When putting together a business plan what is meant by 'Are there similar or substitute goods or services available in the market'?

Answer 1

Are the things that you intend to sell the same as what others are all ready selling, or are they unique to you? The idea of the question is to find out if your goods are going to be "the same old stuff", or something new , that the public has NEVER seen before? When performing your market and competitive analysis, you need to take into consideration competing products and services - including those that are similar or substitute or what is often referred to as indirect competition. For instance, say you just opened an Italian restaurant in the heart of Boston (good luck finding available land!). Since you opened it in a metro area, a large city, you can be sure that is at least one or two other Italian restaurants in your target area. These establishments are considered direct competition, because their menus probably closely resemble yours. Keep in mind, that there is also substantial indirect competition. You may be the only Italian restaurant; however, consumers have other alternatives. There are substitutes for your restaurant. They can choose to go the fast food route or opt for Chinese. Or they can stop by their local grocery store and pick up a ready-to-eat rotisserie chicken. These are what is referred to as similar or substitute goods and services. It is very unlikely that you have a product or service that has no competition. If that's the case, you better detail why and how you are the only one of your kind, as this will always raise a red flag when presenting a business plan to investors or lenders.