Teams of business plan consultants can't be wrong: defining your competition is a key part of your business plan, in part because it demonstrates your level of commitment to understanding the factors that will control your market share, and in part because it can actually help you create a better, more targeted business strategy. Knowing what you're up against will help your company outperform other businesses in your market, and can empower you to anticipate future challenges earlier and more concretely than your competitors. Given the advantages of thoroughly researching your competitors, having a section of your business plan outline your competitive comparison (and your competitive advantage) is more than just a good idea—as any business plan consultants will tell you, it's imperative.
Your competitive comparison should accomplish a few things. For one, it should identify, by name, every major competitor you will face. Knowing the location of these businesses is important, too, because their proximity to your business may be very important if you serve a market immediately surrounding your headquarters. You should also try to establish the market share of each of your competitors in the interest of determining what portion of business in the area market you can reasonably expect to control. Another important piece of the competitive comparison is a list of indirect competitors; as the name suggests, these are secondary businesses which—while not necessarily smaller companies—pose a lesser threat to your business model. These businesses still warrant mention, however, and should be analyzed in a fashion similar to that employed with primary (direct) competitors; business plan consultants advocate at least listing indirect competitors, even if you only analyze the primary ones.
The competitive comparison should take the form of an analysis that lists and dissects each business. Every competitor your business model will face should be listed in this section of the plan, and the strengths and weaknesses of each company should be explained. It is important not to understate competitors' strengths; full disclosure and accuracy in your assessments is vital to the integrity of this section of the plan. By the same token, you should be careful not to get carried away in your criticisms of competitors; even where you have a legitimate point of intervention and can improve upon the existing model (or can offer a higher level of service), you should avoid being overly critical of other businesses in your industry or market. Business plan consultants recommend being thorough but judicious throughout this section; if you have questions on the structure or content of this portion of the plan, it would be best to consult a professional.