Let’s say that you have all the other elements for your imaginary hot dog cart business planned out. The next thing you need to take into account that should be incorporated into your business plan as well is your competition.
What are you up against in your anticipated marketplace? If you are selling hot dogs outside the city courthouse are there already three other hot dog vendors out there? Are all of them swamped at lunch and it looks like that if they had a dozen hot dog carts that they all would still be swamped?
Just because there is a lot of competition that doesn’t mean that you should run away. On the contrary, that could mean that there is a huge demand for the product or service that you are trying to sell. You need to recognize though if the competition is seasonal or timely.
People won’t eat dogs (usually) at 7 am in the morning if they are going to work at the courthouse. They might eat though between 11 am and 2 pm throughout the day. Maybe between 4-6 pm you might get another bump in business.
In the toy business, your seasonal sales in the United States are usually from October through December. In India, you can sell gold for weddings generally before monsoon season.
Are you also different enough from the competition to draw business to you from your competitors? Maybe you sell Kosher hot dogs. Maybe you have a cute girl in a bikini serving the hot dogs. What is your edge that will differentiate you or your product from your competition?
By recognizing your competition and incorporating it in your business plan, you show potential investors that you know what you are doing or at least have researched your market enough so that they can see that you are taking yourself seriously and will be treating your job as a business!
Questions? Comments? Thanks for reading!