Most business plans have a competitive analysis section with a really nice grid. Every one of those has a row for the entrepreneur’s company that, miraculously, gets a check in every column.
Of course, no other competitor scores as well on this objective standard, including all of the household names on the list.
For the reader, the credibility flag starts to droop a bit. As the reader digs deeper, he finds that one of the major product attributes of Microbig (that the entrepreneur doesn’t have) hasn’t made the screening list. While this goes to the question of how the entrepreneur approaches the funding process, (a topic for another time), it also doesn’t do much for really understanding the territory the company is proposing to operate in.
Territory mapping is a great way to begin to get at this idea in another way. Here are some steps and examples. Ask:
1. Who are the customers for the product we propose to offer at the finest level of granularity? (Not just "manufacturers," but "manufacturers with sales of less than $20 Million with unit production in the hundreds of thousands" etc. ) How many are there in the addressable market?
2. What functionality are we selling and what is the total functionality to which ours is attached?
3. What parts of the total functionality equation are not in our product line?
4. What is the overlap with our product and the other companies selling in this functionality continuum? Where else in our customer’s company does that functionality take them that it does not take us?
5. What are the revenue sizes of our competitors? How much of their revenue is in our target customer segment? (Central to their business, important but secondary, tangential, etc.) Who owns them?
6. Is their any complementary opportunity in our distribution requirements with each company providing functionality?
This train of thought can quickly lead to a much more robust discussion about competitive opportunity than a feature matrix. It begins to help understand the nuances of how each other product is part of the customer’s solution set, and where our opportunities may lie across a number of dimensions.
Who might be interested in allowing us to distribute their complementary solutions?
Who might exit sooner rather than later?
Which companies have some sort of interlocking ownership?
Who might be doing a rollup?
From a resource point of view, who has more or fewer resources? Etc.
Now a good entrepreneur knows all of this. But an investor taking an initial look probably does not. (Or, if they do, confirmation along these dimensions will almost certainly bring more credibility more quickly.)
The ensuing discussion will often find two people – an entrepreneur and an investor – on the same side of the table talking about the possibilities for the business – quickly.