain independent feedback on their various ideas rather than to
win the prize on offer.

Common business plan mistakes

While including the necessary items in a business plan is important, you also want to make sure you don’t commit
any of the following common business plan mistakes:

Putting it off

Too many businesses make business plans only when they have no choice in the matter. Unless the bank or the
investors want a plan, there is no plan.
Don't wait to write your plan until you think you’ll have enough time. "I can't plan. I'm too busy getting things done,"
business people say. The busier you are, the more you need to plan. If you are always putting out fires, you should
build firebreaks or a sprinkler system. You can lose the whole forest for paying too much attention to the individual
burning trees.

Cash flow casualness

Most people think in terms of profits instead of cash. When you imagine a new business, you think of what it would
cost to make the product, what you could sell it for, and what the profits per unit might be. We are trained to think of
business as sales minus costs and expenses, which equal profits. Unfortunately, we don’t spend the profits in a
business. We spend cash. So understanding cash flow is critical. If you have only one table in your business plan,
make it the cash flow table.

Idea inflation

Don't overestimate the importance of the idea. You don't need a great idea to start a business; you need time,
money, perseverance, and common sense. Few successful businesses are based entirely on new ideas. A new
idea is harder to sell than an existing one, because people don't understand a new idea and they are often unsure
if it will work.
Plans don't sell new business ideas to investors. People do. Investors invest in people, not ideas. The plan, though
necessary, is only a way to present information.\

Fear and dread

Doing a business plan isn't as hard as you might think. You don't have to write a doctoral thesis or a novel. There
are good books to help, websites, business links, universities, and there is software available to help you.

Spongy, vague goals

Leave out the vague and the meaningless babble of business phrases (such as “being the best”) because they are
simply hype. Remember that the objective of a plan is to secure results, and for results, you need tracking and
follow up. You need specific dates, management responsibilities, budgets, and milestones. Then you can follow up.
No matter how well thought out or brilliantly presented, it means nothing unless it produces results.

One size fits all

Tailor your plan to its real business purpose. Business plans can be different things: they are often just sales
documents to sell an idea for a new business. They can also be detailed action plans, financial plans, marketing
plans, and even personnel plans. They can be used to start a business, or just run a business better.

Diluted priorities

Remember, strategy is focus. A priority list with 3-4 items is focus. A priority list with 20 items is certainly not
strategic, and rarely if ever effective. The more items on the list, the less the importance of each.

Hockey-stick shaped growth projections

Sales grow slowly at first, but then shoot up boldly with huge growth rates, as soon as 'something' happens. Have
projections that are conservative so you can defend them. When in doubt, be less optimistic.

Understand your competition

Who competes with you for your customers' time and money? Are they directly selling competitive products and
services, substitutes, or possible substitutes?What are their strengths and weaknesses? How are they positioned
in the market?

Your Competitive Analysis

A good competitive analysis varies according to what industry you're in and your specific marketing plan and
situation. A comprehensive competitive analysis does have some common themes.

Begin by explaining the general nature of competition in your type of business, and how customers seem to
choose one provider over another. What might make customers decide? Price or billing rates, reputation, or image
and visibility? Are brand names important? How influential is word of mouth in providing long-term satisfied
customers?

For example, competition in the restaurant business, might depend on reputation and trends in one part of the
market and on location and parking in another. For the Internet and Internet service providers, busy signals for dial-
up customers might be important. A purchase decision for a car, may be based on style, or speed, or reputation for
reliability.

For many professional service practices, the nature of competition depends on word of mouth because advertising
is not completely accepted and therefore not as influential. Is there price competition between accountants,
doctors, and lawyers?

How do people choose travel agencies or florists for weddings? Why does someone hire one gardener over
another? Why would a customer choose Starbucks over the local coffee house? Why select a Dell computer
instead of one from H-P or Gateway? What factors make the most difference for your business? Why? This type of
information is invaluable in understanding the nature of competition.

Compare your product or service in the light of those factors of competition. How do you stack up against the
others? For example:

• As a travel agent your agency might offer better airline ticketing than others, or perhaps it is located next to a
major university and caters to student traffic. Other travel agents might offer better service, better selection, or
better computer connections.
• The computer you sell is faster and better, or perhaps comes in fruity colors. Other computers offer better price or
service.
• Your graphic design business might be mid-range in price, but well known for proficiency in creative technical
skills.
• Your car is safer, or faster, or more economical.
• Your management consulting business is a one-person home office business, but enjoys excellent relationships
with major personal computer manufacturers who call on you for work in a vertical market in which you specialize.

In other words, you should know how you are positioned in the market. Why do people buy your
product or services instead of the others offered in the same general categories? What benefits do you
offer at what price, to whom, and how does your mix compare to others? Think about specific kinds of
benefits, features, and market groups, comparing where you think you can show the difference.
Describe each of your major competitors in terms of those same factors. This may include their size, the market
share they command, their comparative product quality, their growth, available capital and resources, image,
marketing strategy, target markets, or whatever else you consider important.

Make sure you specifically describe the strengths and weaknesses of each competitor, and compare them to your
own. Consider their service, pricing, reputation, management, financial position, brand awareness, business
development, technology, or other factors that you feel are important. In what segments of the market do they
operate? What seems to be their strategy? How much do they impact your business, and what threats and
opportunities do they represent?

Finding Information on Competitors

You can find an amazing wealth of market data on the Internet. The hard part, of course, is sorting through it and
knowing what to stress.

Your access to competitive information will vary, depending on where you are and who the competition is.
Competitors that are publicly traded may have a significant amount of information available, as regular financial
reporting is a requirement of every serious stock market in the world. Where ever your target is listed for public
trading, it has to report data.

Competitive information may be limited in situations where your competitors are privately held. If possible, you may
want to take on the task of playing the role of a potential customer and gain information from that perspective.
Industry associations, industry publications, media coverage, information from the financial community, and their
own marketing materials and websites may be good resources to identify these factors and "rate" the performance
and position of each competitor.