“We have found a gap in the market with no direct competitors.”
I hear that sentence almost every week, and it worries me more than any weakness a founder could confess to. Last quarter I sat with two founders building broadly similar recruitment software. Both had capable products. Both were raising a seed round. The first insisted nobody else was doing what they did. The second arrived with a competitive analysis documenting a dozen direct rivals, several indirect ones, and the two larger players most likely to move into the space, with a clear position against each. Only one of them raised the money.
Here is the uncomfortable truth that most business-plan guides soft-pedal: your competitive analysis, not your product, is the single strongest signal an investor reads about whether you can actually execute. A founder who understands acquisition costs, pricing dynamics, and distribution economics is telling the investor something the pitch deck cannot: that they understand the market they are about to spend the investor’s money in. In 25 years working with UK founders, and across the 2,000-plus businesses SGI has supported, the quality of the competitive analysis has predicted the funding outcome more reliably than the strength of the idea.
This guide is specifically about the competitive analysis section and how to build one that reads as investment-grade rather than a box ticked. It covers why “no competition” is the answer that damages you most, how to gather intelligence that investors trust, and how to present positioning that survives due diligence. For the mechanics of the underlying framework, I link through to our full guide to Porter’s Five Forces for founders rather than repeat them here.
Why “No Competition” Is the Answer That Concerns Investors Most
When a founder tells me they have found a market with no competitors, my first thought is never “how exciting.” It is “why has nobody else built this?” Investors think the same way, and the honest answer is usually one of three things, none of them flattering.
The first is that customers do not want to pay for the solution. The problem is real but not painful enough to open a wallet, or acceptable free workarounds already exist. I once worked with a founder who had built a genuinely elegant tool for organising digital photos and described it as having no competition. The competition was Apple, Google, and Microsoft, all giving away the same capability inside products people already owned. Beautiful product, no market.
The second is that the founder has not looked properly. “No competitors” almost always means “no identical products,” which is a category error. Competition is defined by the alternatives a customer can choose, not by mirror images of your own build. A Bristol-based sustainable packaging founder I advised was certain she had no rivals because existing suppliers “did not understand environmental concerns.” Proper research surfaced dozens of businesses solving the same customer need through biodegradable materials, reusable systems, alternative polymers and packaging-reduction consultancy. That was not discouraging. It was the intelligence that let her position precisely, price against a real benchmark and target the right buyers, which is why the round eventually closed.
The third is that real barriers exist which the founder has not yet identified. Sometimes a market looks uncontested because everyone who tried concluded the economics did not work, or because regulation, certification or distribution access keeps newcomers out. Understanding why competitors have stayed away is as strategically important as knowing who they are.
The reframe I give every founder is this. Competition validates that customers will pay to solve this problem, that viable business models exist and that distribution channels are reachable. Your job in the business plan is not to prove competition does not exist. It is to demonstrate, with evidence, why a customer will choose you over their existing alternatives.
The Five Forces, Read Through a Funding Lens
Most competitive analysis sections fail because they describe the market. Investment-grade ones interpret it. The structure I use with clients is Porter’s Five Forces, but applied to the specific question a funder is asking: whether this business can win and sustain a profitable position. The full mechanics of each force sit in our Porter’s Five Forces guide; what follows is how each one should show up in a plan that is trying to raise money.
Competitive rivalry is where founders either name three companies or list thirty. Neither helps. What an investor wants is a read on concentration and intensity: is the market fragmented, with no player holding meaningful share, or is it concentrated among a few incumbents? A fragmented market signals easier entry but harder defensibility, and your plan needs to answer for the defensibility. When I worked with a Liverpool fintech in invoice financing, their first draft named “five main competitors.” The real landscape held far more once we counted alternative-finance providers and accounting-software firms adding financing features. The insight that changed their raise was not the count. It was that no competitor focused on the construction and trade sectors, which represented a meaningful slice of the market, so they positioned there and stopped competing head-on.
The threat of new entrants concerns the durability of your position, and it is where optimistic plans quietly overstate their moat. A Cambridge medical-device founder I advised had a genuine early lead, but the barriers protecting it, chiefly certification cost and clinical validation, were scheduled to ease under forthcoming regulatory change. The competitive advantage window was narrower than the plan assumed. Naming that honestly, and building a strategy to establish position before the barriers dropped, made the plan more fundable, not less, because it showed the founder understood the clock they were racing.
Supplier power rarely appears in early plans, and its absence is telling. If your model depends on one or two suppliers of a specialised component, your margins are not really yours. A Newcastle manufacturing startup I worked with had attractive projected margins that rested entirely on two sole-source suppliers, one of which could plausibly enter their market directly. We reworked the design toward commodity components and qualified a second source before they approached investors, because a margin an investor cannot trust is not a margin.
Buyer power determines whether you set prices or your customers do. Founders often chase large enterprise logos and describe the resulting concentration as strength. A Sheffield logistics-technology founder had three enterprise customers generating the vast majority of revenue, with the largest single account able to dictate terms at every renewal. Repositioning toward the mid-market spread that risk, shortened sales cycles and improved margins, and the plan told a far safer story to a growth investor.
Threat of substitutes is the force founders miss most, and it is frequently the real competition. When we interviewed the target customers of an expense-management platform, most were not using rival software at all. They were using spreadsheets, the basic features inside their accounting tools, or nothing. The genuine competitor was the status quo. That single finding rewrote the positioning from “better than other apps” to “escape the spreadsheet,” which spoke to a far larger and more winnable market.
Gathering Intelligence Investors Actually Trust
A competitive analysis is only as credible as the research behind it, and this is where you separate a plan that reads as researched from one that reads as assumed. There are two layers, and serious plans use both.
Primary research is the layer founders skip, and investors value most, because it is the layer that cannot be faked from a desk. The single richest source is direct conversation with customers about how they actually chose their current solution and what they wish it did better. I typically recommend 15 to 25 interviews across your customer segments, exploring three things: what alternatives they evaluated and why they chose as they did, what frustrates them about their current option, and what would make them switch. When we ran this for the packaging founder above, we learned that buyers valued certification credibility over technical features and needed a clear return-on-investment case, none of which appeared in any market report. That is what turned a generic value proposition into one that closed deals. Mystery-shopping your competitors, experiencing their sales process and onboarding as a customer would, adds tactical detail that desk research never captures.
Secondary research provides the context and the benchmarks. Industry reports from sources such as Mintel and IBISWorld provide market size and growth data. Companies House filings provide real financial and structural data on UK private competitors, and they are free. Funding announcements, press coverage and LinkedIn headcount trends let you infer strategy and trajectory. Digital intelligence tools such as SEMrush, Ahrefs, or SimilarWeb reveal how competitors acquire customers and where their traffic comes from, often exposing an underserved channel you can own. Patent and trademark filings at the Intellectual Property Office indicate where rivals are investing and whether a path you plan to take is already fenced off.
The point of combining both layers is not volume. It is triangulation. When primary interviews and secondary data agree, you have a finding an investor will believe. When they disagree, you have found something worth understanding before you stake a strategy on it.
Turning Intelligence Into Position
Research that is not converted into a decision is just a document. The output of competitive analysis, the part that belongs in the business plan, is a defensible position and the evidence for it.
A positioning map is the clearest way to show this. Plot competitors across the two dimensions that matter most to your customers- price against ease of use, or specialist focus against breadth- and the gaps become visible. The insight is rarely an empty quadrant with no competitors. It is usually a quadrant where competitors exist but serve customers badly. For a project-management software client, the crowded territory was complex, premium tools that, in the customers’ own words, “nobody except the project manager actually used.” The opening was not a missing feature. It was simplicity that the incumbents treated as a limitation rather than a selling point, and that became the whole position.
Alongside the map, an honest strength-and-weaknesses read on the handful of competitors that matter, and a short, specific view of how each is likely to respond when you enter, tells an investor you have thought past launch. Market leaders in growing markets usually accommodate a small new entrant rather than fight; struggling players sometimes cut prices and then exit; and a competitor whose customers you are taking will respond. Anticipating this in the plan is the difference between a founder who has modelled the market and one who is hoping.
The Mistakes That Sink the Section
Four errors recur in the competitive analyses I review, and each one is visible to an experienced investor in seconds.
The first is claiming no competition, which I have covered, and which reads as either naivety or inadequate research. The fix is to define competition broadly: direct rivals, indirect alternatives, substitutes, likely entrants and the status quo of doing nothing.
The second is the surface list, three names followed by “we are better and cheaper.” It provides no strategic information and signals shallow thinking. For every competitor that matters, an investor wants to see who they target, how they are vulnerable and what that means for your strategy. Analysis, not enumeration.
The third is the static snapshot. A competitive analysis run once and never revisited is dangerous, because markets move. I have watched a founder approach a Series B with intelligence that was 18 months out of date, by which point new entrants and shifting pricing had made the original strategy unviable. Competitive analysis is a process you maintain, not a section you write once, and saying so in the plan itself signals maturity.
The fourth is the opposite failure, competitor obsession, where every product and pricing decision chases a rival’s last move. It produces an undifferentiated business with confused positioning. Use competitive intelligence to inform strategy, then commit to a differentiated position and hold it. Know your competition, respect it, and then beat it by serving customers better than it does.
A Practical Sequence You Can Follow
For founders building this section themselves, here is the sequence I use with clients, compressed into a workable order.
- Define the landscape. List direct competitors, indirect alternatives, substitutes, likely entrants and the customer’s status quo behaviour. Aim for breadth first; you will narrow later.
- Gather intelligence. Run 15 to 25 customer interviews, mystery-shop three to five competitors, and pull secondary data from industry reports, Companies House, funding announcements and digital-intelligence tools.
- Analyse the five forces. Work through rivalry, entrants, supplier power, buyer power and substitutes, using our Porter’s Five Forces guide for the mechanics, and record the strategic implication of each for your business specifically.
- Build the position. Create one or two positioning maps, identify the underserved gap, and define the differentiated position you will own and defend.
- Integrate throughout the plan. Competitive intelligence should shape your market analysis, your marketing strategy, your financial benchmarks and your risk section, not sit in an isolated block.
Done properly, this is roughly a four- to six-week exercise for a founder working alone. The depth of insight matters more than the number of competitors covered: a genuine analysis of the eight to ten rivals that matter beats a superficial sweep of thirty.
How SGI Can Help
Competitive analysis is one of the most common places where a fundable business becomes unfunded, not because the business is weak, but because the section does not demonstrate the market command investors are looking for. Across the businesses we have supported, this is consistently where an experienced outside read adds the most value, because we have seen how the same analysis lands in front of the people writing the cheques.
If you are preparing to raise, the most useful next step is usually to get the competitive section of your plan reviewed against the standard investors and lenders actually apply. You can do that as part of our investor-ready business plan service, or if you are earlier and still testing the concept itself, through business concept validation, which builds the competitive picture from the ground up. For established businesses using competitive analysis to guide strategy rather than to raise, business strategy consulting is the better fit.
Get your competitive analysis right, and it stops being the section that loses you funding and becomes the one that wins it.
Book a free consultation to review your competitive analysis
Frequently Asked Questions
How long should the competitive analysis be in my business plan? For an investor-ready plan, roughly 1,500 to 2,500 words in the main document, with detailed competitor profiles in an appendix. Bank-loan plans need less, around 800 to 1,200 words, focused on positioning and sustainability. Depth of insight matters more than length: a real analysis of eight to ten competitors is worth far more than a shallow list of thirty.
Should I name specific competitors? Yes. Claiming you have competitors but declining to name them raises immediate questions about the depth of your research. Keep the tone professional and focus on positioning rather than criticism. Investors will research your competitors regardless, so demonstrating that you understand the landscape builds credibility rather than exposing a threat.
What if I genuinely operate in a new category? Even category-creating businesses face substitutes, adjacent players and potential entrants. Focus your analysis on what customers do today instead of buying from you, who could enter once you prove demand, and which established players could expand into your space. Define your category while showing you understand the alternatives customers currently accept.
How do I research private competitors that publish little? Combine sources: customer interviews revealing strengths and weaknesses; mystery shopping the competitor directly; Companies House filings for UK private companies; LinkedIn for headcount and growth signals; funding announcements; trade publications; and digital intelligence tools. No single source is complete, but together they demonstrate genuine research effort.
How often should I update it? Run a full analysis for the plan, then review it at least quarterly for major changes and refresh it comprehensively once a year. Significant events, a competitor’s funding round, a major launch, or a regulatory shift should trigger an immediate reassessment. In fast-moving markets, a competitive analysis can be dangerously stale within 6 to 12 months.
How do I position against much larger, better-funded competitors? Large competitors have disadvantages: slower decision-making, product complexity from trying to serve everyone, weaker service to smaller accounts, and less pricing flexibility. Compete on the dimensions where their scale works against them- speed, focus, service and specialisation- rather than meeting them head-on where they are strongest.
What is the difference between competitive analysis and market analysis? Market analysis asks whether the market is attractive: its size, growth and demand. Competitive analysis asks whether you can win within it: who you face, how you differentiate and whether the advantage holds. Both are essential, because an attractive market you cannot compete in is not an opportunity, and an advantage in a market too small to matter is not valuable.
References
- Michael E. Porter, “The Five Competitive Forces That Shape Strategy,” Harvard Business Review, 2008.
- Companies House, company filing and search service, GOV.UK. https://www.gov.uk/government/organisations/companies-house
- British Business Bank, Small Business Finance Markets report (latest edition). https://www.british-business-bank.co.uk/
- Competition and Markets Authority, market studies and guidance, GOV.UK. https://www.gov.uk/government/organisations/competition-and-markets-authority
- Office for National Statistics, UK business and industry statistics. https://www.ons.gov.uk/
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Kurt Graver is the founder and CEO of SGI Consultants, a business consultancy that has helped over 2,000 entrepreneurs establish successful startups using systematic business development methodologies. An accountant with an MBA and 25 years of commerce and consultancy experience, Kurt specialises in strategic planning, market analysis, and sustainable business growth