Market Analysis
The market analysis section of your business plan should
illustrate your industry and market knowledge as well as any of your research
findings and conclusions. This section is usually presented after the company description.
What to Include in Your Market
Analysis
Industry Description and Outlook – Describe your industry, including its current size and
historic growth rate as well as other trends and characteristics (e.g., life
cycle stage, projected growth rate). Next, list the major customer groups
within your industry.
Information About Your Target Market – Narrow your target market to a manageable size. Many
businesses make the mistake of trying to appeal to too many target markets.
Research and include the following information about your market:
Distinguishing characteristics – What are the critical needs of your potential
customers? Are those needs being met? What are the demographics of the
group and where are they located? Are there any seasonal or cyclical purchasing
trends that may impact your business?
Size of the primary target market – In addition to the size of your market, what data
can you include about the annual purchases your market makes in your industry?
What is the fore casted market growth for this group? For more information, see
our market research guide for tips and free government resources that can help
you build a market profile.
How much market share can you gain? – What is the market share percentage and number of
customers you expect to obtain in a defined geographic area? Explain the logic
behind your calculation.
Pricing and gross margin targets – Define your pricing structure,
gross margin levels, and any discount that you plan to use.
When you include information about any of the market tests
or research studies you have completed, be sure to focus only on the results of
these tests. Any other details should be included in the appendix.
Competitive Analysis –
Your competitive analysis should identify your competition by product line or
service and market segment. Assess the following characteristics of the
competitive landscape:
- Market
share
- Strengths
and weaknesses
- How
important is your target market to your competitors?
- Are
there any barriers that may hinder you as you enter the market?
- What
is your window of opportunity to enter the market?
- Are
there any indirect or secondary competitors who may impact your success?
- What
barriers to market are there (e.g., changing technology, high investment
cost, lack of quality personnel)?
Regulatory Restrictions –
Include any customer or governmental regulatory requirements affecting
your business, and how you’ll comply. Also, cite any operational or cost impact
the compliance process will have on your business.
Once you’ve completed this section, you can move
on to the Organization & Management section of your business
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