Competitor analysis for a small business: steps, free tools and a worked example

Before you open your shop or launch your service, someone is already selling to the customer you want. It may be a shop on the same street, a Facebook page, an app, or an old habit that means the customer does not need you at all. Competitor analysis is the organised way to find out who these rivals are: what they offer, at what price, to whom, and where they fall short. Without it, your feasibility study rests on a guessed price and a hoped-for market share, the two numbers that change the result of any study the most.

This article explains who your competitors really are, how to analyse them with free tools, and gives you a comparison table template to fill in yourself. We then apply all of it to an illustrative, fully calculated example of a laundry in a residential neighbourhood, to show how what you learn about competitors turns into a price, an expected number of orders, a break-even point and a monthly profit or loss. We finish with what from the analysis belongs in your feasibility study, and what the law does not allow you to do with competitors.

What is competitor analysis and why do it before you start?

OpenStax's Entrepreneurship textbook says a competitive analysis should provide the entrepreneur with information about how competitors market their business². It adds that the analysis helps develop a competitive edge that supports a sustainable revenue stream, and helps you spot product or service gaps: areas your competitors do not serve, or do not serve well².

In everyday terms, you are looking for answers to questions like these. How much does a customer pay today for what I plan to sell? What do they like about the existing shops and what annoys them? When are those shops crowded and when are they empty? Does anyone deliver? Does anyone stay open late? Each answer can become a decision: a price, opening hours, an extra service, or even a decision not to open in that location.

How is it different from market research and SWOT?

Market research measures demand: how many potential customers there are and how much they spend. Competitor analysis answers the next question: who takes that demand today, and how much of it could be left for you. A SWOT analysis then takes the results of both and sorts them into strengths, weaknesses, opportunities and threats. So the logical order of work is market research, then competitor analysis, then SWOT, then the numbers. The first step is covered in market research for a small business in Egypt and the third in SWOT analysis for a small business.

Who are your competitors? Direct, indirect and substitutes

The first mistake in competitor analysis is listing only the shops that sell the same product. Customers do not compare shops; they compare ways of meeting a need. So sort competitors into three circles:

• Direct competitors sell the same product or service to the same customer in the same area. Another laundry in the neighbourhood is a direct competitor of yours.
• Indirect competitors offer something different that meets the same need. OpenStax's management textbook defines a substitute as any other product or service that can satisfy the same need for a customer as an industry's offerings³. A home washing machine and a household iron are substitutes for a laundry.
• Potential competitors have not entered yet but could tomorrow: a chain opening a branch, or an app expanding into your area.

If your idea is new and nobody offers the same thing, do not write "no competitors". OpenStax's Entrepreneurship textbook says that in this case the analysis might need to focus on substitute products rather than direct competitors². Customers were solving their problem somehow before you arrived, and that solution is your competitor.

A wider view: Porter's five forces

Competition does not come only from rival shops. Michael Porter's five forces model identifies five forces that shape competition in any industry: industry rivalry, the threat of new entrants, buyer power, the threat of substitutes and supplier power³. The same textbook defines buyer power as the balance of power in the relationship between a firm and its customers, and supplier power as the balance of power between firms and their suppliers³. Barriers to entry are the factors that prevent new firms from competing successfully in the industry³.

Why does this matter to a small business owner? Because each force raises a practical question. If barriers to entry are low, for example a small shop and simple equipment are enough, expect a new competitor to open next door once you succeed. If you have only one supplier for a key input, that supplier has the power to raise prices on you. If customers can switch to a rival at no cost, their power is high and they will not accept a large price increase.

How to do a competitor analysis, step by step

You do not need paid software. You need a week or two of field and desk work and a single table to collect everything:

1. Define the customer and the area first. The competitor for a customer in a residential neighbourhood is not the same as for one in an office district. Define the area most of your customers will come from.
2. Make a wide list, then pick the most important. Search Google Maps, social media and delivery apps, and walk the area. Then choose a small number for deep analysis. The comparison worksheet from SCORE, a US organisation that supports small businesses, compares your business with 3 of your competitors⁴. That suits most small businesses, provided one of them is an indirect substitute if it matters.
3. Choose the comparison factors. Pick the factors your customers actually decide on. The SCORE worksheet suggests factors such as product or service, sales channels, unique features, pricing, production and delivery, and suppliers⁴. OpenStax's example grid for a bicycle shop compares strengths, weaknesses, product quality level, price point, business location and promotion².
4. Collect the facts. Actual prices, opening hours, turnaround time and what customers say. Details follow below.
5. Score each factor and write down why. The SCORE worksheet asks you to rate each item based on how you think your customers would perceive it⁴: from the customer's point of view, not yours.
6. Look for the gap. A factor customers care about where every competitor is weak. That is the opportunity your message is built on.
7. Turn the findings into numbers. A price, an expected number of customers, and the extra costs of delivering what makes you different. That is what the worked example does.

Where to find competitor information for free

• Visit as a customer. Actually buy from them. Note the price, the waiting time, how you were treated and the quality of what you received. One visit at peak time and another at a quiet time give you a clearer picture than any online research.
• Google Maps reviews. Google's help pages say reviews show next to a Business Profile in Maps and Search, give potential customers helpful information and help them decide⁵. Read the negative reviews in particular and look for the repeated complaint: delays, rudeness, unclear prices. A complaint repeated across several competitors is a gap in the market.
• Their social media pages. OpenStax's Entrepreneurship textbook recommends researching competitors' social media, including learning each competitor's unique selling proposition, meaning the thing it presents as making it different². It also recommends reading customer reviews to find out what customers like and dislike about existing products². In Egypt there were 51.6 million social media user identities in October 2025, equal to 43.4% of the population, according to DataReportal⁶; these are accounts, not necessarily unique people. Even so, the figure means a large share of your customers and competitors are on these platforms, and the comments there are free research material.
• Google Trends. It compares search interest in different terms, or in one term across regions and periods. Read it carefully: Google's help pages say each data point is divided by the total searches of the geography and time range it represents, and the results are then scaled from 0 to 100⁷. In other words, it shows relative interest, not a count of searches. Use it to see seasons and compare interest in two alternatives, not to size a market.
• Customers and suppliers. Ask 15 to 20 potential customers: where do you buy today, why, and what bothers you? Ask suppliers in general terms about demand in the area; they deal with several shops.
• Field counts. Stand outside a competitor for an hour at peak time and count the customers going in, on more than one day. Simple as it is, this count beats any guess about their sales. But remember that a visit is not an order: at a laundry, for example, many visits are to collect an earlier order rather than drop off a new one, so separate the two in your count or your estimate.

A line you must not cross: no price agreements

Knowing your competitors' prices is one thing; agreeing prices with them is something else entirely. Article 6 of Egypt's Law No. 3 of 2005 on the Protection of Competition and the Prohibition of Monopolistic Practices, in the September 2022 edition published by the Egyptian Competition Authority, prohibits any agreement or contract between competing persons in a relevant market that would raise, lower or fix the prices of the products concerned¹. Article 22, as replaced by Law No. 56 of 2014, sets the fine for breaching Article 6 at no less than 2% and no more than 12% of total revenue from the product concerned during the period of the violation; where revenue cannot be calculated, the fine is between EGP 500,000 and EGP 500 million¹.

This is not only a concern for large companies. In November 2021 the Authority found that 21 owners of dermatology and cosmetic clinics had breached the law by agreeing among themselves to set and fix the prices of some medical and cosmetic services offered to consumers, and decided to take legal action against them⁸. So collect published prices yourself, set your price yourself, and do not enter any price agreement with competitors, even between small shops on the same street. If you have a question about a specific situation, ask a legal professional.

A competitor analysis template you can fill in

This is the table we suggest you start with. Put competitors in the columns and factors in the rows, and write the fact before the score:

Once the facts are in, give each competitor a score on each factor. The SCORE worksheet uses a three-point scale⁴; here 1 means weak and 3 means strong. Then give each factor a weight according to how much it matters to your customers, ideally taken from the answers of the customers you asked rather than your own opinion. Each competitor's weighted score is the sum of (factor score × weight).

Worked example: competitor analysis for a laundry

Illustrative example: all names and figures in this section are assumptions for explanation, not market prices or averages. Every result is calculated from these assumptions. The owner plans a laundry and ironing shop in a residential neighbourhood, open 26 days a month.

Step 1: who are the competitors?

• Competitor A: a long-established traditional ironing shop on the same street. Cheap, returns orders the next day, no delivery, and its reviews complain about late orders and lost items.
• Competitor B: a branch of a well-known laundry chain 600 metres away. More expensive, highly rated for quality, returns orders within 24 to 48 hours, delivers for a fee.
• Competitor C: an app-based laundry service that collects from the home and returns after 48 hours.
• Substitute: washing and ironing at home. Not scored in the table, but it is why many families send only shirts and suits.

Step 2: the weighted comparison table

The owner asked 20 neighbours what matters when choosing a laundry and arrived at these weights: price 30%, quality 25%, speed 20%, delivery 15%, opening hours 10%. He then scored each competitor from 1 to 3:

Example of the calculation: Competitor A = 3 × 0.30 + 1 × 0.25 + 2 × 0.20 + 1 × 0.15 + 2 × 0.10 = 0.90 + 0.25 + 0.40 + 0.15 + 0.20 = 1.90.

What does the table tell us? No competitor combines a reasonable price with same-day return. A is cheap but not same-day, sometimes late, and weak on quality, B is good but expensive, and C is convenient but takes 48 hours. That is the gap: same-day service at a mid-market price. Note, though, that the score for "my business" is a plan, not a fact. A 3 for speed is a promise whose cost must be carried in staff numbers and working hours; otherwise the real score is lower.

Step 3: price survey and choosing a price

The owner collected the prices of three main services from the three competitors by visiting, asking directly and reading published price lists (EGP per item):

He chose prices close to or slightly below the average, and clearly above Competitor A, because his intended advantage is speed and quality, not being cheapest. Assume a typical order is 6 items to iron, 2 items to wash and iron, and a suit about once every 3 orders (0.3 suits per order):

• Order value at my prices = 6 × 20 + 2 × 40 + 0.3 × 150 = 120 + 80 + 45 = EGP 245.
• Variable cost per order (detergent, water, machine electricity, packaging): EGP 4 per item ironed, EGP 12 per item washed and ironed, EGP 45 per suit. That is 6 × 4 + 2 × 12 + 0.3 × 45 = 24 + 24 + 13.5 = EGP 61.5. Because he will offer delivery, he assumes 40% of orders are delivered by a freelance courier at EGP 15 per order, an average of 0.4 × 15 = EGP 6 per order. Total variable cost is 61.5 + 6 = EGP 67.5.
• Contribution margin per order, the amount left after variable cost to cover fixed costs and then become profit: 245 − 67.5 = EGP 177.5.

Step 4: from field counts to expected orders

The owner stood outside Competitors A and B during the peak hour on three days and counted an average of 18 and 28 people going in per hour. Assuming the peak hour accounts for about 20% of a day's visits, daily visits are 18 ÷ 0.20 = 90 and 28 ÷ 0.20 = 140. Since roughly half of visits are to collect earlier orders, new orders are about 90 ÷ 2 = 45 and 140 ÷ 2 = 70 a day. For Competitor C he assumed 30 orders a day from the area; this is the weakest number in the analysis because it was not counted in the field. The total is about 145 orders a day.

If his orders come from customers who use these competitors today, 20 orders a day means taking 20 ÷ 145 = 13.8% of the area's orders, and 12 orders means 8.3%. The point is not the precision of the number but the question it forces: is taking about 14% of a whole neighbourhood's orders in the first year realistic for a new shop? What makes a customer leave their usual laundry and come to me? If the comparison table gives no convincing answer, use the lower figure. In this example we treat 20 orders as the base case because the gap in the comparison table is clear, but it remains an assumption to test; 12 orders is the pessimistic case.

Step 5: break-even and profit

Monthly fixed costs (assumed): rent EGP 15,000; wages for 3 workers including the employer's social-insurance share EGP 30,000; a part-time peak-hours worker to make same-day service possible EGP 6,000; fixed electricity and water EGP 5,000; marketing EGP 3,000; other expenses EGP 2,000. Total EGP 61,000.

• Break-even = 61,000 ÷ 177.5 = 343.7 orders, or 344 orders a month, about 13.2 a day.
• At 20 orders a day: 20 × 26 = 520 orders. Revenue = 520 × 245 = EGP 127,400. Operating profit = 520 × 177.5 − 61,000 = EGP 31,300.
• Margin of safety, the distance between expected sales and break-even, = (520 − 343.7) ÷ 520 = 33.9%.

Profit here means operating profit before equipment depreciation and maintenance, tax, any loan repayments, and the owner's own pay if he is not one of the three workers. All of these must be deducted in the full study.

If these calculations are new to you, the full explanation is in break-even point and working capital.

Step 6: what if we compete on price instead of speed?

A common temptation is "I'll be the cheapest and customers will come". Let us calculate what happens if the owner drops to Competitor A's prices (EGP 15, 35 and 120). The order value becomes 6 × 15 + 2 × 35 + 0.3 × 120 = EGP 196, variable cost stays at EGP 67.5, and the contribution margin falls to EGP 128.5. Break-even rises to 61,000 ÷ 128.5 = 474.7 orders, about 18.3 a day instead of 13.2.

The table shows why competitor analysis must come before the pricing decision. A lower price only raises profit if it brings in far more orders: at the mid-market price you need 344 orders to break even, at Competitor A's price you need 475. That is 38% more orders just to reach the same point. Worse, Competitor A may respond with a further cut, pulling you into a price war on a margin that cannot take it. In this example, the advantage the analysis uncovered, speed with reasonable quality, supports a mid-market price. Even at that price, the business loses EGP 5,620 a month in the pessimistic case, against EGP 20,908 at the low price. The right price reduces the risk but does not remove it, and capital must cover the early loss-making months until orders reach at least 13.2 a day.

What does the example tell us?

First, the most important output of the analysis was not the list of competitors but two numbers: a defensible price, and an order volume grounded in field counts. Second, every advantage you plan has a cost: same-day service added a part-time worker at EGP 6,000 a month, and delivery added EGP 6 per order; together they raised break-even from about 300 to 344 orders. Promising them to customers without costing them would make the study optimistic for no reason. Third, the weakest number in the analysis, Competitor C's orders, needs testing, because it changes the market-share estimate. If the market is larger or smaller than estimated, what changes is how realistic 20 orders a day is.

From analysis to pricing and positioning

Once you know where each competitor stands, you have to decide where you stand. OpenStax's marketing textbook defines product positioning as the process of deciding and communicating how an organisation wants its market to think and feel about a product or service⁹. A simple tool for this is the perceptual map: a visual diagram that shows how the average target customer perceives your product versus your competitors', using two determinant attributes on two axes⁹, such as price and quality, or price and speed.

Draw the two axes on paper and place each competitor according to your comparison table. In the laundry example, A sits in "cheap, not same-day", B in "expensive and good", and C in "mid-priced, slow to return, convenient". The empty space, "mid-priced and fast", is the proposed position for the new business.

Three ways to compete

OpenStax's management textbook describes Porter's generic strategies¹⁰:

• Cost leadership: offering customers your product or service at a lower price than your rivals¹⁰. It only works if your costs really are lower, not if you simply accept a thinner margin, as the example showed.
• Differentiation: adding value to your products and services to attract customers who are willing to pay a higher price¹⁰.
• Focus: concentrating your marketing and selling efforts on a smaller market than a broad cost leader or differentiator¹⁰, such as a suits-and-formalwear-only service for workers in an office district.

The same textbook says a firm has a competitive advantage when it successfully attracts more customers, earns more profit or returns more value to its owners than rival firms¹⁰. Note that the definition is about results, not about what you say about yourself. For choosing a price once you know your competitors' prices, see how to price a product.

Common mistakes in competitor analysis

1. "I have no competitors." Every customer solves their problem somehow today. If you find no direct competitor, look for the substitute; if you find no substitute, there may not be enough need.
2. Looking only at direct competitors. In our example, washing at home is why many families send only shirts and suits to a laundry, which shapes the size of the whole market.
3. Researching only from a desk. Online pages show what the competitor wants you to see. Visits and field counts show reality.
4. Scores without reasons. "3 for quality" without reviews or a test purchase is an opinion. Write the evidence next to each score.
5. Scoring yourself generously. Owners give their planned business top marks before it opens. Treat your own scores as promises that need a cost and a test.
6. Competing on price by default. As we saw, matching the cheapest competitor raised break-even from 344 to 475 orders.
7. Forgetting how competitors will react. A competitor will not stand still after you open. Ask what they would do if they lost 10% of their customers.
8. Doing it once. Competitors' prices, hours and services change. Update the table every few months and whenever a new competitor arrives.
9. Getting too close to competitors. Do not share your planned prices, costs or customer lists with competitors. Agreeing prices is prohibited by law, as explained above; if you are unsure about a particular step, ask a legal professional.

How competitor analysis feeds your feasibility study

The analysis is not a chapter added for appearance. It is the source of the study's most important assumptions:

• Price: comes from the price survey and your place on the perceptual map, not from cost alone. Record in the study the competitor prices your price is based on and the date you collected them.
• Sales volume: comes from estimating competitors' volume and the share you can take, with a convincing reason for customers to switch. In the example, 20 orders a day for the base case and 12 for the pessimistic case.
• Costs: every competitive advantage has a cost: an extra worker, delivery, longer hours. Put it in your costs before you promise it.
• The pessimistic scenario: should include competitors' reactions: a price cut, or a new branch nearby. Calculate the effect as we did in the price table.
• Time to reach target volume: customers do not switch on day one. Assume a gradual build-up of orders over the first months; this determines the capital you need until you break even.

To test your market-share assumption before spending capital, see practical methods in how to validate a business idea, and for the full picture of what a study contains, the feasibility study in Egypt 2026 guide.

How Kleverz helps

Kleverz is an AI-powered platform for feasibility studies. If you are still at the idea stage, the free idea check takes about 5 minutes and gives you a verdict (proceed, adjust, validate first or avoid), a Kleverz Score out of 100 across five dimensions, the top 3 risks, and a first step to take in the next 48 hours.

Once your competitor analysis has given you a price and an expected volume, the detailed study is built on the numbers you enter: price, direct cost, expected volume, team, city and capital. It calculates start-up costs and fixed monthly costs including the employer's social-insurance share, a month-by-month cash flow for the first 12 months and a yearly summary over three years, monthly break-even revenue and the units needed per product or service, the operating break-even month, the payback month, the deepest cash need and a recommended capital that adds a two-month reserve. It shows optimistic, realistic and pessimistic scenarios, the main risks, indicators to track and a week-by-week plan for the first month, and is delivered within 24 hours of payment confirmation, in Arabic or English. When you decide to go ahead, Maher Consulting Firm, the human consulting arm, handles company formation and procedures.

Frequently asked questions

Sources

1. Egyptian Competition Authority. قانون حماية المنافسة ومنع الممارسات الاحتكارية رقم 3 لسنة 2005 وتعديلاته — طبعة سبتمبر 2022 (in Arabic). Checked 2 November 2026.
2. OpenStax. Entrepreneurship — 5.3 Competitive Analysis (2020-01-16). Checked 2 November 2026.
3. OpenStax. Principles of Management — 8.4 A Firm's Micro Environment: Porter's Five Forces (2019-03-20). Checked 2 November 2026.
4. SCORE. Competitive Comparison Worksheet. Checked 2 November 2026.
5. Google Business Profile Help. Tips to get more reviews. Checked 2 November 2026.
6. DataReportal (Kepios). Digital 2026: Egypt (2025-11-08) — secondary source. Checked 2 November 2026.
7. Google Trends Help. FAQ about Google Trends data. Checked 2 November 2026.
8. Al-Mal News. «حماية المنافسة»: اتخاذ الإجراءات القانونية ضد 21 عيادة للجلدية والتجميل اتفقت على تحديد الأسعار (in Arabic) (2021-11-16) — secondary source. Checked 2 November 2026.
9. OpenStax. Principles of Marketing — 5.6 Product Positioning (2023-01-25). Checked 2 November 2026.
10. OpenStax. Principles of Management — 8.6 Competition, Strategy, and Competitive Advantage (2019-03-20). Checked 2 November 2026.