How to Use Competitive Intel to Boost Your Business Plan, According to Investors

When you’re bringing innovative solutions to market, it can be challenging to navigate the competitive landscape. But if you are armed with an understanding of the market demand and have conducted a thorough analysis of your competitors, you will be better prepared to make strategic decisions about the direction of your startup as well as refine your value propositions and go-to-market strategies.

“Market and competitor analysis are systematic ways to understand the universe in which your startup will operate and will help inform everything from product to strategy to go-to-market and even how you choose to capitalize the company,” said Narmeen Azad, MBA, a healthcare operator, an investor in over 65 healthcare-related companies, co-founder the telehealth company Altopax, and an advisor for the healthcare initiative at Columbia Venture Community.

Cure sat down with experts skilled in both investments and market and competitor analysis. Below, they identify the core components of effective market and competitor analysis and offer insight into how this information can be used to tailor your business plan.

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What Is Market and Competitor Analysis and Why It’s Important

Market and competitor analysis allows you to systematically study the landscape you will be entering so that you can better understand your customer’s needs, identify what your competitors are doing, and analyze current market trends. This insight allows you to identify opportunities or gaps that are not filled, mitigate risks, and differentiate your product or service.

“Market analysis will help you understand the size of the opportunity, the growth trajectory, trends, and dynamics of your target market,” said Azad. “Competitor analysis will help you articulate who is solving similar problems, how they’re doing it, and where gaps or opportunities exist.”

A strong analysis also allows investors to evaluate the viability and scalability of your company. They are looking to see if you’re addressing a significant need, how large that market is, and whether there’s room for sustainable growth. And when you present them with a solid understanding of the market and your competitors, this demonstrates that you know the landscape, can articulate your unique value proposition, and have a strategy to effectively differentiate your company.

How to Gather Credible Data

Gathering reliable data is not an easy task, especially when funds are limited. But this step is essential if you want to build credibility into your business plan. Plus, having this data helps you make informed strategic decisions.

According to Steven Gould, MD, an investor, former executive for a publicly traded biotechnology company, and the Consulting Director for Ventures at the Polsky Center for Entrepreneurship and Innovation at the University of Chicago, the first step in gathering credible data involves asking the right questions. 

It also includes being able to answer key questions posed by investors, he said. For instance, investors often want to know what problem you’re solving and what unmet need you’re addressing, he said. “Also, what is your solution? Is there a market for it? Can you get it approved?” 

To gather your data, Azad recommended including both primary and secondary sources. For example, she said your primary source research may include conducting interviews with patients, payers, clinicians, channel partners, and even competitors when you can.

“Good secondary sources of information can include government databases and datasets,” she said. “Commercial market research reports, industry association publications, peer-reviewed academic journals, and even public company filings like 10Ks, S-1s, and investor decks also can be used. These sources help you size the market, understand trends, and benchmark against other players. “ 

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How to Synthesize These Findings Into Compelling Insights

To synthesize your findings, use your raw data to highlight unmet needs, competitive gaps, and market trends that validate your startup’s relevance and potential impact. You can also create competitive positioning matrices that map competitors across relevant dimensions, said Azad. Then, identify gaps in markets you plan to occupy, she said. 

Potential investors and other stakeholders also want to see that you understand the problem you’re solving, the size of the opportunity, and why your approach is better. And they expect you to be able to answer the question of “Why now?” said Gould. 

“Everybody’s doing great science,” he said. “The questions are: Is this basic science for the sake of science or is this something that has potential to change the world? Founders can’t be so in love with their science that they aren’t willing to take a different look.”

And market and competitor analysis helps them do that. “Investors want to know that they’re putting money into something that at least has a shot at getting out there and making them money,” said Gould.

What You Can Learn From Market and Competitor Analysis

When you put together an effective market and competitor analysis, this process gives you critical insight into what you are facing and helps influence every strategic decision you will make going forward. It also guides you to build a better answer for your core customers, develop stronger pitches for investors, and even outmaneuver your competitors.

Doing these analyses can also influence your product and distribution, help determine your competitive advantage, allow you to identify the target market and ICP, dodge potential threats from competitors, mitigate regulatory risks, and help you avoid costly mistakes, said Azad. It also can be used to determine how you should capitalize your startup.

This analysis can even influence who you bring on your team to help you meet your objectives, said Gould. Typically, you will need the inventor, an innovator, and an entrepreneur, he said. “The inventor makes the novel discovery, the innovator defines [or] develops the way in which the invention will be used to improve the world, and the entrepreneur is the one who makes sure it gets out into the world by building and executing the commercialization plan.”

Gould said when building this team, they should display the four Rs—they’re relentless, resilient, resourceful, and realistic. “I don’t want them to give up too soon, but at some point they may have to face the facts and if things aren’t working [in the market or if they discover some incongruences] they need to be able to shift gears.”

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Best Practices and Common Pitfalls to Avoid

Conducting an effective market and competitor analysis requires both strategy and discipline, especially because missteps can lead to flawed assumptions and missed opportunities. Here are some best practices to gather meaningful data and translate it into actionable strategies as well as some common pitfalls that can cause you to get off course.

• Use credible and diverse data sources that include both primary research and secondary sources. In other words, your primary research might include expert interviews, surveys, and focus groups while your secondary sources might be market reports, academic research, and regulatory databases, said Azad.

• Remember that this analysis is dynamic and not static. Keep your finger on the pulse of the market and your competitors and be prepared to make adjustments as needed, suggested Azad.

• Focus on actionable insights and weave them into your business plan. For instance, you might use this analysis to determine where to launch first, what price to charge, and how to address key threats to success.

• Resist the urge to overestimate your market size or how long it will take to launch your product or service. Things usually take longer than expected and cost more than anticipated, said Gould. Be realistic and conservative as well as justify your estimates with real data.

• Refrain from underestimating your competitors. Just because your science may be more advanced, does not mean consumers will automatically buy it, said Gould. Consider your competitors’ market traction, brand trust, and distribution.

You also want to avoid falling prey to confirmation bias, said Azad. “It’s tempting to disregard data that challenges your view on your competitors’ advantages or market trends that may disprove your assumptions. Ultimately, being clear-eyed about these will allow [you] to pivot when needed and build real, competitive advantages.”