Entrepreneurship and Small Business (ESB) Certification Practice Exam

Which section of a business plan evaluates the competition?

1. Operations plan

2. Financial plan

3. Market analysis

4. Executive summary

The correct answer is: Market analysis

The market analysis section of a business plan is crucial for evaluating the competition. This section delves into the competitive landscape, identifying key competitors, analyzing their strengths and weaknesses, and understanding market trends that could impact the business. By examining the competitors, an entrepreneur can determine what unique value or advantage their business can offer and identify opportunities for differentiation. In this section, detailed research is conducted on market demographics, customer needs, and existing market players. This enables a business to position itself effectively within the market by recognizing where its products or services can fill a gap or meet an unfulfilled demand. Understanding the competition also helps in formulating strategies for marketing, pricing, and product development. The operations plan focuses on the internal management and logistics of running the business, while the financial plan outlines projected revenues, expenses, and overall financial strategy. The executive summary provides a snapshot of the business plan but does not delve into the specifics of competition analysis. Therefore, the market analysis is the dedicated section that assesses competition comprehensively.