How to create a competitive analysis in your pitch deck? In other words, how do you create and show your competition in a pitch deck?
There are other entrepreneurs and companies with similar ideas, and working on this problem out there somewhere. If you are successful in proving this market and growing your company, even more entrepreneurs and large incumbents will become interested in this space.
Knowing yourself, and your own company is important. Focusing on being great is better than worrying about others. Yet, ignoring the competition is a surefire way to fail with a startup, or even once you’ve become a large corporation. Even a public one.
So, how do you go about performing an effective competitive analysis for your business? How do you show what’s important in your pitch deck? And, how do smart founders leverage their competition to their own advantage when fundraising for their companies?
The Ultimate Guide To Pitch Decks
Here is the content that we will cover in this post. Let’s get started.
- 1.What Is A Competitive Analysis In Business?
- 2. How To Create A Competitive Analysis For Your Business Plan
- 3. Market Research
- 4. Market Size & Trends
- 5. Who Are Your Competitors
- 6. What Are They Doing Well?
- 7. Where Are The Gaps?
- 8. Have Others Review & Challenge Your Competitive Analysis
- 9. How To Show The Competitive Analysis In Your Pitch Deck
- 10. The Competition Slide
- 11. Competitive Advantage Slide
- 12. Where Do Your Competition Slides Belong In Your Pitch Deck?
- 13. How To Strategically Use Competition For Your Advantage
- 14. Amount Raised
- 15. Justification For Your Valuation
- 16. Proof
- 17. Exit Potential
- 18. Demonstrating Your Competitive Advantage
- 19. Competitive Analysis Vs. SWOT Analysis
What Is A Competitive Analysis In Business?
A competitive analysis is a comparison and evaluation of your company’s competition.
It is a snapshot of the competitive landscape in your industry. Which will be of special interest to investors for a variety of reasons. As well as having several applications in-house. For example, recruiting, planning marketing campaigns, and training and equipping your sales team.
Some factors included in a competitive analysis may include looking at:
- Who are your competitors
- What are they doing well and not
- Their pricing
- Business models
- Market share percentages
It can be good to learn from your competition in this process. Just do not copy everything they are doing if you want to be different, and win. If you don’t know 110% what is really working for them, or not, or it’s just the status quo, be very cautious about jumping on the bandwagon. Such as thinking of webinars, requiring demos in the sales process, or using FB ads.
Before you continue reading through this post, take a few minutes to watch this video I have created. In it, I have described in detail how to define your competitive advantage in the pitch deck. You’re sure to find it helpful.
How To Create A Competitive Analysis For Your Business Plan
It is vital to run a competitive analysis before you try to start up a business. As well as before making any major changes.
This is critical before trying to pitch investors for funding. It is quite surprising how many entrepreneurs fail to do their homework, and then waste so much of their time, energy, and funds, and expect investors to do the same.
Your full business plan will certainly have more depth and breadth than a pitch deck slide when it comes to competition analysis.
So, where do you start, and what’s involved? And, how would you create a competitive analysis in your pitch deck when you’re ready for fundraising?
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The first step is some market research. You can begin with a general bird’s eye view of the industry you are in. Then zoom in deep to analyze a few of the closest and most serious competitors.
It is mind-blowing how many entrepreneurs even fail to do a basic Google search to see if there is already an identical company to their vision out there.
If you don’t take this part of your business seriously, then you can’t expect anyone else to take your business seriously, or to waste their time with you.
There are a variety of ways to conduct this research. You can take the DIY route online, and go through industry associations. You can purchase professional market research reports and studies. Or you may hire people for it, and commission custom reports. There are on-demand freelancers that can help you with this.
Most important of all, and the precursor of all great startups, is getting out there and talking to your target customers. The more the better. Some founders even spend the first six months or more just talking to potential customers to get clarity on the problem they are out to solve, and what customers really want, need, and will pay for.
Market Size & Trends
As a part of this process, you will evaluate the size of the market, its major segments, and submarkets. You will conclude which your business will be able to serve, and which you will begin targeting first.
Be sure to pay particular attention to trends and the direction of the market. Which phase of the cycle is it in? Where are macro trends heading? Is it growing or shrinking?
Key data from this research will be included on your market slide in your pitch deck.
Who Are Your Competitors
How many players are competing in this market? What different types and categories of competitors can you identify?
Which are the most serious threat to your venture, and your investors’ capital? Be sure to drill down into those to really understand them and what you are up against. Don’t overlook those most likely to become serious competitors in the future.
You may want to create a database, or at least a spreadsheet, with all of these competitors, and their relevant information for easily referring back to and updating later. Such as their pricing, Minimum Viable Product or MVP, team members, valuations, funding rounds, market share, and NPS scores.
What Are They Doing Well?
What do they seem to be doing well? From a business standpoint, what metrics suggest that they are performing well? Especially from an investor perspective. Of course, the reality behind the scenes can always be a very different story. As we know from names like FTX, Lehman Brothers, and Enron.
Be sure to pay attention to what customers say that they are doing well at. What do they love most about the company, product, and service? How did they end up buying from them? Why do they stay loyal customers of those businesses?
Where Are The Gaps?
What are the other players in this space not doing well? What gaps are they leaving for you to get in, and take over?
What do their online reviews say about them? The ones buried a few pages back on Google that they’ve tried to bury. What do the customers you actually talk to say? Where are the flaws? Who is not being served well? What are they eager to pay for that they aren’t getting? Hone in on the one big thing that will make a difference, and will make a big business.
Have Others Review & Challenge Your Competitive Analysis
Always get an experienced second pair of eyes on your work. A third is even better. Talk to industry veterans, investors, and advisors to see what you may be missing, what’s important to them, and what else you may need to research.
How To Show The Competitive Analysis In Your Pitch Deck
Showing your work in a pitch deck is much different than your full work and what you include in your full business plan.
You have very little space in your pitch deck. There is very little that you can fit on a single slide, still have an effective pitch deck, and get investors through to funding you.
The data and points you want to convey in a fundraising pitch are also different from what you need for your business plan, and to operate internally.
You can include your full business plan and competition analysis in your virtual data room for the most serious investors. Though, what you include in your deck is going to be extremely simplified and concise.
The two main pitch deck slides that directly deal with this are the Competition slide and the Competitive Advantage slide.
The Competition Slide
This is about positioning your company for investment. It is a strategic slide that can either detract from your venture as a contender for funding or can add immense value and urgency for them to take action.
Use a simple visual graph on this slide.
Plot three or four of the most important competitors against yours to create the outcome you are looking for.
This does not mean hiding the competition or denying they are there. It is about picking the most relevant and strategic for this purpose.
Using their logos, as well as yours, on this slide is a good idea.
Competitive Advantage Slide
This slide can be used to further convey what is so great and valuable about your startup, and why investors should put their capital into your venture.
For investors, this is equally about advantages that preserve their capital and can grow it with impressive returns.
Note that you should be accounting for existing competition, and what’s coming on the horizon too.
What is your one big advantage in this space?
You may use a graphic or a few bullet points on this slide. And, that’s how you’ll create a competitive analysis in your pitch deck.
Where Do Your Competition Slides Belong In Your Pitch Deck?
These slides come right after your problem, solution, and market size slides.
This makes them about your fifth and sixth slides in your pitch deck. Depending on whether you choose to include a pitch deck summary slide right after your initial cover slide.
These slides are directly followed by your traction, product, and customers slides.
Be sure to have your slides in the correct order if you want to get funded.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
How To Strategically Use Competition For Your Advantage
As already mentioned, the competitive analysis in your pitch deck is about positioning your startup.
Here are some of the ways in which you can use your competitors to your own advantage on these slides, and maximize your fundraising potential.
By including at least one other relevant startup that has raised a significant amount of capital at, or near the same stage, you are able to justify the amount that you are asking for. It is a benchmark that investors can use for evaluating your ask, and how much money they should commit to this venture.
Justification For Your Valuation
Your competition can also help justify the valuation you are asking for in this round. By using your competition’s valuations, you can indicate what yours should be in comparison, as well as what it could be in the future.
This can make a big difference when it comes to the terms you can negotiate, and how much you have to give up to secure your ideal investors.
Other companies stand as proof that this is a real problem, one that needs to be solved, and has value. It is proof that a real and valuable business can be built in this space. This removes a lot of doubt, questions, and risk for investors.
It also helps if other respected and envied investors have invested in startups in this space.
Can you include any other relevant companies which have gone public, or which have been acquired? This can allude to the potential for an exit and real tangible returns for your prospective investors.
They need to know that they can cash out and liquidate their investment at some point. Hopefully, for huge gains.
Demonstrating Your Competitive Advantage
How you contrast your startup against these other players is also key to evidencing your advantages.
Are others notorious for poor NPS scores, having burned their most loyal customers, etc?
Competitive Analysis Vs. SWOT Analysis
Competitive analysis in your pitch deck looks deeply at other companies and compares them to yours. A SWOT analysis is about evaluating your own company. Though may include some similar and cross-over elements.
A SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats.
Your strengths can include your advantages over other potential competitors. As your weaknesses may include how much better-capitalized others are. Your opportunities are where your competitors are leaving a void in the market. Threats may certainly include your competition.
A traditional SWOT analysis diagram is more commonly seen in a full business plan than in a pitch deck.
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