industry overview in business plan

Business Plan Example and Template

Learn how to create a business plan

What is a Business Plan?

A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing .

Business Plan - Document with the words Business Plan on the title

A business plan should follow a standard format and contain all the important business plan elements. Typically, it should present whatever information an investor or financial institution expects to see before providing financing to a business.

Contents of a Business Plan

A business plan should be structured in a way that it contains all the important information that investors are looking for. Here are the main sections of a business plan:

1. Title Page

The title page captures the legal information of the business, which includes the registered business name, physical address, phone number, email address, date, and the company logo.

2. Executive Summary

The executive summary is the most important section because it is the first section that investors and bankers see when they open the business plan. It provides a summary of the entire business plan. It should be written last to ensure that you don’t leave any details out. It must be short and to the point, and it should capture the reader’s attention. The executive summary should not exceed two pages.

3. Industry Overview

The industry overview section provides information about the specific industry that the business operates in. Some of the information provided in this section includes major competitors, industry trends, and estimated revenues. It also shows the company’s position in the industry and how it will compete in the market against other major players.

4. Market Analysis and Competition

The market analysis section details the target market for the company’s product offerings. This section confirms that the company understands the market and that it has already analyzed the existing market to determine that there is adequate demand to support its proposed business model.

Market analysis includes information about the target market’s demographics , geographical location, consumer behavior, and market needs. The company can present numbers and sources to give an overview of the target market size.

A business can choose to consolidate the market analysis and competition analysis into one section or present them as two separate sections.

5. Sales and Marketing Plan

The sales and marketing plan details how the company plans to sell its products to the target market. It attempts to present the business’s unique selling proposition and the channels it will use to sell its goods and services. It details the company’s advertising and promotion activities, pricing strategy, sales and distribution methods, and after-sales support.

6. Management Plan

The management plan provides an outline of the company’s legal structure, its management team, and internal and external human resource requirements. It should list the number of employees that will be needed and the remuneration to be paid to each of the employees.

Any external professionals, such as lawyers, valuers, architects, and consultants, that the company will need should also be included. If the company intends to use the business plan to source funding from investors, it should list the members of the executive team, as well as the members of the advisory board.

7. Operating Plan

The operating plan provides an overview of the company’s physical requirements, such as office space, machinery, labor, supplies, and inventory . For a business that requires custom warehouses and specialized equipment, the operating plan will be more detailed, as compared to, say, a home-based consulting business. If the business plan is for a manufacturing company, it will include information on raw material requirements and the supply chain.

8. Financial Plan

The financial plan is an important section that will often determine whether the business will obtain required financing from financial institutions, investors, or venture capitalists. It should demonstrate that the proposed business is viable and will return enough revenues to be able to meet its financial obligations. Some of the information contained in the financial plan includes a projected income statement , balance sheet, and cash flow.

9. Appendices and Exhibits

The appendices and exhibits part is the last section of a business plan. It includes any additional information that banks and investors may be interested in or that adds credibility to the business. Some of the information that may be included in the appendices section includes office/building plans, detailed market research , products/services offering information, marketing brochures, and credit histories of the promoters.

Business Plan Template

Here is a basic template that any business can use when developing its business plan:

Section 1: Executive Summary

Present the company’s mission.
Describe the company’s product and/or service offerings.
Give a summary of the target market and its demographics.
Summarize the industry competition and how the company will capture a share of the available market.
Give a summary of the operational plan, such as inventory, office and labor, and equipment requirements.

Section 2: Industry Overview

Describe the company’s position in the industry.
Describe the existing competition and the major players in the industry.
Provide information about the industry that the business will operate in, estimated revenues, industry trends, government influences, as well as the demographics of the target market.

Section 3: Market Analysis and Competition

Define your target market, their needs, and their geographical location.
Describe the size of the market, the units of the company’s products that potential customers may buy, and the market changes that may occur due to overall economic changes.
Give an overview of the estimated sales volume vis-à-vis what competitors sell.
Give a plan on how the company plans to combat the existing competition to gain and retain market share.

Section 4: Sales and Marketing Plan

Describe the products that the company will offer for sale and its unique selling proposition.
List the different advertising platforms that the business will use to get its message to customers.
Describe how the business plans to price its products in a way that allows it to make a profit.
Give details on how the company’s products will be distributed to the target market and the shipping method.

Section 5: Management Plan

Describe the organizational structure of the company.
List the owners of the company and their ownership percentages.
List the key executives, their roles, and remuneration.
List any internal and external professionals that the company plans to hire, and how they will be compensated.
Include a list of the members of the advisory board, if available.

Section 6: Operating Plan

Describe the location of the business, including office and warehouse requirements.
Describe the labor requirement of the company. Outline the number of staff that the company needs, their roles, skills training needed, and employee tenures (full-time or part-time).
Describe the manufacturing process, and the time it will take to produce one unit of a product.
Describe the equipment and machinery requirements, and if the company will lease or purchase equipment and machinery, and the related costs that the company estimates it will incur.
Provide a list of raw material requirements, how they will be sourced, and the main suppliers that will supply the required inputs.

Section 7: Financial Plan

Describe the financial projections of the company, by including the projected income statement, projected cash flow statement, and the balance sheet projection.

Section 8: Appendices and Exhibits

Quotes of building and machinery leases
Proposed office and warehouse plan
Market research and a summary of the target market
Credit information of the owners
List of product and/or services

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Building Your Business
Becoming an Owner
Business Plans

How to Write The Industry Section of a Business Plan

Writing a Business Plan: Section 2

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Geber86 / Getty Images

When writing a business plan, the Industry section is best organized as two parts: an overview of the industry and a summary of your business's position within the overall industry.

Before writing this section of the business plan, use these questions to focus your research:

What is the size of your industry?
What sectors does this industry include?
Who are the major players in this industry?
What are the markets and customers for this industry?
What are the industry's estimated sales this year? Last year? The year before?
What national and economic trends have affected this industry and how?
What national and economic trends might affect it in the future and how?
What is the long-term outlook for this industry?
What products or services will your business be selling?
What is your Unique Selling Proposition? (What is it about your business that makes it unique and sets it apart from competitors?)
What are the barriers to entry in your industry?
How will you overcome these barriers?
Who are your competitors?
What is the market share of your competitors?
What is your business's competitive advantage (i.e., your market niche or estimated market share)?
What is your target market?
How are you protecting your product or process (i.e., patents, copyrights, trademarks, franchise rights that you either hold or plan to acquire)?

Once you have all this information, you'll write this section of the business plan in the form of several short paragraphs. (Remember, each of these paragraphs is a summary, not a detailed point-by-point explanation.) Use appropriate headings for each paragraph.

Finding Information on Your Industry

But where do you find the information that you need for writing the Industry Overview section of your business plan?

United States Research

In the United States, you may want to start your research by reviewing information from the U.S. Census Bureau, Industry Statistics Portal. This site provides data for selected industries separated into categories using the North American Industry Classification System (NAICS). The Bureau of Labor Statistics also offers a large selection of information grouped by NAICS industry.

There are also other sources of information—some free and some paid sources—including IBIS World, Select USA, and the U.S. the Department of Commerce Bureau of Economic Analysis.

Canadian Research

When you're writing a business plan and looking for information on Canadian industries, Industry Canada is your logical first stop. Their Find Statistics by Industry page lets you see key economic indicators for different sectors of the Canadian economy, access industry profiles, and analysis and research small businesses in Canada generally.

Another primary source for industry and economic information that you can easily access online when you're writing a business plan is Statistics Canada. From this homepage you can find a wealth of free statistical information; use this page, to search for Statistics Canada publications back to 1980.

There are also provincial statistics websites where you'll be able to find more economic, social, and demographic statistics relating to your industry and the business environment.

The Canada Business Service Centres located in each province also offer excellent collections of resources online, and telephone and email information services. You'll find a list of links to the Canada Business Service Centre in each province in my Provincial Programs and Services Resources.

The business sections of national newspapers and business magazines will also be helpful; these often carry features on the past and future business trends.

And don't forget your local sources of business information when you're researching your business plans, such as your Economic Development Centre, Chamber of Commerce, or Women's Enterprise Centre, or the business section of the local library.

Doing Business Plan Research

If your business is related to manufacturing when you're writing a business plan begin by determining the NAICS of your particular industry, and the sector and sub-sector if applicable. It will make it easier for you to find statistical information relating to your industry. If your business is a service, begin with Industry Canada's service industry profiles.

Refer to the list of questions earlier in this article on how to write a business plan as a research guide. Whenever you find a piece of information that you want:

Check its date and determine whether or not the information is current enough to be valid;
Write down the date and source of the information, as you'll need to cite your information sources in the business plan.

When you're writing a business plan, you want your research information to be as up-to-date as possible. After all, there's no point in starting a business if you don't want it to succeed.

Analyze your market like a pro with this step-by-step guide + insider tips

Don’t fall into the trap of assuming that you already know enough about your market.

No matter how fantastic your product or service is, your business cannot succeed without sufficient market demand .

You need a clear understanding of who will buy your product or service and why .

You want to know if there is a clear market gap and a market large enough to support the survival and growth of your business.

Industry research and market analysis will help make sure that you are on the right track .

It takes time , but it is time well spent . Thank me later.

WHAT is Market Analysis?

The Market Analysis section of a business plan is also sometimes called:

Market Demand, Market Trends, Target Market, The Market
Industry Analysis & Trends, Industry & Market Analysis, Industry and Market Research

WHY Should You Do Market Analysis?

First and foremost, you need to demonstrate beyond any reasonable doubt that there is real need and sufficient demand for your product or service in the market, now and going forward.

What makes you think that people will buy your products or services?
Can you prove it?

Your due diligence on the market opportunity and validating the problem and solution described in the Product and Service section of your business plan are crucial for the success of your venture.

Also, no company operates in a vacuum. Every business is part of a larger overall industry, the forces that affect your industry as a whole will inevitably affect your business as well.

Evaluating your industry and market increases your own knowledge of the factors that contribute to your company’s success and shows the readers of your business plan that you understand the external business conditions.

External Support

In fact, if you are seeking outside financing, potential backers will most definitely be interested in industry and market conditions and trends.

You will make a positive impression and have a better chance of getting their support if you show market analysis that strengthens your business case, combining relevant and reliable data with sound judgement.

Let’s break down how to do exactly that, step by step:

HOW To Do Market Analysis: Step-by-Step

So, let’s break up how market analysis is done into three steps:

Industry: the total market
Target Market: specific segments of the industry that you will target
Target Customer: characteristics of the customers that you will focus on

Step 1: Industry Analysis

How do you define an industry.

For example, the fashion industry includes fabric suppliers, designers, companies making finished clothing, distributors, sales representatives, trade publications, retail outlets online and on the high street.

How Do You Analyze an Industry?

Briefly describe your industry, including the following considerations:

1.1. Economic Conditions

Outline the current and projected economic conditions that influence the industry your business operates in, such as:

Official economic indicators like GDP or inflation
Labour market statistics
Foreign trade (e.g., import and export statistics)

1.2. Industry Description

Highlight the distinct characteristic of your industry, including:

Market leaders , major customer groups and customer loyalty
Supply chain and distribution channels
Profitability (e.g., pricing, cost structure, margins), financials
Key success factors
Barriers to entry preventing new companies from competing in the industry

1.3. Industry Size and Growth

Estimate the size of your industry and analyze how industry growth affects your company’s prospects:

Current size (e.g., revenues, units sold, employment)
Historic and projected industry growth rate (low/medium/high)
Life-cycle stage /maturity (emerging/expanding/ mature/declining)

1.4. Industry Trends

Industry Trends: Describe the key industry trends and evaluate the potential impact of PESTEL (political / economic / social / technological / environmental / legal) changes on the industry, including the level of sensitivity to:
Seasonality
Economic cycles
Government regulation (e.g. environment, health and safety, international trade, performance standards, licensing/certification/fair trade/deregulation, product claims) Technological change
Global Trends: Outline global trends affecting your industry
Identify global industry concerns and opportunities
International markets that could help to grow your business
Strategic Opportunity: Highlight the strategic opportunities that exist in your industry

Step 2: Target Customer Identification

Who is a target customer.

One business can have–and often does have–more than one target customer group.

The success of your business depends on your ability to meet the needs and wants of your customers. So, in a business plan, your aim is to assure readers that:

Your customers actually exist
You know exactly who they are and what they want
They are ready for what you have to offer and are likely to actually buy

How Do You Identify an Ideal Target Customer?

2.1. target customer.

Identify the customer, remembering that the decision-maker who makes the purchase can be a different person or entity than the end-user.

2.2. Demographics

For consumers ( demographics ): Age, gender, income, occupation, education, family status, home ownership, lifestyle (e.g., work and leisure activities)
For businesses ( firmographic ): Industry, sector, years in business, ownership, size (e.g., sales, revenues, budget, employees, branches, sq footage)

2.3. Geographic Location

Where are your customers based, where do they buy their products/services and where do they actually use them

2.4 Purchasing Patterns

Identify customer behaviors, i.e., what actions they take
how frequently
and how quickly they buy

2.5. Psychographics

Identify customer attitudes, i.e., how they think or feel
Urgency, price, quality, reputation, image, convenience, availability, features, brand, customer service, return policy, sustainability, eco-friendliness, supporting local business
Necessity/luxury, high involvement bit ticket item / low involvement consumable

Step 3: Target Market Analysis

What is a target market.

Target market, or 'target audience', is a group of people that a business has identified as the most likely to purchase its offering, defined by demographic, psychographic, geographic and other characteristics. Target market may be broken down to target customers to customize marketing efforts.

How Do You Analyze a Target Market?

So, how many people are likely to become your customers?

To get an answer to this questions, narrow the industry into your target market with a manageable size, and identify its key characteristics, size and trends:

3.1. Target Market Description

Define your target market by:

Type: B2C, B2B, government, non-profits
Geographic reach: Specify the geographic location and reach of your target market

3.2. Market Size and Share

Estimate how large is the market for your product or service (e.g., number of customers, annual purchases in sales units and $ revenues). Explain the logic behind your calculation:

TAM (Total Available/Addressable/Attainable Market) is the total maximum demand for a product or service that could theoretically be generated by selling to everyone in the world who could possibly buy from you, regardless of competition and any other considerations and restrictions.
SAM (Serviceable Available Market) is the portion of the TAM that you could potentially address in a specific market. For example, if your product/service is only available in one country or language.
SOM (Service Obtainable Market / Share of Market) is the share of the SAM that you can realistically carve out for your product or service. This the target market that you will be going after and can reasonably expect to convert into a customer base.

3.3. Market Trends

Illustrate the most important themes, changes and developments happening in your market. Explain the reasons behind these trends and how they will favor your business.

3.4. Demand Growth Opportunity

Estimate future demand for your offering by translating past, current and future market demand trends and drivers into forecasts:

Historic growth: Check how your target market has grown in the past.
Drivers past: Identify what has been driving that growth in the past.
Drivers future: Assess whether there will be any change in influence of these and other drivers in the future.

How Big Should My Target Market Be?

Well, if the market opportunity is small, it will limit how big and successful your business can become. In fact, it may even be too small to support a successful business at all.

On the other hand, many businesses make the mistake of trying to appeal to too many target markets, which also limits their success by distracting their focus.

What If My Stats Look Bad?

Large and growing market suggests promising demand for your offering now and into the future. Nevertheless, your business can still thrive in a smaller or contracting market.

Instead of hiding from unfavorable stats, acknowledge that you are swimming against the tide and devise strategies to cope with whatever lies ahead.

Step 4: Industry and Market Analysis Research

The market analysis section of your business plan should illustrate your own industry and market knowledge as well as the key findings and conclusions from your research.

Back up your findings with external research sources (= secondary research) and results of internal market research and testing (= primary research).

What is Primary and Secondary Market Research?

Yes, there are two main types of market research – primary and secondary – and you should do both to adequately cover the market analysis section of your business plan:

Primary market research is original data you gather yourself, for example in the form of active fieldwork collecting specific information in your market.
Secondary market research involves collating information from existing data, which has been researched and shared by reliable outside sources . This is essentially passive desk research of information already published .

Unless you are working for a corporation, this exercise is not about your ability to do professional-level market research.

Instead, you just need to demonstrate fundamental understanding of your business environment and where you fit in within the market and broader industry.

Why Do You Need To Do Primary & Secondary Market Research?

There are countless ways you could go collecting industry and market research data, depending on the type of your business, what your business plan is for, and what your needs, resources and circumstances are.

For tried and tested tips on how to properly conduct your market research, read the next section of this guide that is dedicated to primary and secondary market research methods.

In any case, tell the reader how you carried out your market research. Prove what the facts are and where you got your data. Be as specific as possible. Provide statistics, numbers, and sources.

When doing secondary research, always make sure that all stats, facts and figures are from reputable sources and properly referenced in both the main text and the Appendix of your business plan. This gives more credibility to your business case as the reader has more confidence in the information provided.

Go to the Primary and Secondary Market Research post for my best tips on industry, market and competitor research.

7 TOP TIPS For Writing Market Analysis

1. realistic projections.

Above all, make sure that you are realistic in your projections about how your product or service is going to be accepted in the market, otherwise you are going to seriously undermine the credibility of your entire business case.

2. Laser Focus

Discuss only characteristic of your target market and customers that are observable, factual and meaningful, i.e. directly relate to your customers’ decision to purchase.

Always relate the data back to your business. Market statistics are meaningless until you explain where and how your company fits in.

For example, as you write about the market gap and the needs of your target customers, highlight how you are uniquely positioned to fill them.

In other words, your goal is to:

Present your data
Analyze the data
Tie the data back to how your business can thrive within your target market

3. Target Audience

On a similar note, tailor the market analysis to your target audience and the specific purpose at hand.

For example, if your business plan is for internal use, you may not have to go into as much detail about the market as you would have for external financiers, since your team is likely already very familiar with the business environment your company operates in.

4. Story Time

Make sure that there is a compelling storyline and logical flow to the market information presented.

The saying “a picture is worth a thousand words” certainly applies here. Industry and market statistics are easier to understand and more impactful if presented as a chart or graph.

6. Information Overload

Keep your market analysis concise by only including pertinent information. No fluff, no repetition, no drowning the reader in a sea of redundant facts.

While you should not assume that the reader knows anything about your market, do not elaborate on unnecessary basic facts either.

Do not overload the reader in the main body of the business plan. Move everything that is not essential to telling the story into the Appendix. For example, summarize the results of market testing survey in the main body of the business plan document, but move the list of the actual survey questions into the appendix.

7. Marketing Plan

Note that market analysis and marketing plan are two different things, with two distinct chapters in a business plan.

As the name suggests, market analysis examines where you fit in within your desired industry and market. As you work thorugh this section, jot down your ideas for the marketing and strategy section of your business plan.

Final Thoughts

Remember that the very act of doing the research and analysis is a great opportunity to learn things that affect your business that you did not know before, so take your time doing the work.

Why are Industry & Market Research and Analysis IMPORTANT?

Industry and market research and analysis are important because they allow you to gain knowledge of the industry, the target market you are planning to sell to, and your competition, so you can make informed strategic decisions on how to make your business succeed.

How Can Industry & Market Research and Analysis BENEFIT a Business?

Industry and market research and analysis benefit a business by uncovering opportunities and threats within its environment, including attainable market size, ideal target customers, competition and any potential difficulties on the company’s journey to success.

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How To Develop the Industry Analysis of Your Business Plan

Just like other key success factors of your business plan , the industry analysis section explains why your new or growing business is valuable to investors or lenders. The word, “analysis” doesn’t mean you’ll have to research in libraries or collect statistics from all over the world; it only means readers will be able to learn some facts about the industry in which your business operates. Why is this important? The industry analysis facts help explain why an investment in your business is a good idea for important reasons.

What Is The Industry Analysis In A Business Plan?

The industry analysis is a collection of facts that build the story of your business and the industry within which it operates. An industry analysis usually contains some details about the size of the industry. It will offer numbers that show how active the industry is overall and how much it’s growing. An industry analysis may also include industry trends and information about the competitive landscape. Along with other facts, the industry analysis will outline why your business is a solid opportunity for investors or lenders and this is why it is an important part of your business plan.

Here’s what you should know about creating an industry analysis: it’s not hard to do. In the following paragraphs, we will walk you through the places where you can find information and you’ll see how to set up the industry analysis like a pro. Use this analysis to show investors or lenders how much you know about the industry in which your own business operates.

Industry Analysis vs. Market Analysis

While building your industry analysis, you’ll probably find terms like “market analysis” or “market trends.” Where do these terms fit into an industry analysis? Let’s first look at the term, “industry analysis.” Think of the industry in which your business operates as an entire world. It is made up of businesses that are like yours or similar to yours. An industry analysis is the “big picture” view of a particular kind of business in a national or even global view.

If an industry analysis is the big picture, a “market analysis” is just one part of that big picture. A market analysis usually shows facts about two key areas within business: potential customers and major competitors of your business. There are several parts to your industry analysis, which you’ll build in the following section, but the market analysis is especially important to investors or lenders. It is a forecast of the potential success of your business.

Key Components of an Industry Analysis

There are several parts inside the “big picture” of an industry analysis; however, you only need to include those that relate to your business and industry. To help make this analysis easy to build, you’ll find the “key components” of an industry analysis listed here. While these are all important, if you are in an industry that needs more explanation, you can add analysis facts to this section, as well. The main idea here is to showcase the industry in which your business operates and detail why your business in this industry is a winning opportunity for investors or lenders.

First, read about the key components that you will place in an effective industry analysis. You’ll find out why each is important to the readers of your business plan. Then, in the following section, find what you will need to complete each key component in your industry analysis.

Industry Overview

The overview is a general look at your industry. Explain what you know about the industry. What products or services are sold? Is this industry worldwide or within the US? This section is a few sentences of explanation about the industry overall.

Industry Size

The size of the industry will tell readers just how big your business might become. It tells readers there is an audience of buyers who want the products or services sold and it suggests that there is potential in the industry for new products, new technology, and new ideas.

Market Size

The target market size relates only to two factors: the potential customers of your business and the main competitors of your business. This is not a highly-detailed examination, but it should be a specific one. You’ll want to include the most reliable facts possible to help investors or lenders understand the potential of your business.

Industry Rate of Growth

The rate of growth shows the age of any particular industry. Investors use it to gauge how much potential might be in a business. If the industry is in a fast-paced growth stage, a mature stage, or a declining stage, readers will want this information to make informed strategic decisions about the health of the industry.

Market Trends

In this section, you’ll show facts about trends among customers in the industry in general. For example, if you own a coffee shop, are industry suppliers suggesting customers want more varieties of coffee from which to choose? Are coffee shop owners in general bringing in new business with drive-through service? These kinds of details tell part of the industry story as it relates to customers in general.

Competitors

Every growing industry has competition among businesses and, while it is a positive sign for industry growth, it can also signal challenges and obstacles for new or growing businesses. Offering facts about the status of competition in your industry, including their strengths and weaknesses, pricing strategies, and marketing strategies, will help readers understand the health of your competitors in the industry.

Market Challenges

Just as there are always opportunities, there are also always challenges to an industry. This may include government regulations, labor laws, union requirements, or other issues that are challenges for the success of the industry overall. These should be included in your industry analysis report to give a full understanding to readers of the current status of the industry.

Strategies and Strengths

This key component of your industry analysis looks at strategies that may be used to overcome challenges. It also sketches out how the strengths of the industry meet any obstacles within the industry.

How To Write An Industry Analysis For Your Business

Each key component for a comprehensive industry analysis is defined above. However, these components cannot be presented in your business plan unless you know how to find the information you need. The following is an “action list” with resources you can search to find the information for each key component. In no time, you’ll be a pro at finding the information and facts you need to write your industry analysis.

1. Action Step: Industry Overview

To find basic facts about the industry in which your business operates, conduct an online search to discover various websites that hold industry information. Look for industry information in:

National trade associations
Labor unions
Governmental agencies
National advertising firms
Business database groups
National business associations

2. Action Step: Industry Size

The size of the industry in which your business operates may be a major consideration for investors or lenders. You may offer historical growth, projected growth, global growth or local growth rates. It is preferable for industries to show thriving businesses and growing numbers; however, it is also important to note that newly-established industry groups are often intriguing and inviting to investors. Use specific industry size facts from reliable sources in this section of your industry analysis.

Look for industry information in:

Governmental agencies (Economic Census, Bureau of Labor Statistics)
Competitor information
Manufacturing reports

3. Action Step: Market Size

The market size for your business will be a more detailed look at your business competition than the larger industry size research. You’ll want to search for verifiable facts and statistics online and via trade association information.

IBISWorld (reliable, paid-subscription)
Statista (online portal)
D&B Hoovers (industry/business directory)
Trade associations
Industry manufacturing reports

4. Action Step: Industry Rate of Growth

This important fact will tell a crucial story to investors or lenders: the rate of growth, year over year, will suggest a rapid growth industry, a mature industry, or a declining industry. Search for reliable information for the year prior to the current one (i.e. if 2024, look at 2023):

Trade association magazines
Government reports or filings
Market watch reports
Advertising/marketing reports

5. Action Step: Market Trends

If you are unsure of the industry trends, look at recent business magazines for updated or new information and check the following resources for news:

Online search of competitors
Union and labor group associations
Industry trade magazines

6. Action Step: Competitors

If you are unsure of who your business competitors are or where they are located, this is the perfect time to conduct market research to find these details. Note how big their businesses might be, when they were each established, who owns the companies, how many employees they have, and add any details regarding yearly revenues that can be found. Also, note any signs of growth or loss in the competitor businesses. Look in the following for information:

Local business groups
City or state governmental information
Businesses that may want to collaborate with yours

7. Action Step: Market Challenges

Every business has challenges from competitors, growth trends, shifting business suppliers, and other variables. List these for potential investors or lenders. Acknowledge the challenges, and explain your strategy for overcoming each challenge. In this way, readers will understand that you’ve pre-determined a course or action by forecasting the challenge and preparing for it. This is the type of decision-making and leading that investors and lenders want to see.

8. Action Step: Strategies and Strengths

To complement your strategies to meet any market challenges, list ways in which you will use the strengths of your business to put solid growth plans into place and meet those business objectives and goals. Indicate any strategies you’ve designed to overcome competitor advantages and outline the competitive edge or unique value your business will offer over others. In this key component, allow your own vision and goals to shine for readers.

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How to Conduct an Industry Analysis

Female entrepreneur in a carpentry shop working on cutting a piece of wood. She has a firm understanding of her industry to grow her business.

8 min. read

Updated March 18, 2024

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I bet you agree: You need to know the industry you want to start a business in, and the kind of business you want to start, before you can start it.

Industry analysis is part of good management. That’s not just for the business planning, but rather for business survival, beginning to end. Most of the people who successfully start their own business have already had relevant business experience before they start, most often as employees.

But in this article, I focus on how to consolidate and formalize that industry knowledge into a formal business plan .

Although all business owners need to know their industry, the documented details and explanations are mainly for when you’re writing a business plan you need to show to outsiders, like bank lenders or investors . You’ll need to do some industry analysis so you’re able to explain the general state of your industry, its growth potential, and how your business model fits into the landscape.

And if your business plan is more of an internal strategic roadmap, you should still be very sure—whether you have to prove it to others or not—that you know your market, even if you don’t do a formal industry analysis. Whether you’re a service business, manufacturer, retailer, or something else, you want to know your industry inside and out.

What to cover in your industry analysis

Whether you write it all out in a formal business plan or not, when you’re doing your industry analysis, you’re looking at the following:

Industry participants
Distribution patterns
Competition and buying patterns

Everything in your industry that happens outside of your business will affect your company. The more you know about your industry, the more advantage and protection you will have.

A complete business plan discusses:

General industry economics
Participants
Factors in the competition
And whatever else describes the nature of your business to outsiders

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A note on finding industry information

The internet has had an enormous impact on the state of business information. Finding information isn’t really the problem anymore, after the information explosion and the huge growth in the internet beginning in the 1990s and continuing in the 21st century.

Even 10 or 15 years ago, dealing with information was more a problem of sorting through it all than of finding raw data. That generality is truer every day. There are websites for business analysis, financial statistics, demographics, trade associations, and just about everything you’ll need for a complete business plan.

You should know who else sells in your market. You can’t easily describe a type of business without describing the nature of the participants. There is a huge difference, for example, between an industry like broadband television services, in which there are only a few huge companies in any one country, and one like dry cleaning, in which there are tens of thousands of smaller participants.

This can make a big difference to a business and a business plan. The restaurant industry, for example, is what we call “pulverized,” meaning that it, like the dry cleaning industry, is made up of many small participants. The fast-food business, on the other hand, is composed of a few national brands participating in thousands of branded outlets, many of them franchised .

Economists talk of consolidation in an industry as a time when many small participants tend to disappear and a few large players emerge. In accounting, for example, there are a few large international firms whose names are well-known, and tens of thousands of smaller firms. The automobile business is composed of a few national brands participating in thousands of branded dealerships, and in computer manufacturing, for example, there are a few large international firms whose names are well-known, and thousands of smaller firms.

Products and services can follow many paths between suppliers and users.

Explain how distribution works in your industry:

Is this an industry in which retailers are supported by regional distributors, as is the case for computer products, magazines, or auto parts?
Does your industry depend on direct sales to large industrial customers?
Do manufacturers support their own direct sales forces, or do they work with product representatives?

Some products are almost always sold through retail stores to consumers, and sometimes these are distributed by distribution companies that buy from manufacturers. In other cases, the products are sold directly from manufacturers to stores. Some products are sold directly from the manufacturer to the final consumer through mail campaigns, national advertising, or other promotional means.

In many product categories, there are several alternatives, and distribution choices are strategic.

Amazon made direct delivery a huge competitive advantage, especially in its earlier years. Doordash and competitors chose to be intermediaries between restaurants and customers, and several businesses offer prepackaged meal ingredients delivered with instructions for finishing the preparations in the consumers’ kitchens. Now major grocery chains offer grocery delivery. Red Box made a strategy of DVDs in kiosks. An entire industry of food delivery options gives consumers choices like restaurant meals or fresh meals ingredients being delivered. Many products are distributed through direct business-to-business (B2B) sales and in long-term contracts such as the ones between car manufacturers and their suppliers of parts, materials, and components. In some industries, companies use representatives, agents, or commissioned salespeople.

Technology can change the patterns of distribution in an industry or product category. The internet, for example, changed options for software distribution, books, music, and other products. Cable communication first, and more recently streaming, changed the options for distributing video products and video games. Some kinds of specialty items sell best with late-night infomercials on television, but others end up working on the web instead of television.

Distribution patterns may not be as critical to most service companies, because distribution is normally about physical distribution of specific physical products such as a restaurant, graphic artist, professional services practice, or architect.

For a few services, the distribution may still be relevant. A phone service, cable provider, or an internet provider might describe distribution related to physical infrastructure. Some publishers may prefer to treat their business as a service, rather than a manufacturing company, and in that case distribution may also be relevant.

It is essential to understand the nature of competition in your market. This is still in the general area of describing the industry or type of business.

Explain the general nature of competition in this business, and how the customers seem to choose one provider over another:

What are the keys to success?
What buying factors make the most difference—is it price? Product features? Service? Support? Training? Software? Delivery dates?
Are brand names important?

In the computer business, for example, competition might depend on reputation and trends in one part of the market, and on channels of distribution and advertising in another. In many business-to-business industries, the nature of competition depends on direct selling, because channels are impractical.

Price is vital in products competing with each other on retail shelves, but delivery and reliability might be much more important for materials used by manufacturers in volume, for which a shortage can affect an entire production line.

In the restaurant business, for example, competition might depend on reputation and trends in one part of the market, and on location and parking in another.

In many professional service practices, the nature of competition depends on word of mouth, because advertising is not completely accepted. Is there price competition between accountants, doctors, and lawyers? How powerful are the insurance decisions in medicine, like in or out of network? How do people choose travel agencies or florists for weddings? Why does someone hire one landscape architect over another? Why choose Starbucks, a national brand, over the local coffee house? All of this is the nature of competition.

The key to your specific industry analysis is a collection of decisions and educated guesses you’ll probably have to make for yourself. There are few pat answers. Maybe it’s easy parking, a great location, great reviews on Amazon or Yelp, or recommendations on social media. You can’t necessarily look this up. It’s the kind of educated guessing that makes some businesses more successful than others.

Main competitors

Do a very complete analysis of your main competitors. Make a list, determining who your main competitors are. What are the strengths and weaknesses of each?

Consider your competitors’:

Financial position
Channels of distribution
Brand awareness
Business development
Technology, or other factors that you feel are important
In what segments of the market do they operate? What seems to be their strategy? How much do they impact your products, and what threats and opportunities do they represent?

Finding competitive information

Competitive research starts with a good web search. Look up competitors’ websites and social media, then search for mentions, reviews, announcements, and even vacancies and job search information. An amazing array of competitive information is posted in plain sight, where anybody can find it.

From, there, for a good review of additional sources of information, I suggest Practical Market Research Resources for Entrepreneurs , also here on Bplans.

Competitive matrix

A lot of businesses organize competitive analysis into a competitive matrix. The standard competitive matrix shows how different competitors stack up according to significant factors.

Some people also use a SWOT analysis to think about competition in terms of opportunities and threats, the “OT” of SWOT. Opportunities and threats are generally taken as externals, which would include competition, so it’s valuable to run a SWOT analysis on your business to help figure this out.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

7 Min. Read

Target Market Examples

10 Min. Read

How to Create a Detailed User or Buyer Persona

3 Min. Read

How to Use TAM, SAM, SOM to Determine Market Size

9 Min. Read

How to Write a Customer Analysis

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First Steps: Writing the Industry Section of Your Business Plan This quick guide offers tips that will help you create the industry section for your business plan.

By Teresa Ciulla Jan 4, 2015

Opinions expressed by Entrepreneur contributors are their own.

In their book Write Your Business Plan , the staff of Entrepreneur Media, Inc. offer an in-depth understanding of what's essential to any business plan, what's appropriate for your venture, and what it takes to ensure success. In this edited excerpt, the authors outline what type of details you should include in the industry section of your business plan.

It isn't enough to just work hard. If you're in the wrong industry at the wrong time, making your business grow is going to be difficult. The investment community tends to believe that any business can be buoyed by an industry on the rise and that the opposite is true in an industry whose tide is ebbing. This means it's important for you to include an industry analysis in your business plan.

Readers of your business plan may want to see an industry on a fast-growth track with few established competitors and great potential. Or they may be more interested in a big, if somewhat slower-growing, market with competitors who have lost touch with the market, leaving the door open for rivals.

Whatever the facts are, you'll need to support them with a snapshot analysis of the state of your industry and any trends taking place. This can't be mere off-the-cuff thinking. You need to support your opinions with market research that identifies specific competitors and outlines their weaknesses and strengths and any barriers to entry into the market. You need to describe why your industry is valuable and how it will continue to be important. Finally, and perhaps most important, you'll have to convincingly describe what makes you better and destined to succeed.

When preparing the state of the industry section, instead of looking at your business as a self-contained system, you'll describe the whole industry in which you operate and point to your position in that universe. You then zero in on your country, your state and your local community, deepening on how far your business stretches.

This part of your plan may take a little more legwork than other sections because you'll be drawing together information from a number of outside sources. You may also be reporting on or even conducting your own original research into industry affairs.

To start preparing your industry analysis and outlook, dig up the following facts about your field:

1. What is your total industry-wide sales volume? In dollars? In units?

2. What are the trends in sales volumes within your industry?

3. Who are the major players and your key competitors? What are they like?

4. What does it take to compete? What are the barriers to entry?

5. What technological trends affect your industry?

6. What are the main modes of marketing?

7. How does government regulation affect the industry?

8. In what ways are changing consumer tastes affecting your industry?

9. Identify recent demographic trends affecting the industry.

10. How sensitive is the industry to seasons and economic cycles?

11. What are key financial measures in your industry (average profit margins, sales commissions, etc.)?

If your business addresses a trend before it's been widely recognized, you need to include this information in your business plan. Providing some statistics in the trends section of your plan can make it more convincing.

Barriers to Entry

If you want to become a semiconductor manufacturer, you'll need a billion-dollar factory or two. If you want to have a TV network, you'll need programming and cable carriage in the major markets. These problems are called barriers to entry, and they exist to some extent in all industries. The barriers may be monetary, technological, distribution or market-related, or they may simply be a matter of ownership of prime real estate.

An important part of analyzing your market is determining what the barriers to entry are and how high they stretch. If the barriers are high, as is the case with automobile manufacturing, you can be assured new competitors are likely to be slow in springing up. If the barriers are low, such as opening a nail salon, which doesn't have a huge overhead, you have more opportunity to get into the game.

Be alert for innovative competitors when writing the section of your plan in which you analyze barriers to entry. Clearly some markets are also more saturated than others, and today some are dominated by the McDonald's of their industry. For example, it's hard to open a bookstore today with Amazon changing the way people buy books. In that industry, you need to be creative and explore entry into specialty books, mystery books or another niche within the larger market. Exploring entry points in the marketplace carefully will save you from a disastrous error and will certainly demonstrate to investors that you've thought your plan through and aren't jumping to conclusions.

Identifying Competitors

You're not alone, even if you have a one-person business. You also have your competition to worry about, and your backers will worry about competition, too. Even if you're truly in the rare position of addressing a brand-new market where no competition exists, most experienced people reading your plan will have questions about companies they suspect may be competitors. For these reasons, you should devote a special section of your plan to identifying competitors.

If you had to name two competitors in the athletic shoe market, you'd quickly come up with Nike and Reebok. But these by far aren't the only competitors in the sneaker business. They're just two of the main ones, and depending on the business you're in, the other ones may be more important. If you sell soccer shoes, for instance, Adidas is a bigger player than either of the two American firms. And smaller firms such as Etonic, New Balance and Saucony also have niches where they are comparatively powerful.

You can develop a list of competitors by talking to customers and suppliers, checking with industry groups, and reading trade journals. But it's not enough to simply name your competitors. You need to know their manner of operation, how they compete.

Does a competitor stress a selective, low-volume, high-margin business, or does she emphasize sales growth at any cost, taking every job that comes along, whether or not it fits any coherent scheme or offers an attractive profit? Knowing this kind of information about competitors can help you identify their weaknesses as well as their names.

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How to Write a Business Plan Industry Analysis

How do you conduct industry analysis for a business plan? Do you need help conducting market research and industry analysis for your business plan? Then I advice you read on. So you have a great business idea, you have refined and fine-tuned it, and you are ready to launch. You are going to offer a product or service with a clearly defined customer base, and you are confident that you will be successful in the long term.

Well, if the above applies perfectly to you, then you have not completed your assignment. What happens when you enter an examination hall without having studied for the exam at all? You’d spend all your time in the hall blaming yourself for being silly, right? Now, starting a business is even much more important because there’s a lot more at stake than passing or failing a grade. So, you must not leave out any aspect of research undone.

In this section of your business plan, you will demonstrate that the industry’s market size is worth going after, who your main competitors will be if you decide to take a plunge, and how you will be able to carve out a niche for yourself and give your competitors a run for their money. Planning a business goes beyond analyzing the potential of your offer. You must analyze the following three factors as well:

The strengths and weaknesses of your business
The competition
Who your customers are, what they want, and how they want it

These are the major components of a business plan’s market or industrial analysis and it is also known as a SWOT (Strength, Weaknesses, Opportunities and Threats) analysis. This section of your business plan reveals the chances of your business to achieve success with its offers. And that’s why the industry analysis is a very important section of your business plan, which must be carefully conducted and documented.

So in this article, we will be looking at how to conduct industry analysis for a business plan. If you are a budding entrepreneur, or you are planning to start a new business; then below are the exact steps to follow when conducting an industry analysis for a new business:

How to Conduct Industry Analysis for a Business Plan

1. analyze the competition.

Of the three factors listed above, the competition may prove the most difficult to analyze, especially if you are new to the industry. But there are ways to simplify the task. You can start by looking at your direct competitors. If you are planning to start a new restaurant in an area, your direct competitors are other restaurants within that locality, while your indirect competitors are those that are slightly remote but still around.

Now, you are not just counting the number of rivals you have. You are trying to see how you can push ahead of them by filling a loophole they never noticed all these while. Some people find it hard to leave their workplace for the restaurant at lunchtime, but it’s either they do it or go hungry. You can disrupt the market’s status quo by offering to deliver lunch to people right in their workplaces. Filling loopholes like this one should be your goal.

If you don’t device strategies for pushing ahead of the competition, you will just enter the industry and join the survival race that you may never win. So, you need to introduce an innovation that will threaten your rivals. Remember, it’s either you differentiate or you fizzle out fast!

2. Assess the industry / market size

After analyzing your direct and indirect competitors, you will need to analyze your chances of standing firm even in the face of stiffer competition. Your first step in market research is to get an idea of how big the opportunity is and why it’s worth going after.

This means finding out how many customers you are catering to and much revenue you are likely to make. This is a convincing first step to lure in whoever is reading your business plan to become intrigued and dig further into your findings. Here are some factors you should consider:

The individual strengths and weaknesses of your competitors.
The rate at which new competitors enter the market or the rate at which old competitors are leaving the market.
The products or services that fetch most revenue for your competitors.
How you will overcome the threat of substitute goods.

You can get lots of helpful information about your market from government sources, trade associations, financial services firms, online data providers, and free resources on the web.

3. Analyze industry forces and trends

You will need to outline what’s happening in the industry from many perspectives that would help the reader get the full gist on whether the market is lucrative or not. A great general-purpose tool for doing just that is the PEST Analysis. Here’s what it stands for and what you should consider:

P – Political factors ( the role government plays in your industry )
E – Economic factors ( the state of the economy on both local and national level )
S – Social factors ( relevant changes in matters like lifestyle trends, demographics, consumer attitudes, buying patterns and opinions )
T – Technological factors ( the impact of changing technological trends on your industry )

4. Develop your marketing plan

Developing your marketing plan entails answering the following questions:

What products or services are you offering?
How much will you charge for your offers?
Where will you sell your product, and who are your target customers?
What special incentives would you use to encourage customers to buy your product?

In short, this section of your industry analysis outlines how you will deliver your product to the customers and how you will win customers to your side.

5. Craft your growth plan

While some entrepreneurs are of the opinion that this step should come only after you have established your business, crafting your market development plan helps you envision your company growing in a few years. Your growth plan should address the following questions:

According to recent data, is the market for your product growing or dwindling?
Do you plan to introduce new products or line extensions in the next few years?
If you plan to introduce new offers, would they be closely related to your current offers or within another niche entirely?
Are there strategies for giving your business the competitive advantage in the industry?
Are there plans to handle increasing demand?

6. Fine-tune your analysis

After the steps discussed above, cross check your analyses to ensure that your findings are factual and your figures are accurate. Another handy tool to have in your arsenal when conducting industry research is the almighty Porter’s 5 Forces Analysis . ( Don’t worry if you’ve never attended a business strategy class in your life, it’s actually quite straightforward ). Here’s the breakdown:

Threat of new entrants

How difficult ( or easy ) is it for someone to enter your specific vertical? If it’s very easy then most likely the space will be crowded with competitors fighting for margins. Conversely, if it’s very difficult, that that in itself can become a competitive advantage.

Threat of substitute products or services

How likely is it that another product or service could decrease demand or displace you and potentially the entire industry all together?

Bargaining power of customers

When it comes to pricing and terms, how much power does your customer have? Are they organized enough to exercise their purchase power, or is there so much competition that they have their pick resulting in pricing wars amongst providers?

Bargaining power of suppliers

This refers to how dependent you are on a given supplier to operate your business. If it’s difficult or near impossible for you to switch, that means they have the upper hand, whereas, if the switching costs are low, you can negotiate better terms for yourself.

Competitive rivalry of the market

Factoring in the first four forces, you can arrive at a good understanding of the playing field and whether it’s in your favor if you enter it, how long you’ll be able to last, through what means you’ll carve a space for yourself, and what you’re up against.

As a final note, you must never forget that the industry analysis is a vital part of your business plan and it will probably be the most extensive portion of it. So, take your time to conduct extensive research on your competitors and market trends over the recent years.

Go to Chapter 9 Part B: Writing a Business Plan Competitive Market Analysis
Go Back to Chapter 8: Writing your Company’s Profile
Go Back to Introduction and Table of Content

More on Business Plans

How to Write the Market Analysis Section of a Business Plan

Written by Dave Lavinsky

industry description and target market analysis

What is the Market Analysis in a Business Plan?

The market analysis section of your business plan is where you discuss the size of the market in which you’re competing and market trends that might affect your future potential such as economic, political, social and/or technological shifts.

This helps you and readers understand if your market is big enough to support your business’ growth, and whether future conditions will help or hurt your business. For example, stating that your market size is $56 billion, has been growing by 10% for the last 10 years, and that trends are expected to further increase the market size bodes well for your company’s success.

Download our Ultimate Business Plan Template here

What Should a Market Analysis Include?

You’ll want to address these issues in your market analysis:

Size of Industry – How big is the overall industry?
Projected Growth Rate of Industry – Is the industry growing or shrinking? How fast?
Target Market – Who are you targeting with this product or service?
Competition – How many businesses are currently in the same industry?

Learn how to write the full market analysis below.

How to Write a Market Analysis

Here’s how to write the market analysis section of a business plan.

Describe each industry that you are competing in or will be targeting.
Identify direct competition, but don’t forget about indirect competition – this may include companies selling different products to the same potential customer segments.
Highlight strengths and weaknesses for both direct and indirect competitors, along with how your company stacks up against them based on what makes your company uniquely positioned to succeed.
Include specific data, statistics, graphs, or charts if possible to make the market analysis more convincing to investors or lenders.

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Industry overview.

In your industry overview, you will define the market in which you are competing (e.g., restaurant, medical devices, etc.).

You will then detail the sub-segment or niche of that market if applicable (e.g., within restaurants there are fast food restaurants, fine dining, etc.).

Next, you will describe the key characteristics of your industry. For example, discuss how big the market is in terms of units and revenues. Let the reader know if the market is growing or declining (and at what rate), and what key industry trends are facing your market.

Use third-party market research as much as possible to validate the discussion of your industry.

Here is a list of additional items you may analyze for a complete industry overview:

An overview of the current state of the industry . How big is it, how much does it produce or sell? What are its key differentiators from competitors? What is its target customer base like – demographic information and psychographics? How has the industry performed over time (global, domestic)?
Analyze the macro-economic factors impacting your industry . This includes items such as economic growth opportunities, inflation, exchange rates, interest rates, labor market trends, and technological improvements. You want to make sure that all of these are trending in a positive direction for you while also being realistic about them. For example, if the economy is in shambles you might want to wait before entering the particular market.
Analyze the political factors impacting your industry . This is an often-overlooked section of any business plan, but it can be important depending on what type of company you are starting. If you’re in a highly regulated industry (such as medical devices), this is something that you’ll want to include.
Analyze the social factors impacting your industry . This includes analyzing society’s interest in your product or service, historical trends in buying patterns in your industry, and any effects on the industry due to changes in culture. For example, if there is a growing counter-culture trend against big oil companies you might want to position yourself differently than a company in this industry.
Analyze the technological factors impacting your industry . This includes analyzing new technologies being developed in software, hardware, or applications that can be used to improve your product or service. It also includes emerging consumer trends and will be highly dependent on your business type. In a technology-related venture, you would analyze how these changes are impacting consumers. For an educational-related venture, you would analyze how these changes are impacting students, teachers, and/or administrators.

For each of these items, you want to provide some detail about them including their current state as well as what external factors have played a role in the recent past. You can also include many other important factors if they apply to your business including demographic trends, legal issues, environmental concerns, and sustainability issues.

When you are done analyzing all of these factors, wrap it up by summing them up in a statement that includes your view on the future of the industry. This should be positive to attract investors, potential customers, and partners.

If you’re having trouble thinking about all of these factors then it might be helpful to first develop a SWOT analysis for your business.

Once you have an understanding of the market, you’ll need to think about how you will position yourself within that potential market.

Picking Your Niche

You want to think about how large your market is for this venture. You also want to consider whether you’d like to pick a niche within the overall industry or launch yourself into the mainstream.

If you have an innovative product it can be easier to enter the mainstream market – but at the same time, you might face some additional competition if there are similar products available.

You can choose to specialize in a niche market where you’ll face less competition – but might be able to sell your services at a higher price point (this could make it easier for you to get potential customers).

Of course, if your product or service is unique then there should be no competition. But, what happens if it isn’t unique? Will you be able to differentiate yourself enough to create a competitive advantage or edge?

If you are planning on entering the mainstream market, think about whether there are different sub-niches within your specific market. For example, within the technology industry, you can choose to specialize in laptops or smartphones or tablets, or other categories. While it will be more difficult to be unique in a mainstream market, you will still be able to focus on one type or category of products.

How Will You Stand Out?

Many companies are able to stand out – whether by offering a product that is unique or by marketing their products in a way that consumers notice. For example, Steve Jobs was able to take a business idea like the iPhone and make it into something that people talked about (while competitors struggled to play catch up).

You want your venture to stand out – whether with an innovative product or service or through marketing strategies. This might include a unique brand, name, or logo. It might also include packaging that stands out from competitors.

Write down how you will achieve this goal of standing out in the marketplace. If it’s a product, then what features do you have that other products don’t? If it’s a service, then what is it about this service that will make people want to use your company rather than your competition?

You also need to think about marketing. How are you going to promote yourself or sell your product or service? You’ll need a marketing plan for this – which might include writing copy, creating an advertisement, setting up a website, and several other activities. This should include a description of each of these strategies.

If you’re struggling with the details of any of these sections, it might be helpful to research what other companies in your market are doing and how they’ve been successful. You can use this business information to inform your own strategies and plans.

Relevant Market Size & Competition

In the second stage of your analysis, you must determine the size and competition in your specific market.

Target Market Section

Your company’s relevant market size is the amount of money it could make each year if it owned a complete market share.

It’s simple.

To begin, estimate how many consumers you expect to be interested in purchasing your products or services each year.

To generate a more precise estimate, enter the monetary amount these potential customers may be ready to spend on your goods or services each year.

The size of your market is the product of these two figures. Calculate this market value here so that your readers can see how big your market opportunity is (particularly if you are seeking debt or equity funding).

You’ll also want to include an analysis of your market conditions. Is this a growing or declining market? How fast is it growing (or declining)? What are the general trends in the market? How has your market shifted over time?

Include all of this information in your own business plan to give your readers a clear understanding of the market landscape you’re competing in.

The Competition

Next, you’ll need to create a comprehensive list of the competitors in your market. This competitive analysis includes:

Direct Competitors – Companies that offer a similar product or service
Indirect Competitors – Companies that sell products or services that are complementary to yours but not directly related

To show how large each competitor is, you can use metrics such as revenue, employees, number of locations, etc. If you have limited information about the company on hand then you may want to do some additional research or contact them directly for more information. You should also include their website so readers can learn more if they desire (along with social media profiles).

Once you complete this list, take a step back and try to determine how much market share each competitor has. You can use different methods to do this such as market research, surveys, or conduct focus groups or interviews with target customers.

You should also take into account the barriers to entry that exist in your market. What would it take for a new company to enter the market and start competing with you? This could be anything from capital requirements to licensing and permits.

When you have all of this information, you’ll want to create a table like the one below:

Once you have this data, you can start developing strategies to compete with the other companies which will be used again later to help you develop your marketing strategy and plan.

Writing a Market Analysis Tips

Include an explanation of how you determined the size of the market and how much share competitors have.
Include tables like the one above that show competitor size, barriers to entry, etc.
Decide where you’re going to place this section in your business plan – before or after your SWOT analysis. You can use other sections as well such as your company summary or product/service description. Make sure you consider which information should come first for the reader to make the most sense.
Brainstorm how you’re going to stand out in this competitive market.

Formatting the Market Analysis Section of Your Business Plan

Now that you understand the different components of the market analysis, let’s take a look at how you should structure this section in your business plan.

Your market analysis should be divided into two sections: the industry overview and market size & competition.

Each section should include detailed information about the topic and supporting evidence to back up your claims.

You’ll also want to make sure that all of your data is up-to-date. Be sure to include the date of the analysis in your business plan so readers know when it was conducted and if there have been any major changes since then.

In addition, you should also provide a short summary of what this section covers at the beginning of each paragraph or page. You can do this by using a title such as “Industry Overview” or another descriptive phrase that is easy to follow.

As with all sections in a business plan, make sure your market analysis is concise and includes only the most relevant information to keep your audience engaged until they reach your conclusion.

A strong market analysis can give your company a competitive edge over other businesses in its industry, which is why it’s essential to include this section in your business plan. By providing detailed information about the market you’re competing in, you can show your readers that you understand the industry and know how to capitalize on current and future trends.

Business Plan Market Analysis Examples

The following are examples of how to write the market analysis section of a business plan:

Business Plan Market Analysis Example #1 – Hosmer Sunglasses, a sunglasses manufacturer based in California

According to the Sunglass Association of America, the retail sales volume of Plano (non-prescription) sunglasses, clip-on sunglasses, and children’s sunglasses (hereinafter collectively referred to as “Sunwear”) totaled $2.9 billion last year. Premium-priced sunglasses are driving the Plano Sunwear market. Plano sunglasses priced at $100 or more accounted for more than 49% of all Sunwear sales among independent retail locations last year.

The Sunglass Association of America has projected that the dollar volume for retail sales of Plano Sunwear will grow 1.7% next year. Plano sunglass vendors are also bullish about sales in this year and beyond as a result of the growth of technology, particularly the growth of laser surgery and e-commerce.

Business Plan Market Analysis Example #2 – Nailed It!, a family-owned restaurant in Omaha, NE

According to the Nebraska Restaurant Association, last year total restaurant sales in Nebraska grew by 4.3%, reaching a record high of $2.8 billion. Sales at full-service restaurants were particularly strong, growing 7% over 2012 figures. This steady increase is being driven by population growth throughout the state. The Average Annual Growth Rate (AGR) since 2009 is 2.89%.

This fast growth has also encouraged the opening of new restaurants, with 3,035 operating statewide as of this year. The restaurant industry employs more than 41,000 workers in Nebraska and contributes nearly $3 billion to the state economy every year.

Nebraska’s population continues to increase – reaching 1.9 million in 2012, a 1.5% growth rate. In addition to population, the state has experienced record low unemployment every year since 2009 – with an average of 4.7% in 2013 and 2014.

Business Plan Market Analysis Example #3 – American Insurance Company (AIC), a chain of insurance agencies in Maine

American Insurance Company (AIC) offers high-quality insurance at low prices through its chain of retail outlets in the state of Maine. Since its inception, AIC has created an extensive network of agents and brokers across the country with expanding online, call center and retail business operations.

AIC is entering a market that will more than double in size over the next 50 years according to some industry forecasts. The insurance industry is enjoying low inflation rates, steady income growth, and improving standards of living for most Americans during what has been a difficult period for much of American business. This makes this a good time to enter the insurance industry as it enjoys higher margins because customers are purchasing more coverage due to increased costs from medical care and higher liability claims.

American Insurance Company provides affordable homeowners, auto, and business insurance through high-quality fulfillment centers across America that have earned a reputation for top-notch customer service.

AIC will face significant competition from both direct and indirect competitors. The indirect competition will come from a variety of businesses, including banks, other insurance companies, and online retailers. The direct competition will come from other well-funded start-ups as well as incumbents in the industry. AIC’s competitive advantages include its low prices, high quality, and excellent customer service.

AIC plans to grow at a rate that is above average for the industry as a whole. The company has identified a market that is expected to grow by more than 100% in the next decade. This growth is due to several factors: the increase in the number of two-income households, the aging population, and the impending retirement of many baby boomers will lead to an increase in the number of people who are purchasing insurance.

AIC projects revenues of $20M in year one, which is equivalent to 100% growth over the previous year. AIC forecasts revenue growth of 40%-60% each year on average for 10 years. After that, revenue growth is expected to slow down significantly due to market saturation.

The following table illustrates these projections:

Competitive Landscape

Direct Competition: P&C Insurance Market Leaders

Indirect Competition: Banks, Other Insurance Companies, Retailers

Market Analysis Conclusion

When writing the market analysis section, it is important to provide specific data and forecasts about the industry that your company operates in. This information can help make your business plan more convincing to potential investors.

If it’s helpful, you should also discuss how your company stacks up against its competitors based on what makes it unique. In addition, you can identify any strengths or weaknesses that your company has compared to its competitors.

Based on this data, provide projections for how much revenue your company expects to generate over the next few years. Providing this information early on in the business plan will help convince investors that you know what you are talking about and your company is well-positioned to succeed.

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Other Resources for Writing Your Business Plan

How to Write a Great Business Plan Executive Summary How to Expertly Write the Company Description in Your Business Plan The Customer Analysis Section of Your Business Plan Completing the Competitive Analysis Section of Your Business Plan The Management Team Section of Your Business Plan Financial Assumptions and Your Business Plan How to Create Financial Projections for Your Business Plan Everything You Need to Know about the Business Plan Appendix Best Business Plan Software Business Plan Conclusion: Summary & Recap

How to Conduct an Industry Analysis? Steps, Template, Examples

Appinio Research · 16.11.2023 · 41min read

Are you ready to unlock the secrets of Industry Analysis, equipping yourself with the knowledge to navigate markets and make informed strategic decisions? Dive into this guide, where we unravel the significance, objectives, and methods of Industry Analysis.

Whether you're an entrepreneur seeking growth opportunities or a seasoned executive navigating industry shifts, this guide will be your compass in understanding the ever-evolving business terrain.

What is Industry Analysis?

Industry analysis is the process of examining and evaluating the dynamics, trends, and competitive forces within a specific industry or market sector. It involves a comprehensive assessment of the factors that impact the performance and prospects of businesses operating within that industry. Industry analysis serves as a vital tool for businesses and decision-makers to gain a deep understanding of the environment in which they operate.

Key components of industry analysis include:

Market Size and Growth: Determining the overall size of the market, including factors such as revenue, sales volume, and customer base. Analyzing historical and projected growth rates provides insights into market trends and opportunities.
Competitive Landscape: Identifying and analyzing competitors within the industry. This includes assessing their market share , strengths, weaknesses, and strategies. Understanding the competitive landscape helps businesses position themselves effectively.
Customer Behavior and Preferences: Examining consumer behavior , preferences, and purchasing patterns within the industry. This information aids in tailoring products or services to meet customer needs.
Regulatory and Legal Environment: Assessing the impact of government regulations, policies, and legal requirements on industry operations. Compliance and adaptation to these factors are crucial for business success.
Technological Trends: Exploring technological advancements and innovations that affect the industry. Staying up-to-date with technology trends can be essential for competitiveness and growth.
Economic Factors: Considering economic conditions, such as inflation rates, interest rates, and economic cycles, that influence the industry's performance.
Social and Cultural Trends: Examining societal and cultural shifts, including changing consumer values and lifestyle trends that can impact demand and preferences.
Environmental and Sustainability Factors: Evaluating environmental concerns and sustainability issues that affect the industry. Industries are increasingly required to address environmental responsibility.
Supplier and Distribution Networks: Analyzing the availability of suppliers, distribution channels, and supply chain complexities within the industry.
Risk Factors: Identifying potential risks and uncertainties that could affect industry stability and profitability.

Objectives of Industry Analysis

Industry analysis serves several critical objectives for businesses and decision-makers:

Understanding Market Dynamics: The primary objective is to gain a comprehensive understanding of the industry's dynamics, including its size, growth prospects, and competitive landscape. This knowledge forms the basis for strategic planning.
Identifying Growth Opportunities: Industry analysis helps identify growth opportunities within the market. This includes recognizing emerging trends, niche markets, and underserved customer segments.
Assessing Competitor Strategies: By examining competitors' strengths, weaknesses, and strategies, businesses can formulate effective competitive strategies. This involves positioning the company to capitalize on its strengths and exploit competitors' weaknesses.
Risk Assessment and Mitigation: Identifying potential risks and vulnerabilities specific to the industry allows businesses to develop risk mitigation strategies and contingency plans. This proactive approach minimizes the impact of adverse events.
Strategic Decision-Making: Industry analysis provides the data and insights necessary for informed strategic decision-making. It guides decisions related to market entry, product development, pricing strategies, and resource allocation.
Resource Allocation: By understanding industry dynamics, businesses can allocate resources efficiently. This includes optimizing marketing budgets, supply chain investments, and talent recruitment efforts.
Innovation and Adaptation: Staying updated on technological trends and shifts in customer preferences enables businesses to innovate and adapt their offerings effectively.

Importance of Industry Analysis in Business

Industry analysis holds immense importance in the business world for several reasons:

Strategic Planning: It forms the foundation for strategic planning by providing a comprehensive view of the industry's landscape. Businesses can align their goals, objectives, and strategies with industry trends and opportunities.
Risk Management: Identifying and assessing industry-specific risks allows businesses to manage and mitigate potential threats proactively. This reduces the likelihood of unexpected disruptions.
Competitive Advantage: In-depth industry analysis helps businesses identify opportunities for gaining a competitive advantage. This could involve product differentiation, cost leadership, or niche market targeting .
Resource Optimization: Efficient allocation of resources, both financial and human, is possible when businesses have a clear understanding of industry dynamics. It prevents wastage and enhances resource utilization.
Informed Investment: Industry analysis assists investors in making informed decisions about allocating capital. It provides insights into the growth potential and risk profiles of specific industry sectors.
Adaptation to Change: As industries evolve, businesses must adapt to changing market conditions. Industry analysis facilitates timely adaptation to new technologies, market shifts, and consumer preferences .
Market Entry and Expansion: For businesses looking to enter new markets or expand existing operations, industry analysis guides decision-making by evaluating the feasibility and opportunities in target markets.
Regulatory Compliance: Understanding the regulatory environment is critical for compliance and risk avoidance. Industry analysis helps businesses stay compliant with relevant laws and regulations.

In summary, industry analysis is a fundamental process that empowers businesses to make informed decisions, stay competitive, and navigate the complexities of their respective markets. It is an invaluable tool for strategic planning and long-term success.

How to Prepare for Industry Analysis?

Let's start by going through the crucial preparatory steps for conducting a comprehensive industry analysis.

1. Data Collection and Research

Primary Research: When embarking on an industry analysis, consider conducting primary research . This involves gathering data directly from industry sources, stakeholders, and potential customers. Methods may include surveys , interviews, focus groups , and observations. Primary research provides firsthand insights and can help validate secondary research findings.
Secondary Research: Secondary research involves analyzing existing literature, reports, and publications related to your industry. Sources may include academic journals, industry-specific magazines, government publications, and market research reports. Secondary research provides a foundation of knowledge and can help identify gaps in information that require further investigation.
Data Sources: Explore various data sources to collect valuable industry information. These sources may include industry-specific associations, government agencies, trade publications, and reputable market research firms. Make sure to cross-reference data from multiple sources to ensure accuracy and reliability.

2. Identifying Relevant Industry Metrics

Understanding and identifying the right industry metrics is essential for meaningful analysis. Here, we'll discuss key metrics that can provide valuable insights:

Market Size: Determining the market's size, whether in terms of revenue, units sold, or customer base, is a fundamental metric. It offers a snapshot of the industry's scale and potential.
Market Growth Rate: Assessing historical and projected growth rates is crucial for identifying trends and opportunities. Understanding how the market has evolved over time can guide strategic decisions.
Market Share Analysis: Analyzing market share among industry players can help you identify dominant competitors and their respective positions. This metric also assists in gauging your own company's market presence.
Market Segmentation : Segmenting the market based on demographics, geography, behavior, or other criteria can provide deeper insights. Understanding the specific needs and preferences of various market segments can inform targeted strategies.

3. Gathering Competitive Intelligence

Competitive intelligence is the cornerstone of effective industry analysis. To gather and utilize information about your competitors:

Competitor Identification: Begin by creating a comprehensive list of your primary and potential competitors. Consider businesses that offer similar products or services within your target market. It's essential to cast a wide net to capture all relevant competitors.
SWOT Analysis : Conduct a thorough SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis for each competitor. This analysis helps you identify their internal strengths and weaknesses, as well as external opportunities and threats they face.
Market Share Analysis: Determine the market share held by each competitor and how it has evolved over time. Analyzing changes in market share can reveal shifts in competitive dynamics.
Product and Pricing Analysis: Evaluate your competitors' product offerings and pricing strategies . Identify any unique features or innovations they offer and consider how your own products or services compare.
Marketing and Branding Strategies: Examine the marketing and branding strategies employed by competitors. This includes their messaging, advertising channels, and customer engagement tactics. Assess how your marketing efforts stack up.

Industry Analysis Frameworks and Models

Now, let's explore essential frameworks and models commonly used in industry analysis, providing you with practical insights and examples to help you effectively apply these tools.

Porter's Five Forces Model

Porter's Five Forces is a powerful framework developed by Michael Porter to assess the competitive forces within an industry. This model helps you understand the industry's attractiveness and competitive dynamics.

How to Conduct an Industry Analysis Template Examples Porters Five Forces Analysis Appinio

It consists of five key forces:

Threat of New Entrants: This force evaluates how easy or difficult it is for new companies to enter the industry. Factors that increase barriers to entry include high capital requirements, strong brand loyalty among existing players, and complex regulatory hurdles. For example, the airline industry has significant barriers to entry due to the need for large capital investments in aircraft, airport facilities, and regulatory approvals.
Bargaining Power of Suppliers: This force examines the influence suppliers have on the industry's profitability. Powerful suppliers can demand higher prices or impose unfavorable terms. For instance, in the automotive industry, suppliers of critical components like microchips can wield significant bargaining power if they are few in number or if their products are highly specialized.
Bargaining Power of Buyers: The bargaining power of buyers assesses how much influence customers have in negotiating prices and terms. In industries where buyers have many alternatives, such as the smartphone market, they can demand lower prices and better features, putting pressure on manufacturers to innovate and compete.
Threat of Substitutes: This force considers the availability of substitute products or services that could potentially replace what the industry offers. For example, the rise of electric vehicles represents a significant threat to the traditional gasoline-powered automotive industry as consumers seek eco-friendly alternatives.
Competitive Rivalry: Competitive rivalry assesses the intensity of competition among existing firms in the industry. A highly competitive industry, such as the smartphone market, often leads to price wars and aggressive marketing strategies as companies vie for market share.

Example: Let's consider the coffee shop industry . New entrants face relatively low barriers, as they can set up a small shop with limited capital. However, the bargaining power of suppliers, such as coffee bean producers, can vary depending on the region and the coffee's rarity. Bargaining power with buyers is moderate, as customers often have several coffee shops to choose from. Threats of substitutes may include energy drinks or homemade coffee, while competitive rivalry is high, with numerous coffee chains and independent cafes competing for customers.

SWOT Analysis

SWOT Analysis is a versatile tool used to assess an organization's internal strengths and weaknesses, as well as external opportunities and threats. By conducting a SWOT analysis, you can gain a comprehensive understanding of your industry and formulate effective strategies.

Strengths: These are the internal attributes and capabilities that give your business a competitive advantage. For instance, if you're a tech company, having a talented and innovative team can be considered a strength.
Weaknesses: Weaknesses are internal factors that hinder your business's performance. For example, a lack of financial resources or outdated technology can be weaknesses that need to be addressed.
Opportunities: Opportunities are external factors that your business can capitalize on. This could be a growing market segment, emerging technologies, or changing consumer trends.
Threats: Threats are external factors that can potentially harm your business. Examples of threats might include aggressive competition, economic downturns, or regulatory changes.

Example: Let's say you're analyzing the fast-food industry. Strengths could include a well-established brand, a wide menu variety, and efficient supply chain management. Weaknesses may involve a limited focus on healthy options and potential labor issues. Opportunities could include the growing trend toward healthier eating, while threats might encompass health-conscious consumer preferences and increased competition from delivery apps.

PESTEL Analysis

PESTEL Analysis examines the external macro-environmental factors that can impact your industry. The acronym stands for:

Political: Political factors encompass government policies, stability, and regulations. For example, changes in tax laws or trade agreements can affect industries like international manufacturing.
Economic: Economic factors include economic growth, inflation rates, and exchange rates. A fluctuating currency exchange rate can influence export-oriented industries like tourism.
Social: Social factors encompass demographics, cultural trends, and social attitudes. An aging population can lead to increased demand for healthcare services and products.
Technological: Technological factors involve advancements and innovations. Industries like telecommunications are highly influenced by technological developments, such as the rollout of 5G networks.
Environmental: Environmental factors cover sustainability, climate change, and ecological concerns. Industries such as renewable energy are directly impacted by environmental regulations and consumer preferences.
Legal: Legal factors encompass laws, regulations, and compliance requirements. The pharmaceutical industry, for instance, faces stringent regulatory oversight and patent protection laws.

Example: Consider the automobile manufacturing industry. Political factors may include government incentives for electric vehicles. Economic factors can involve fluctuations in fuel prices affecting consumer preferences for fuel-efficient cars. Social factors might encompass the growing interest in eco-friendly transportation options. Technological factors could relate to advancements in autonomous driving technology. Environmental factors may involve emissions regulations, while legal factors could pertain to safety standards and recalls.

Industry Life Cycle Analysis

Industry Life Cycle Analysis categorizes industries into various stages based on their growth and maturity. Understanding where your industry stands in its life cycle can help shape your strategies.

Introduction: In the introduction stage, the industry is characterized by slow growth, limited competition, and a focus on product development. New players enter the market, and consumers become aware of the product or service. For instance, electric scooters were introduced as a new mode of transportation in recent years.
Growth: The growth stage is marked by rapid market expansion, increased competition, and rising demand. Companies focus on gaining market share, and innovation is vital. The ride-sharing industry, exemplified by companies like Uber and Lyft, experienced significant growth in this stage.
Maturity: In the maturity stage, the market stabilizes, and competition intensifies. Companies strive to maintain market share and differentiate themselves through branding and customer loyalty programs. The smartphone industry reached maturity with multiple established players.
Decline: In the decline stage, the market saturates, and demand decreases. Companies must adapt or diversify to survive. The decline of traditional print media is a well-known example.

Example: Let's analyze the video streaming industry . The introduction stage saw the emergence of streaming services like Netflix. In the growth stage, more players entered the market, and the industry saw rapid expansion. The industry is currently in the maturity stage, with established platforms like Netflix, Amazon Prime, and Disney+ competing for market share. However, with continued innovation and changing consumer preferences, the decline stage may eventually follow.

Value Chain Analysis

Value Chain Analysis dissects a company's activities into primary and support activities to identify areas of competitive advantage. Primary activities directly contribute to creating and delivering a product or service, while support activities facilitate primary activities.

Primary Activities: These activities include inbound logistics (receiving and storing materials), operations (manufacturing or service delivery), outbound logistics (distribution), marketing and sales, and customer service.
Support Activities: Support activities include procurement (acquiring materials and resources), technology development (R&D and innovation), human resource management (recruitment and training), and infrastructure (administrative and support functions).

Example: Let's take the example of a smartphone manufacturer. Inbound logistics involve sourcing components, such as processors and displays. Operations include assembly and quality control. Outbound logistics cover shipping and distribution. Marketing and sales involve advertising and retail partnerships. Customer service handles warranty and support.

Procurement ensures a stable supply chain for components. Technology development focuses on research and development of new features. Human resource management includes hiring and training skilled engineers. Infrastructure supports the company's administrative functions.

By applying these frameworks and models effectively, you can better understand your industry, identify strategic opportunities and threats, and develop a solid foundation for informed decision-making.

Data Interpretation and Analysis

Once you have your data, it's time to start interpreting and analyzing the data you've collected during your industry analysis.

You can unlock the full potential of your data with Appinio 's comprehensive research platform. Beyond aiding in data collection, Appinio simplifies the intricate process of data interpretation and analysis. Our intuitive tools empower you to effortlessly transform raw data into actionable insights, giving you a competitive edge in understanding your industry.

Whether it's assessing market trends, evaluating the competitive landscape, or understanding customer behavior, Appinio offers a holistic solution to uncover valuable findings. With our platform, you can make informed decisions, strategize effectively, and stay ahead of industry shifts.

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1. Analyze Market Size and Growth

Analyzing the market's size and growth is essential for understanding its dynamics and potential. Here's how to conduct a robust analysis:

Market Size Calculation: Determine the total market size in terms of revenue, units sold, or the number of customers. This figure serves as a baseline for evaluating the industry's scale.
Historical Growth Analysis: Examine historical data to identify growth trends. This includes looking at past year-over-year growth rates and understanding the factors that influenced them.
Projected Growth Assessment: Explore industry forecasts and projections to gain insights into the expected future growth of the market. Consider factors such as emerging technologies, changing consumer preferences, and economic conditions.
Segmentation Analysis: If applicable, analyze market segmentation data to identify growth opportunities in specific market segments. Understand which segments are experiencing the most significant growth and why.

2. Assess Market Trends

Stay ahead of the curve by closely monitoring and assessing market trends. Here's how to effectively evaluate trends within your industry.

Consumer Behavior Analysis: Dive into consumer behavior data to uncover shifts in preferences, buying patterns, and shopping habits. Understand how technological advancements and cultural changes influence consumer choices.
Technological Advancements: Keep a keen eye on technological developments that impact your industry. Assess how innovations such as AI, IoT, blockchain, or automation are changing the competitive landscape.
Regulatory Changes: Stay informed about regulatory shifts and their potential consequences for your industry. Regulations can significantly affect product development, manufacturing processes, and market entry strategies.
Sustainability and Environmental Trends: Consider the growing importance of sustainability and environmental concerns. Evaluate how your industry is adapting to eco-friendly practices and how these trends affect consumer choices.

3. Evaluate Competitive Landscape

Understanding the competitive landscape is critical for positioning your business effectively. To perform a comprehensive evaluation:

Competitive Positioning: Determine where your company stands in comparison to competitors. Identify your unique selling propositions and areas where you excel.
Market Share Analysis: Continuously monitor market share among industry players. Identify trends in market share shifts and assess the strategies that lead to such changes.
Competitive Advantages and Weaknesses: Analyze your competitors' strengths and weaknesses. Identify areas where you can capitalize on their weaknesses and where you need to fortify your own strengths.

4. Identify Key Success Factors

Recognizing and prioritizing key success factors is crucial for developing effective strategies. To identify and leverage these factors:

Customer Satisfaction: Prioritize customer satisfaction as a critical success factor. Satisfied customers are more likely to become loyal advocates and contribute to long-term success.
Quality and Innovation: Focus on product or service quality and continuous innovation. Meeting and exceeding customer expectations can set your business apart from competitors.
Cost Efficiency: Strive for cost efficiency in your operations. Identifying cost-saving opportunities can lead to improved profitability.
Marketing and Branding Excellence: Invest in effective marketing and branding strategies to create a strong market presence. Building a recognizable brand can drive customer loyalty and growth.

5. Analyze Customer Behavior and Preferences

Understanding your target audience is central to success. Here's how to analyze customer behavior and preferences:

Market Segmentation: Use market segmentation to categorize customers based on demographics, psychographics , and behavior. This allows for more personalized marketing and product/service offerings.
Customer Surveys and Feedback: Gather customer feedback through surveys and feedback mechanisms. Understand their pain points, preferences, and expectations to tailor your offerings.
Consumer Journey Mapping: Map the customer journey to identify touchpoints where you can improve engagement and satisfaction. Optimize the customer experience to build brand loyalty.

By delving deep into data interpretation and analysis, you can gain valuable insights into your industry, uncover growth opportunities, and refine your strategic approach.

How to Conduct Competitor Analysis?

Competitor analysis is a critical component of industry analysis as it provides valuable insights into your rivals, helping you identify opportunities, threats, and areas for improvement.

1. Identify Competitors

Identifying your competitors is the first step in conducting a thorough competitor analysis. Competitors can be classified into several categories:

Direct Competitors: These are companies that offer similar products or services to the same target audience. They are your most immediate competitors and often compete directly with you for market share.
Indirect Competitors: Indirect competitors offer products or services that are related but not identical to yours. They may target a slightly different customer segment or provide an alternative solution to the same problem.
Potential Competitors: These companies could enter your market in the future. Identifying potential competitors early allows you to anticipate and prepare for new entrants.
Substitute Products or Services: While not traditional competitors, substitute products or services can fulfill the same customer needs or desires. Understanding these alternatives is crucial to your competitive strategy.

2. Analyze Competitor Strengths and Weaknesses

Once you've identified your competitors, you need to analyze their strengths and weaknesses. This analysis helps you understand how to position your business effectively and identify areas where you can gain a competitive edge.

Strengths: Consider what your competitors excel at. This could include factors such as brand recognition, innovative products, a large customer base, efficient operations, or strong financial resources.
Weaknesses: Identify areas where your competitors may be lacking. Weaknesses could involve limited product offerings, poor customer service, outdated technology, or financial instability.

3. Competitive Positioning

Competitive positioning involves defining how you want your business to be perceived relative to your competitors. It's about finding a unique position in the market that sets you apart. Consider the following strategies:

Cost Leadership: Strive to be the low-cost provider in your industry. This positioning appeals to price-conscious consumers.
Differentiation: Focus on offering unique features or attributes that make your products or services stand out. This can justify premium pricing.
Niche Market: Target a specific niche or segment of the market that may be underserved by larger competitors. Tailor your offerings to meet their unique needs.
Innovation and Technology: Emphasize innovation and technology to position your business as a leader in product or service quality.
Customer-Centric: Prioritize exceptional customer service and customer experience to build loyalty and a positive reputation.

4. Benchmarking and Gap Analysis

Benchmarking involves comparing your business's performance and practices with those of your competitors or industry leaders. Gap analysis helps identify areas where your business falls short and where improvements are needed.

Performance Benchmarking: Compare key performance metrics, such as revenue, profitability, market share, and customer satisfaction, with those of your competitors. Identify areas where your performance lags behind or exceeds industry standards.
Operational Benchmarking: Analyze your operational processes, supply chain, and cost structures compared to your competitors. Look for opportunities to streamline operations and reduce costs.
Product or Service Benchmarking: Evaluate the features, quality, and pricing of your products or services relative to competitors. Identify gaps and areas for improvement.
Marketing and Sales Benchmarking: Assess your marketing strategies, customer acquisition costs, and sales effectiveness compared to competitors. Determine whether your marketing efforts are performing at a competitive level.

Market Entry and Expansion Strategies

Market entry and expansion strategies are crucial for businesses looking to enter new markets or expand their presence within existing ones. These strategies can help you effectively target and penetrate your chosen markets.

Market Segmentation and Targeting

Market Segmentation: Begin by segmenting your target market into distinct groups based on demographics , psychographics, behavior, or other relevant criteria. This helps you understand the diverse needs and preferences of different customer segments.
Targeting: Once you've segmented the market, select specific target segments that align with your business goals and capabilities. Tailor your marketing and product/service offerings to appeal to these chosen segments.

Market Entry Modes

Selecting the proper market entry mode is crucial for a successful expansion strategy. Entry modes include:

Exporting: Sell your products or services in international markets through exporting. This is a low-risk approach, but it may limit your market reach.
Licensing and Franchising: License your brand, technology, or intellectual property to local partners or franchisees. This allows for rapid expansion while sharing the risk and control.
Joint Ventures and Alliances: Partner with local companies through joint ventures or strategic alliances. This approach leverages local expertise and resources.
Direct Investment: Establish a physical presence in the target market through subsidiaries, branches, or wholly-owned operations. This offers full control but comes with higher risk and investment.

Competitive Strategy Formulation

Your competitive strategy defines how you will compete effectively in the target market.

Cost Leadership: Strive to offer products or services at lower prices than competitors while maintaining quality. This strategy appeals to price-sensitive consumers.
Product Differentiation: Focus on offering unique and innovative products or services that stand out in the market. This strategy justifies premium pricing.
Market Niche: Target a specific niche or segment within the market that is underserved or has particular needs. Tailor your offerings to meet the unique demands of this niche.
Market Expansion : Expand your product or service offerings to capture a broader share of the market. This strategy involves diversifying your offerings to appeal to a broader audience.
Global Expansion: Consider expanding internationally to tap into new markets and diversify your customer base. This strategy involves thorough market research and adaptation to local cultures and regulations.

International Expansion Considerations

If your expansion strategy involves international markets, there are several additional considerations to keep in mind.

Market Research: Conduct in-depth market research to understand the target country's cultural, economic, and legal differences.
Regulatory Compliance: Ensure compliance with international trade regulations, customs, and import/export laws.
Cultural Sensitivity: Adapt your marketing and business practices to align with the cultural norms and preferences of the target market.
Localization: Consider adapting your products, services, and marketing materials to cater to local tastes and languages.
Risk Assessment: Evaluate the political, economic, and legal risks associated with operating in the target country. Develop risk mitigation strategies.

By carefully analyzing your competitors and crafting effective market entry and expansion strategies, you can position your business for success in both domestic and international markets.

Risk Assessment and Mitigation

Risk assessment and mitigation are crucial aspects of industry analysis and strategic planning. Identifying potential risks, assessing vulnerabilities, and implementing effective risk management strategies are essential for business continuity and success.

1. Identify Industry Risks

Market Risks: These risks pertain to factors such as changes in market demand, economic downturns, shifts in consumer preferences, and fluctuations in market prices. For example, the hospitality industry faced significant market risks during the COVID-19 pandemic, resulting in decreased travel and tourism .
Regulatory and Compliance Risks: Regulatory changes, compliance requirements, and government policies can pose risks to businesses. Industries like healthcare are particularly susceptible to regulatory changes that impact operations and reimbursement.
Technological Risks: Rapid technological advancements can disrupt industries and render existing products or services obsolete. Companies that fail to adapt to technological shifts may face obsolescence.
Operational Risks: These risks encompass internal factors that can disrupt operations, such as supply chain disruptions, equipment failures, or cybersecurity breaches.
Financial Risks: Financial risks include factors like liquidity issues, credit risk , and market volatility. Industries with high capital requirements, such as real estate development, are particularly vulnerable to financial risks.
Competitive Risks: Intense competition and market saturation can pose challenges to businesses. Failing to respond to competitive threats can result in loss of market share.
Global Risks: Industries with a worldwide presence face geopolitical risks, currency fluctuations, and international trade uncertainties. For instance, the automotive industry is susceptible to trade disputes affecting the supply chain.

2. Assess Business Vulnerabilities

SWOT Analysis: Revisit your SWOT analysis to identify internal weaknesses and threats. Assess how these weaknesses may exacerbate industry risks.
Financial Health: Evaluate your company's financial stability, debt levels, and cash flow. Identify vulnerabilities related to financial health that could hinder your ability to withstand industry-specific challenges.
Operational Resilience: Assess the robustness of your operational processes and supply chain. Identify areas where disruptions could occur and develop mitigation strategies.
Market Positioning: Analyze your competitive positioning and market share. Recognize vulnerabilities in your market position that could be exploited by competitors.
Compliance and Regulatory Adherence: Ensure that your business complies with relevant regulations and standards. Identify vulnerabilities related to non-compliance or regulatory changes.

3. Risk Management Strategies

Risk Avoidance: In some cases, the best strategy is to avoid high-risk ventures or markets altogether. This may involve refraining from entering certain markets or discontinuing products or services with excessive risk.
Risk Reduction: Implement measures to reduce identified risks. For example, diversifying your product offerings or customer base can reduce dependence on a single revenue source.
Risk Transfer: Transfer some risks through methods such as insurance or outsourcing. For instance, businesses can mitigate cybersecurity risks by purchasing cyber insurance.
Risk Acceptance: In cases where risks cannot be entirely mitigated, it may be necessary to accept a certain level of risk and have contingency plans in place to address potential issues.
Continuous Monitoring: Establish a system for continuous risk monitoring. Regularly assess the changing landscape and adjust risk management strategies accordingly.

4. Contingency Planning

Contingency planning involves developing strategies and action plans to respond effectively to unforeseen events or crises. It ensures that your business can maintain operations and minimize disruptions in the face of adverse circumstances. Key elements of contingency planning include:

Risk Scenarios: Identify potential risk scenarios specific to your industry and business. These scenarios should encompass a range of possibilities, from minor disruptions to major crises.
Response Teams: Establish response teams with clearly defined roles and responsibilities. Ensure that team members are trained and ready to act in the event of a crisis.
Communication Plans: Develop communication plans that outline how you will communicate with employees, customers, suppliers, and other stakeholders during a crisis. Transparency and timely communication are critical.
Resource Allocation: Determine how resources, including personnel, finances, and equipment, will be allocated in response to various scenarios.
Testing and Simulation: Regularly conduct tests and simulations of your contingency plans to identify weaknesses and areas for improvement. Ensure your response teams are well-practiced and ready to execute the plans effectively.
Documentation and Record Keeping: Maintain comprehensive documentation of contingency plans, response procedures, and communication protocols. This documentation should be easily accessible to relevant personnel.
Review and Update: Continuously review and update your contingency plans to reflect changing industry dynamics and evolving risks. Regularly seek feedback from response teams to make improvements.

By identifying industry risks, assessing vulnerabilities, implementing risk management strategies, and developing robust contingency plans, your business can navigate the complexities of the industry landscape with greater resilience and preparedness.

Industry Analysis Template

When embarking on the journey of Industry Analysis, having a well-structured template is akin to having a reliable map for your exploration. It provides a systematic framework to ensure you cover all essential aspects of the analysis. Here's a breakdown of an industry analysis template with insights into each section.

Industry Overview

Objective: Provide a broad perspective of the industry.
Market Definition: Define the scope and boundaries of the industry, including its products, services, and target audience.
Market Size and Growth: Present current market size, historical growth trends, and future projections.
Key Players: Identify major competitors and their market share.
Market Trends: Highlight significant trends impacting the industry.

Competitive Analysis

Objective: Understand the competitive landscape within the industry.
Competitor Identification: List direct and indirect competitors.
Competitor Profiles: Provide detailed profiles of major competitors, including their strengths, weaknesses, strategies, and market positioning.
SWOT Analysis: Conduct a SWOT analysis for each major competitor.
Market Share Analysis: Analyze market share distribution among competitors.

Market Analysis

Objective: Explore the characteristics and dynamics of the market.
Customer Segmentation: Define customer segments and their demographics, behavior, and preferences.
Demand Analysis: Examine factors driving demand and customer buying behavior.
Supply Chain Analysis: Map out the supply chain, identifying key suppliers and distribution channels.
Regulatory Environment: Discuss relevant regulations, policies, and compliance requirements.

Technological Analysis

Objective: Evaluate the technological landscape impacting the industry.
Technological Trends: Identify emerging technologies and innovations relevant to the industry.
Digital Transformation: Assess the level of digitalization within the industry and its impact on operations and customer engagement.
Innovation Opportunities: Explore opportunities for leveraging technology to gain a competitive edge.

Financial Analysis

Objective: Analyze the financial health of the industry and key players.
Revenue and Profitability: Review industry-wide revenue trends and profitability ratios.
Financial Stability: Assess financial stability by examining debt levels and cash flow.
Investment Patterns: Analyze capital expenditure and investment trends within the industry.

Consumer Insights

Objective: Understand consumer behavior and preferences.
Consumer Surveys: Conduct surveys or gather data on consumer preferences, buying habits , and satisfaction levels.
Market Perception: Gauge consumer perception of brands and products in the industry.
Consumer Feedback: Collect and analyze customer feedback and reviews.

SWOT Analysis for Your Business

Objective: Assess your own business within the industry context.
Strengths: Identify internal strengths that give your business a competitive advantage.
Weaknesses: Recognize internal weaknesses that may hinder your performance.
Opportunities: Explore external opportunities that your business can capitalize on.
Threats: Recognize external threats that may impact your business.

Conclusion and Recommendations

Objective: Summarize key findings and provide actionable recommendations.
Summary: Recap the most critical insights from the analysis.
Recommendations: Offer strategic recommendations for your business based on the analysis.
Future Outlook: Discuss potential future developments in the industry.

While this template provides a structured approach, adapt it to the specific needs and objectives of your Industry Analysis. It serves as your guide, helping you navigate through the complex landscape of your chosen industry, uncovering opportunities, and mitigating risks along the way.

Remember that the depth and complexity of your industry analysis may vary depending on your specific goals and the industry you are assessing. You can adapt this template to focus on the most relevant aspects and conduct thorough research to gather accurate data and insights. Additionally, consider using industry-specific data sources, reports, and expert opinions to enhance the quality of your analysis.

Industry Analysis Examples

To grasp the practical application of industry analysis, let's delve into a few diverse examples across different sectors. These real-world scenarios demonstrate how industry analysis can guide strategic decision-making.

Tech Industry - Smartphone Segment

Scenario: Imagine you are a product manager at a tech company planning to enter the smartphone market. Industry analysis reveals that the market is highly competitive, dominated by established players like Apple and Samsung.

Use of Industry Analysis:

Competitive Landscape: Analyze the strengths and weaknesses of competitors, identifying areas where they excel (e.g., Apple's brand loyalty ) and where they might have vulnerabilities (e.g., consumer demand for more affordable options).
Market Trends: Identify trends like the growing demand for sustainable technology and 5G connectivity, guiding product development and marketing strategies.
Regulatory Factors: Consider regulatory factors related to intellectual property rights, patents, and international trade agreements that can impact market entry and operations.
Outcome: Armed with insights from industry analysis, you decide to focus on innovation, emphasizing features like eco-friendliness and affordability. This niche approach helps your company gain a foothold in the competitive market.

Healthcare Industry - Telehealth Services

Scenario: You are a healthcare entrepreneur exploring opportunities in the telehealth sector, especially in the wake of the COVID-19 pandemic. Industry analysis is critical due to rapid market changes.

Market Size and Growth: Evaluate the growing demand for telehealth services, driven by the need for remote healthcare during the pandemic and convenience factors.
Regulatory Environment: Understand the evolving regulatory landscape, including changes in telemedicine reimbursement policies and licensing requirements.
Technological Trends: Explore emerging technologies such as AI-powered diagnosis and remote monitoring that can enhance service offerings.
Outcome: Industry analysis underscores the potential for telehealth growth. You adapt your business model to align with regulatory changes, invest in cutting-edge technology, and focus on patient-centric care, positioning your telehealth service for success.

Food Industry - Plant-Based Foods

Scenario: As a food industry entrepreneur , you are considering entering the plant-based foods market, driven by increasing consumer interest in health and sustainability.

Market Trends: Analyze the trend toward plant-based diets and sustainability, reflecting changing consumer preferences.
Competitive Landscape: Assess the competitive landscape, understanding that established companies and startups are vying for market share.
Consumer Behavior: Study consumer behavior, recognizing that health-conscious consumers seek plant-based alternatives.
Outcome: Informed by industry analysis, you launch a line of plant-based products emphasizing both health benefits and sustainability. Effective marketing and product quality gain traction among health-conscious consumers, making your brand a success in the plant-based food industry.

These examples illustrate how industry analysis can guide strategic decisions, whether entering competitive tech markets, navigating dynamic healthcare regulations, or capitalizing on shifting consumer preferences in the food industry. By applying industry analysis effectively, businesses can adapt, innovate, and thrive in their respective sectors.

Conclusion for Industry Analysis

Industry Analysis is the compass that helps businesses chart their course in the vast sea of markets. By understanding the industry's dynamics, risks, and opportunities, you gain a strategic advantage that can steer your business towards success. From identifying competitors to mitigating risks and formulating competitive strategies, this guide has equipped you with the tools and knowledge needed to navigate the complexities of the business world.

Remember, Industry Analysis is not a one-time task; it's an ongoing journey. Keep monitoring market trends, adapting to changes, and staying ahead of the curve. With a solid foundation in industry analysis, you're well-prepared to tackle challenges, seize opportunities, and make well-informed decisions that drive your business toward prosperity. So, set sail with confidence and let industry analysis be your guiding star on the path to success.

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What Is an Industry Analysis and Trends Business Plan?

An industry analysis and trends business plan is a component of a business plan that provides a comprehensive insight into industry conditions and trends. 3 min read updated on September 19, 2022

An industry analysis and trends business plan is a component of a business plan that provides a comprehensive insight into industry conditions and trends that can impact a company's success and growth. A thorough analysis of your industry and its trends can give you and other people a clearer idea of the feasibility and relevance of your business idea or goals.

Elements of a Business Plan

There are many different types of business plans. When you are creating your business plan, the information you choose to include will depend on your audience and personal preferences, as well as the questions you wish to answer and problems you seek to solve. While business plans may vary greatly, most of them contain the following elements:

Executive summary
Business description
Analysis of business environment analysis
Industry analysis
Market analysis
Competitive analysis
Marketing plan
Management plan
Operations plan
Financial projections
What Is an Industry Analysis?

An industry analysis enables you to gain a better understanding of the industry and market in which you will be conducting business. By conducting an industry analysis before you start writing your business plan , you will be able to:

Identify industry trends, such as potentially problematic aspects of the industry
Identify trends and opportunities in products and services
Calculate capital requirements
Determine business risks and find ways to reduce them

An industry analysis must be specific to the industry in which you are conducting or are planning to conduct business. With the information you obtain from the analysis, you can devise a long-term strategy to mitigate risks and take full advantage of growth opportunities.

It is important not to confuse an industry analysis with a competitor or market analysis. An industry analysis seeks to describe the products or services offered in a specific industry and the boundaries of the marketplace in relation to economic, political, and regulatory issues. In other words, it defines the scope of the marketplace. A market analysis , on the other hand, helps you determine whether or not a market within your industry will be profitable for your products or services.

Conducting an Industry Analysis

The most widely used method for evaluating any industry was devised by Michael E. Porter from Harvard University. This method can help you create an effective strategy for competing in your industry. According to Porter, all industries and markets are influenced by five forces, which include:

Ease of entry — Companies that are already operating in an industry will enjoy a competitive advantage over newcomers. However, their profits will be reduced unless they find a way to slow down or block the new entries. As for new businesses, they will face a variety of barriers, including government regulations, patents and copyrights, and customer loyalty.
Suppliers' power — Suppliers of materials, products, or services can have a significant impact on a business' ability to compete. In the event that there are few suppliers offering the products or materials or few alternative products, the suppliers have the power to dictate quantities, prices, and delivery times for companies that have no choice but to buy from them.
Buyers' power — In an industry where buyers can choose from many competing products, consumers will have strong bargaining power. This can affect the ability of a company to price its products or services without being afraid of losing customers.
Availability of alternative products — In the situation where two businesses with similar products are competing within an industry, both of them will benefit as their marketing efforts will generally increase demand for their products. However, their market share will be reduced if there is another company selling a different kind of products that can serve as a substitute for theirs.
Competitive rivalry — Competitive rivalry takes into account the number of competitors present in a particular industry, as well as their relative strength. In an industry where many companies are selling similar products, there is little opportunity for one company to control consumers' or suppliers' tendency to go elsewhere.

There are many free industry analysis tools and resources available to business owners who are preparing to create a business plan, such as:

Securities and Exchange Commission
U.S. Census Bureau
Hoover's Online
Thomas Register
Library of Congress Legislative Information
Websites of trade associations and companies

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Top 10 Industry Overview Templates with Examples and Samples

Samradni Pradhan

In the fast-paced business world, it is important for companies to stay up-to-date with the latest industry trends and insights. The most effective way to do this is by utilizing SlideTeam’s industry overview templates. These templates help businesses analyze their industries, identify key trends and challenges, and make informed decisions about their future strategies.

In this blog, we will explore the top 10 industry overview templates that businesses can use to better understand their respective domains. We will provide examples and samples of each template, along with tips on how to use them effectively.

Whether you are a startup trying to gain a foothold in a new market or an established company looking to stay ahead of the competition, these templates will be invaluable. By leveraging the insights gained from industry overviews, businesses can make informed decisions that will help them achieve their goals and succeed in today's competitive business landscape.

If you also wish to explore some project overview templates, you can check them out here !

Template 1: Industry Overview PowerPoint Presentation Slides

Introducing the perfect tool to help you analyze and assess the potential of your industry. This visually appealing slideshow has well-designed templates equipped with the latest industry trends and growth drivers. Our well-researched market analysis PowerPoint templates enable you to identify the key drivers, such as technological advancements, social and economic changes, and political factors that affect your industry's profitability. With 32 ready-to-use slides, you can display the operational information of your competitors, such as market share and geographical presence. Furthermore, these templates can showcase your company's value chain analysis, helping you gain a competitive edge in the market. So, go ahead and add this to your cart right away!

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Template 2: Wellness Industry Overview PowerPoint Presentation Slides

This PPT Deck offers a comprehensive overview of the industry, covering growth rates, health and fitness club demographics, health and wellness industry overview statistics, and more. With this PPT Set, you can showcase statistics on corporate wellness and the percentage of people using health and fitness apps. Additionally, our slides illustrate the industry's products and services segments, including membership fees and personnel training services. Gain valuable insights through the SWOT analysis and learn about the challenges of entering this competitive market. Go ahead and add this template to your cart today!

Template 3: Industry Overview of Food Production Sector PowerPoint Presentation Slides

This PPT Bundle is the perfect tool for companies in the food industry looking to gain valuable insights into the competitive landscape, key trends, and economic indicators related to food production. With SWOT, PESTEL, and Porter's Five Forces techniques, there's room to include a detailed look at the sub-segments of the food production industry overview , including meat, dairy, grains, fruits, and vegetables. Furthermore, our presentation includes an action plan to adopt Industry 4.0, enhance surveillance of the food manufacturing ecosystem, better control over complex supply chains, and more. Monitor your sales and supply chain costs with our included dashboards. Go ahead and grab this deck today!

Template 4: Retail Industry Overview PowerPoint Presentation Slides

Looking to provide your audience with an in-depth insight into your business operations? We have something amazing for you! Our templates allow you to discuss the retail industry overview , including store-based, non-store-based, and service-based retail formats, as well as the key drivers for commercial growth, such as branding, positioning, leverage margin, and merchandising. Moreover, our supply chain vendor layouts enable you to discuss ways of building and sustaining relationships, while our retailing sector presentation helps you create a roadmap for customer retention, satisfaction, and engagement. With our goods and services visuals, you can illustrate the role of information technology in commercial and business operations. Don't wait. Use these templates today!

Template 5: Hospitality Management Industry Overview PowerPoints Presentation Slides

If you want to educate and inform your audience on the key statistics and scope of services in the medical services industry, we have the right template for you. With this PPT Deck, you can give a detailed account of your company's travel and event management services. Furthermore, our service industry layouts provide an in-depth understanding of hotel and lodging business operations. Utilize these designs to create a suitable business strategy, emphasizing pricing strategies, target market, and audience. Finally, take advantage of our professionally crafted tourism industry overview slideshow and engage in various analysis platforms to evaluate your services. Download today to experience the benefits firsthand.

Template 6: Tourism Industry Overview PowerPoint Presentation Slides

This slide deck is the perfect tool to showcase the important statistics and scope of the hospitality industry. This effective presentation covers key considerations, organizational structure, types of hotels, hotel business classifications, and room division. With our hotel management strategies visuals, you can showcase hotel business plans and perform a SWOT analysis of the beverage industry. This slide deck also provides information on the startup budget of the restaurant business and highlights restaurant operating expenses. It is everything you can ask for, go ahead and download it right away!

Template 7: E-Mail Security Industry Overview and Implementation Report PowerPoint Presentation Slides

This template is specifically designed to help you educate and inform your audience about the latest trends and best practices in e-mail security. This comprehensive presentation covers key topics such as cyber threats, phishing attacks, e-mail encryption, and data protection measures. With these PPT Templates, you can showcase your organization's e-mail security policies and procedures and highlight the benefits of implementing effective e-mail security measures. Whether you're an IT professional, a security consultant, or a business owner, our slides will provide you with the insights and tools you need to safeguard your organization's sensitive information. Download today and stay one step ahead of cyber threats!

Template 8: Industry Overview and Market Trends Pitchbook for Investment Bank Underwriting Deal

This comprehensive template offers an in-depth analysis which provides investors with valuable insights to make informed investment decisions. Our Pitchbook Deck covers all major sectors, including technology, healthcare, energy, and more, presenting a clear picture of the current market landscape, competitive landscape, and growth potential. Get ahead of the competition and make informed decisions with our well-developed presentation slides. Download them today!

Template 9: Key Growth Drivers of Food Manufacturing Industry Overview of Food

If your business is operating in the food manufacturing industry , and you need to portray a comprehensive analysis of the factors that are driving the industry growth then this template is perfect for you. This deck covers parameters like highlighting the shift in consumer habits, information on niche markets and private brands, the emergence of the retail sector, rising demand for automatization and robotization, and also some crucial information to highlight rising export opportunities. So go ahead and explore this presentation template today!

Template 10: Airlines Industry Overview Shortage of Pilots Strategies Overcome Challenge Pilot Shortage

The airline industry is a vital component of global transportation, connecting people and businesses around the world. One of the important challenges that the industry is facing is the need for more pilots. If your business operates in this space, we have the perfect template for you. The layout is designed in a way to include relevant information on the number of pilots and market share of different players in the airlines industry overview . Additionally, you will find a separate section that will cover major industry drivers . So, no matter what your requirement is, you can utilize this template and make an impactful presentation.

EXPLORE THESE INDUSTRY OVERVIEW TEMPLATES TODAY!

The overall industry analysis matters the most when you want to get an impression of your business's success. And when you need to present information on the industry in general, these templates will prove to be extremely beneficial.

Download these premium PPT Slides through our monthly, semi-annual, annual, annual + custom design subscriptions here .

These templates help you understand the importance of having a professional look at your presentation. This is especially needed when discussing important information like industry analysis, market value overview, and other factors. Be sure to download and start using these professional templates today.

FAQs on Industry Overview

What is an industry overview in a business plan.

An industry overview is a critical component of a business plan that provides a comprehensive analysis of the industry in which the business operates. It helps businesses understand the competitive landscape, market trends, and key players in their industry.

It typically includes information on the market size, growth rates, and key drivers shaping the industry. It may also provide information on regulatory issues, emerging technologies, and other factors that could impact the industry's prospects.

This overview aims to help businesses identify potential opportunities and threats within their industry This enables them to make informed decisions about their strategies and investments.

What is the market and industry overview?

A market and industry overview is a comprehensive analysis of a specific market and the industry in which it operates. The market overview provides a detailed analysis of the target market's size, growth rate, and trends. It also includes information on customer behavior, preferences, and demographics. This information helps businesses to identify potential opportunities and threats within the market. The industry overview, on the other hand, provides a broader perspective of the market's competitive scenario.

By conducting a market and industry overview, businesses can better understand their target market. This information can help businesses to make important decisions about their strategies and investments and ultimately position themselves for long-term success.

What are the four types of the industry?

Industries can be broadly classified into four types:

Primary Industries: These industries involve extracting and harvesting natural resources, such as agriculture, fishing, mining, and forestry. They are usually located in rural areas and are often characterized by low levels of technology.
Secondary Industries: These industries involve the manufacturing and processing of raw materials into finished products. They are typically located in urban areas and are characterized by higher technology and capital investment.
Tertiary Industries: These industries provide services to individuals and businesses. Examples include banking, healthcare, education, and tourism. These are often located in urban areas and are characterized by high customer interaction and expertise.
Quaternary Industries: These industries involve the creation and dissemination of knowledge and information. They are typically located in urban areas and are characterized by high specialization and innovation.

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Industry Analysis In A Business Plan

Industry Analysis In A Business Plan –

Some decisions require a lot of thinking. You cannot just adopt “Rocks, Scissors, and Paper” to decide in such cases. Many reviews, analyses, and debates are behind such vital decisions. The same is the situation of Luke and his wife, Daisy. They have made this big decision to buy a new home. They have analyzed various areas and bungalows and buildings, and flats. Finally, they have shortlisted a small house and are about to do the paperwork. Luke has analyzed all the positives of that area and nearby amenities. Daisy, on the other hand, is having a hard time. Since it is the most significant decision for her after her marriage, she has been going nuts. She is having nightmares of all the possible things that can go wrong with the house and the new place.

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But nothing went wrong in their case, and they lived happily in the new home. As an intelligent person, Luke had done some proper analysis and predictions. He made calculations of the possibilities and prospects of that area and came up with a positive outlook. Impressive right? But do you want to know a little secret?

Luke has some fantastic analytical skills . So the question is, from where did he get such skills? Is it hereditary? Or has he developed it over time?

How do you think Luke was able to buy such a magnificent new home? The answer is that Luke is a big fan of Warren Buffet. He has been investing in the stock market for a long time and doing well. Before investing in any company, Luke analyzed that sector and industry well. He came up with his industry analysis report and decided whether to invest in that sector or the company. So let’s use Luke’s analytical skills and get insights into what industry analysis is in a business plan and how to perform the same. So let’s learn the basics of Industry analysis.

What is Industry Analysis In A Business Plan?

Before starting with the actual meaning of the industry analysis in a business plan, first, let’s understand what an Industry is.

The industry is a collection of Competitors producing a similar product or offering similar services to their customers.

So the next question is, why are we studying that industry?

To ensure it is the best or worst industry to enter or invest in.

Industry analysis in a business plan is a tool that enables a company to understand its position relative to other companies that produce similar products or services like it. While considering the strategic planning process, a company must understand the overall industry’s forces. Thus, industry analysis techniques in a business plan enable businesses to identify threats and opportunities. It helps them focus their resources on developing unique capabilities to gain a competitive advantage .

Understanding the industry and forecasting its trends and directions, they need to react and control their portion in the industry.

Major elements

1. Understanding the underlying forces at work

Competition intensifying
Changing customers’ needs and taste
Technological innovation
Globalization
Entry of major competitors
Sudden regulation or deregulation

2. Understanding the attractiveness of the industry

Whether it is feasible to enter or invest in that industry.

3. Understanding the critical industry analysis factors that determine success within the industry.

Importance

It is an important element of any investment that one wants to make.
To succeed, business owners need to analyze that industry.
Important for positioning the company in the niche market
It aids the companies in identifying potential opportunities.
It helps in analyzing the threats.
Assists in analyzing the fit between internal management preferences and the business environment.
Facilitates mitigating the risk of entering an extremely competitive business.

Ways to perform

One way to perform the industry analysis in a business plan is to do the ratio analysis and comparisons. Ratios are ascertained by dividing one business variable by another. By comparing the company ratio with that of the industry, a business owner can understand where his business stands concerning the industry average.

Michael E. Porter developed another model for analyzing the industry in his classic book Competitive Strategy: Techniques for Analyzing Industries and Competitors (1980). His model shows that rivalry among the firms in an industry depends upon the following five forces:

The Threat of New Entry

The threat of new entrants refers to the entry of new competitors in the industry. Naturally, a profitable industry will attract more competitors looking to achieve profits. If the entry barriers in the industry are low, it may pose a significant threat to the firms already competing in that market.

Bargaining power of the Supplier

Supplier power refers to the pressure suppliers can exert on businesses by raising prices, lowering quality, or reducing product availability to intimidate buyers. All of these things directly cost the buyer.

Bargaining power of the Buyer

It refers to the pressure the buyers can exert on businesses to ensure higher quality products, better customer service, and lower prices. Strong buyers can make the industry more competitive, thus decreasing the profit for the seller.

Competitive Rivalry

It is the extent to which the competitive firms within an industry can bully each other, thus decreasing profits. Fierce competition may lead to stealing profits and market share amongst competitors.

Threat of Substitution

It is the availability of a substitute product that the buyers can find instead of a core selling product.

Industry Analysis 3 Steps

# Gathering the Data

The Scope of the Research

Define the industry where you would like to perform industry analysis research activities. It can be a broad industry or a niche industry.

Research your industry

Information sources that will help you conduct your industry analysis in a business plan are different for every business. For example, you might need local information, which you can get from your local chamber of commerce. Or you can find your industry analysis information on government websites. You can also find out government statistics or other commercial statistics. You may have to conduct some internet searches to track down the information.

If the information is difficult to obtain at one particular site, you’ll have to extrapolate information from different sources to get the information you’re seeking. Start finding the data from the government or other websites where accurate data is available. Check academic databases for any published information on your area of interest.

Compile relevant data using the sources above.

Make notes of annual revenues, the number of companies involved, and workforce statistics of the desired industry. Find statistics about the size of the customer base and buying trends.

Description of the Industry

Start your industry analysis report with a general description of the industry. Include one or two paragraphs about the industry’s size, products, and geographic concentration.

Describe the company

Include information about the company that you may want to research. Fill in all the general and relevant information about the company.

Competitor Analysis

Understand the competitors and mention relevant statistical information about their revenues, profit, etc. Describe their product range if possible. Mention their strategies and forth-coming products.

GDP and Inflation effects

Mention how much the sector has been contributing to the GDP and how it has been affected by the rising inflation. Give an outlook on the same.

Try to understand the answers to the following industry analysis questions.

What are the industry’s foremost economic characteristics?

To answer this question, you can acquire data about the industry from governmental census data or sites such as Yahoo.com or other data-intensive web locations.

What kinds of competitive forces are industry members facing?

Understand the interrelationships among companies in the industry and their suppliers and buyers. Also, understand the ease of entry and exit from the industry.

What is the Change driving factors and their impacts?

Understand the industry analysis characteristics of the industry, unlike changing social trends, demographics, regulatory issues, etc.

What do market positions rivals occupy?

Analyze whether a firm is smartly positioned or not. Many industry analysis websites list the company’s key competitors and information about them.

Finally, you should get a positive response to the following question.

Points to Stress in Industry Analysis in a Business Plan

1. Industry attractiveness and industry success factors

Industry attractiveness is the presence or absence of threats exhibited by industry forces. Thus a more significant threat posed by any of the industry forces lessens the attractiveness of the industry.
Success factors are the elements that play a significant role in determining whether a company will succeed or fail in a given industry. Some industry analysis examples of success factors are- quick response to market changes, product line, reasonable and fair prices, product quality, sales support, a good record for deliveries, financial position and a management team.

2. Analyzing the future

One of the crucial factors in industry analysis in a business plan is analyzing the sector’s future. Here one can see how the industry has performed historically. Explore how the sector will perform by looking at historical trends.
However, the sector’s future is also affected by the significant changes or regulations related to that industry. Hence it is necessary to analyze these factors for the same.

3. Demand and Supply Analysis

Demand and Supply Analysis also plays a major role here. The following factors of demand and supply may affect the industry-

If demand increases and supply remains unchanged, it leads to a shortage of goods, and the prices increase.
If demand decreases and supply remains intact, it leads to surplus goods and a decrease in the price.

4. Effect of Inflation on the Industry

Inflation has affected some major economies of the world over the past years. Hence analyzing the effect of inflation on a particular sector becomes extremely important in the industry analysis of a business plan process.
Savings, as well as investments, are affected by the high rate of inflation . Hence most companies are affected adversely due to lesser demand for their products and services.

5. Other important factors that can be considered for Industry Analysis in a business plan are

Size of the industry
What sectors does it include?
Major players in this industry
Markets and customers
Estimated sales for the industry (This year? Last year? The year before?)
National/economic trends affecting the industry?
National/economic trends that might affect it in the future
Long-term outlook
Competitor analysis
The competitive advantage of the business
Target Market analysis
Market growth rate
Market profitability
Industry cost structure
Distribution channels
Success factors
Success Details

Considerations for Industry Analysis in a business plan

While carrying out an industry analysis in a business plan, one should consider which forces pose the greatest threat to the business.
Companies may then undertake careful strategic planning to mitigate these threats.
Managers should also consider their own preferences and internal capabilities before undertaking a strategy developed from an industry analysis.

Business Cycle Analysis

Try to classify the industries according to their growth cycle.

Growth industries

The earnings in such industries are significantly above the average of all sectors. Growth stocks suffer less during a recession.

Defensive industries

Such industries are least affected by recessions and economic adversity.

Cyclical industries

Such industries are most affected by recessions and economic adversity.

Benefits of Industry Analysis in a Business Plan

The benefits of completing an industry analysis in a business plan help company managers to gain a better understanding of their business in the industry.
Allows companies to position themselves carefully in their industry.
It helps companies to respond better to any changes in the industry.

Example of Industry Analysis In A Business Plan (FMCG Sector)

So having known the importance and ways to carry out an industry analysis in a business plan, let us now analyze the Indian FMCG sector.

Industry Overview

Currently, the FMCG sector is the fourth largest sector in India, with a market size of USD 12000 Billion.
It is to grow to a USD 18000 Billion industry by 2031.

Major Segments in the FMCG Sector

Major Players

SWOT Analysis of the FMCG Sector

1. Low operational costs 2. Established distribution networks in both urban and rural areas 3. Presence of well-known brands in the FMCG sector

1. Lower scope of investing in technology and achieving economies of scale, especially in small sectors 2. Low exports levels 3. Copy products narrow the scope of FMCG products in the rural and semi-urban markets.

Opportunities

1. Rural market is mostly untapped 2. The increased purchasing power of consumers 3. Large domestic market- population of over one billion. 4. Export potential

1. Removal of import restrictions resulting in replacing of domestic brands 2. Tax and regulatory structure.

Porters five forces model for FMCG Sector

Key Challenges

Consolidation
Product innovation
Lifestyle products
Backward integration
Third-party manufacturing
Increased hiring from Tier 1 & 2 cities
Reducing carbon footprint
The government approved an investment of up to 100 % foreign equity for NRI & overseas corporate bodies.
India has allowed 51 % FDI in multi-brand retail
Relaxation of license rules

The above industry analysis of the Indian FMCG sector is brief to give a gist of what industry analysis in a business plan should include. The actual industry analysis report may be exhaustive detailing all the essential factors.

Hope that the above article has added some value to your learning. Share this with your friends who might find this article interesting.

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How To Write A Business Plan (2024 Guide)

Updated: Apr 17, 2024, 11:59am

How To Write A Business Plan (2024 Guide)

Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.

Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.

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Drafting the Summary

An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.

Ask for Help

When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business.

The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based Goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible Goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business Operations Costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other Costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.

How do I write a simple business plan?

When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.

What are some common mistakes in a business plan?

The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business, an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

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How to Write a Great Business Plan: Overview and Objectives

The third in a comprehensive series to help you craft the perfect business plan for your startup.

How to Write a Great Business Plan: Overview and Objectives

This article is part of a series on how to write a great business plan .

Providing an overview of your business can be tricky, especially when you're still in the planning stages. If you already own an existing business, summarizing your current operation should be relatively easy; it can be a lot harder to explain what you plan to become .

So start by taking a step back.

Think about what products and services you will provide, how you will provide those items, what you need to have in order to provide those items, exactly who will provide those items... and most importantly, whom you will provide those items to.

Consider our bicycle rental business example. It's serves retail customers. It has an online component, but the core of the business is based on face-to-face transactions for bike rentals and support.

So you'll need a physical location, bikes, racks and tools and supporting equipment, and other brick-and-mortar related items. You'll need employees with a very particular set of skills to serve those customers, and you'll need an operating plan to guide your everyday activities.

Sound like a lot? It boils down to:

What you will provide
What you need to run your business
Who will service your customers, and
Who your customers are

In our example, defining the above is fairly simple. You know what you will provide to meet your customer's needs. You will of course need a certain quantity of bikes to service demand, but you will not need a number of different types of bikes. You need a retail location, furnished to meet the demands of your business. You need semi-skilled employees capable of sizing, customizing, and repairing bikes.

And you know your customers: Cycling enthusiasts.

In other businesses and industries answering the above questions can be more difficult. If you open a restaurant, what you plan to serve will in some ways determine your labor needs, the location you choose, the equipment you need to purchase... and most importantly will help define your customer. Changing any one element may change other elements; if you cannot afford to purchase expensive kitchen equipment, you may need to adapt your menu accordingly. If you hope to attract an upscale clientele, you may need to invest more in purchasing a prime location and creating an appealing ambience.

So where do you start? Focus on the basics first:

Identify your industry: Retail, wholesale, service, manufacturing, etc. Clearly define your type of business.
Identify your customer. You cannot market and sell to customers until you know who they are.
Explain the problem you solve. Successful businesses create customer value by solving problems. In our rental example, one problem is cycling enthusiasts who don't--or can't--travel with bikes. Another problem is casual cyclists who can't--or choose not to--spend significant sums on their own bikes. The rental shop will solve that problem by offering a lower-cost and convenient alternative.
Show how you will solve that problem. Our rental shop will offer better prices and enhanced services like remote deliveries, off-hours equipment returns, and online reservations.

If you are still stuck, try answering these questions. Some may pertain to you; others may not.

Who is my average customer? Who am I targeting? (Unless you plan to open a grocery store, you should be unlikely to answer, "Everyone!")
What problem do I solve for my customers?
How will I solve that problem?
Where will I fail to solve a customer problem... and what can I do to overcome that issue? (In our rental example, one problem is a potential lack of convenience; we will overcome that issue by offering online reservations, on-resort deliveries, and drive-up equipment returns.)
Where will I locate my business?
What products, services, and equipment do I need to run my business?
What skills do my employees need, and how many do I need?
How will I beat my competition?
How can I differentiate myself from my competition in the eyes of my customers? (You can have a great plan to beat your competition but you also must win the perception battle among your customers. If customers don't feel you are different... then you aren't truly different. Perception is critical.)

Once you work through this list you will probably end up with a lot more detail than is necessary for your business plan. That is not a problem: Start summarizing the main points. For example, your Business Overview and Objectives section could start something like this:

History and Vision

Blue Mountain Cycle Rentals is a new retail venture that will be located at 321 Mountain Drive, directly adjacent to an extremely popular cycling destination. Our initial goal is to become the premier provider for bicycle rentals. We will then leverage our customer base and position in the market to offer new equipment sales as well as comprehensive maintenance and service, custom equipment fittings, and expert trail advice.

Achieve the largest market share bicycle rentals in the area
Generate a net income of $235,000 at the end of the second year of operation
Minimize rental inventory replacement costs by maintaining a 7% attrition rate on existing equipment (industry average is 12%)

Keys to Success

Provide high quality equipment, sourcing that equipment as inexpensively as possible through existing relationships with equipment manufacturers and other cycling shops
Use signage to attract visitors traveling to the national forest, highlighting our cost and service advantage
Create additional customer convenience factors to overcome a perceived lack of convenience for customers planning to ride roads and trails some distance away from our shop
Develop customer incentive and loyalty programs to leverage customer relationships and create positive word of mouth

You could certainly include more detail in each section; this is simply a quick guide. And if you plan to develop a product or service, you should thoroughly describe the development process as well as the end result.

The key is to describe what you will do for your customers--if you can't, you won't have any customers.

Next time we'll look at another major component in a business plan: your Products and Services .

12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

The name and location of your company
Products and services offered by your company
Mission and vision statements
Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

Business location
The legal structure of your business
Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

The geographical location of your target market
Needs of your target market and how your products and services can meet those needs
Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

Industry description and statistics
Demographics and profile of target customers
Marketing data for your products and services
Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

Your competitors' identified advantages in the market
How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
The standout qualities that distinguish you from other companies
Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

Information about how your company plans to carry out its operations.
The base location from which your company intends to operate.
The number of employees to be utilized and other information about your company's operations.
Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

Projected income statements
Cash flow statements
Balance sheets
Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

Legal documents
Licenses and permits
Credit histories
Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

The management team and other stakeholders resume
Marketing research
Permits and relevant legal documents
Financial documents

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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A business plan is a document that outlines a company's goals and the strategies to achieve them. It's valuable for both startups and established companies. For startups, a well-crafted business plan is crucial for attracting potential lenders and investors. Established businesses use business plans to stay on track and aligned with their growth objectives. This article will explain the key components of an effective business plan and guidance on how to write one.

Key Takeaways

A business plan is a document detailing a company's business activities and strategies for achieving its goals.
Startup companies use business plans to launch their venture and to attract outside investors.
For established companies, a business plan helps keep the executive team focused on short- and long-term objectives.
There's no single required format for a business plan, but certain key elements are essential for most companies.

Investopedia / Ryan Oakley

Any new business should have a business plan in place before beginning operations. Banks and venture capital firms often want to see a business plan before considering making a loan or providing capital to new businesses.

Even if a company doesn't need additional funding, having a business plan helps it stay focused on its goals. Research from the University of Oregon shows that businesses with a plan are significantly more likely to secure funding than those without one. Moreover, companies with a business plan grow 30% faster than those that don't plan. According to a Harvard Business Review article, entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don't.

A business plan should ideally be reviewed and updated periodically to reflect achieved goals or changes in direction. An established business moving in a new direction might even create an entirely new plan.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. It allows for careful consideration of ideas before significant investment, highlights potential obstacles to success, and provides a tool for seeking objective feedback from trusted outsiders. A business plan may also help ensure that a company’s executive team remains aligned on strategic action items and priorities.

While business plans vary widely, even among competitors in the same industry, they often share basic elements detailed below.

A well-crafted business plan is essential for attracting investors and guiding a company's strategic growth. It should address market needs and investor requirements and provide clear financial projections.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, gathering the basic information into a 15- to 25-page document is best. Any additional crucial elements, such as patent applications, can be referenced in the main document and included as appendices.

Common elements in many business plans include:

Executive summary : This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
Products and services : Describe the products and services the company offers or plans to introduce. Include details on pricing, product lifespan, and unique consumer benefits. Mention production and manufacturing processes, relevant patents , proprietary technology , and research and development (R&D) information.
Market analysis : Explain the current state of the industry and the competition. Detail where the company fits in, the types of customers it plans to target, and how it plans to capture market share from competitors.
Marketing strategy : Outline the company's plans to attract and retain customers, including anticipated advertising and marketing campaigns. Describe the distribution channels that will be used to deliver products or services to consumers.
Financial plans and projections : Established businesses should include financial statements, balance sheets, and other relevant financial information. New businesses should provide financial targets and estimates for the first few years. This section may also include any funding requests.

Investors want to see a clear exit strategy, expected returns, and a timeline for cashing out. It's likely a good idea to provide five-year profitability forecasts and realistic financial estimates.

2 Types of Business Plans

Business plans can vary in format, often categorized into traditional and lean startup plans. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

Traditional business plans : These are detailed and lengthy, requiring more effort to create but offering comprehensive information that can be persuasive to potential investors.
Lean startup business plans : These are concise, sometimes just one page, and focus on key elements. While they save time, companies should be ready to provide additional details if requested by investors or lenders.

Why Do Business Plans Fail?

A business plan isn't a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections. Markets and the economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All this calls for building flexibility into your plan, so you can pivot to a new course if needed.

How Often Should a Business Plan Be Updated?

How frequently a business plan needs to be revised will depend on its nature. Updating your business plan is crucial due to changes in external factors (market trends, competition, and regulations) and internal developments (like employee growth and new products). While a well-established business might want to review its plan once a year and make changes if necessary, a new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is ideal for quickly explaining a business, especially for new companies that don't have much information yet. Key sections may include a value proposition , major activities and advantages, resources (staff, intellectual property, and capital), partnerships, customer segments, and revenue sources.

A well-crafted business plan is crucial for any company, whether it's a startup looking for investment or an established business wanting to stay on course. It outlines goals and strategies, boosting a company's chances of securing funding and achieving growth.

As your business and the market change, update your business plan regularly. This keeps it relevant and aligned with your current goals and conditions. Think of your business plan as a living document that evolves with your company, not something carved in stone.

University of Oregon Department of Economics. " Evaluation of the Effectiveness of Business Planning Using Palo Alto's Business Plan Pro ." Eason Ding & Tim Hursey.

Bplans. " Do You Need a Business Plan? Scientific Research Says Yes ."

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

Harvard Business Review. " How to Write a Winning Business Plan ."

U.S. Small Business Administration. " Write Your Business Plan ."

SCORE. " When and Why Should You Review Your Business Plan? "

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How to Write a Market Analysis for a Business Plan

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A lot of preparation goes into starting a business before you can open your doors to the public or launch your online store. One of your first steps should be to write a business plan . A business plan will serve as your roadmap when building your business.

Within your business plan, there’s an important section you should pay careful attention to: your market analysis. Your market analysis helps you understand your target market and how you can thrive within it.

Simply put, your market analysis shows that you’ve done your research. It also contributes to your marketing strategy by defining your target customer and researching their buying habits. Overall, a market analysis will yield invaluable data if you have limited knowledge about your market, the market has fierce competition, and if you require a business loan. In this guide, we'll explore how to conduct your own market analysis.

How to conduct a market analysis: A step-by-step guide

In your market analysis, you can expect to cover the following:

Industry outlook

Target market

Market value

Competition

Barriers to entry

Let’s dive into an in-depth look into each section:

Step 1: Define your objective

Before you begin your market analysis, it’s important to define your objective for writing a market analysis. Are you writing it for internal purposes or for external purposes?

If you were doing a market analysis for internal purposes, you might be brainstorming new products to launch or adjusting your marketing tactics. An example of an external purpose might be that you need a market analysis to get approved for a business loan .

The comprehensiveness of your market analysis will depend on your objective. If you’re preparing for a new product launch, you might focus more heavily on researching the competition. A market analysis for a loan approval would require heavy data and research into market size and growth, share potential, and pricing.

Step 2: Provide an industry outlook

An industry outlook is a general direction of where your industry is heading. Lenders want to know whether you’re targeting a growing industry or declining industry. For example, if you’re looking to sell VCRs in 2020, it’s unlikely that your business will succeed.

Starting your market analysis with an industry outlook offers a preliminary view of the market and what to expect in your market analysis. When writing this section, you'll want to include:

Market size

Are you chasing big markets or are you targeting very niche markets? If you’re targeting a niche market, are there enough customers to support your business and buy your product?

Product life cycle

If you develop a product, what will its life cycle look like? Lenders want an overview of how your product will come into fruition after it’s developed and launched. In this section, you can discuss your product’s:

Research and development

Projected growth

How do you see your company performing over time? Calculating your year-over-year growth will help you and lenders see how your business has grown thus far. Calculating your projected growth shows how your business will fare in future projected market conditions.

Step 3: Determine your target market

This section of your market analysis is dedicated to your potential customer. Who is your ideal target customer? How can you cater your product to serve them specifically?

Don’t make the mistake of wanting to sell your product to everybody. Your target customer should be specific. For example, if you’re selling mittens, you wouldn’t want to market to warmer climates like Hawaii. You should target customers who live in colder regions. The more nuanced your target market is, the more information you’ll have to inform your business and marketing strategy.

With that in mind, your target market section should include the following points:

Demographics

This is where you leave nothing to mystery about your ideal customer. You want to know every aspect of your customer so you can best serve them. Dedicate time to researching the following demographics:

Income level

Create a customer persona

Creating a customer persona can help you better understand your customer. It can be easier to market to a person than data on paper. You can give this persona a name, background, and job. Mold this persona into your target customer.

What are your customer’s pain points? How do these pain points influence how they buy products? What matters most to them? Why do they choose one brand over another?

Research and supporting material

Information without data are just claims. To add credibility to your market analysis, you need to include data. Some methods for collecting data include:

Target group surveys

Focus groups

Reading reviews

Feedback surveys

You can also consult resources online. For example, the U.S. Census Bureau can help you find demographics in calculating your market share. The U.S. Department of Commerce and the U.S. Small Business Administration also offer general data that can help you research your target industry.

Step 4: Calculate market value

You can use either top-down analysis or bottom-up analysis to calculate an estimate of your market value.

A top-down analysis tends to be the easier option of the two. It requires for you to calculate the entire market and then estimate how much of a share you expect your business to get. For example, let’s assume your target market consists of 100,000 people. If you’re optimistic and manage to get 1% of that market, you can expect to make 1,000 sales.

A bottom-up analysis is more data-driven and requires more research. You calculate the individual factors of your business and then estimate how high you can scale them to arrive at a projected market share. Some factors to consider when doing a bottom-up analysis include:

Where products are sold

Who your competition is

The price per unit

How many consumers you expect to reach

The average amount a customer would buy over time

While a bottom-up analysis requires more data than a top-down analysis, you can usually arrive at a more accurate calculation.

Step 5: Get to know your competition

Before you start a business, you need to research the level of competition within your market. Are there certain companies getting the lion’s share of the market? How can you position yourself to stand out from the competition?

There are two types of competitors that you should be aware of: direct competitors and indirect competitors.

Direct competitors are other businesses who sell the same product as you. If you and the company across town both sell apples, you are direct competitors.

An indirect competitor sells a different but similar product to yours. If that company across town sells oranges instead, they are an indirect competitor. Apples and oranges are different but they still target a similar market: people who eat fruits.

Also, here are some questions you want to answer when writing this section of your market analysis:

What are your competitor’s strengths?

What are your competitor’s weaknesses?

How can you cover your competitor’s weaknesses in your own business?

How can you solve the same problems better or differently than your competitors?

How can you leverage technology to better serve your customers?

How big of a threat are your competitors if you open your business?

Step 6: Identify your barriers

Writing a market analysis can help you identify some glaring barriers to starting your business. Researching these barriers will help you avoid any costly legal or business mistakes down the line. Some entry barriers to address in your marketing analysis include:

Technology: How rapid is technology advancing and can it render your product obsolete within the next five years?

Branding: You need to establish your brand identity to stand out in a saturated market.

Cost of entry: Startup costs, like renting a space and hiring employees, are expensive. Also, specialty equipment often comes with hefty price tags. (Consider researching equipment financing to help finance these purchases.)

Location: You need to secure a prime location if you’re opening a physical store.

Competition: A market with fierce competition can be a steep uphill battle (like attempting to go toe-to-toe with Apple or Amazon).

Step 7: Know the regulations

When starting a business, it’s your responsibility to research governmental and state business regulations within your market. Some regulations to keep in mind include (but aren’t limited to):

Employment and labor laws

Advertising

Environmental regulations

If you’re a newer entrepreneur and this is your first business, this part can be daunting so you might want to consult with a business attorney. A legal professional will help you identify the legal requirements specific to your business. You can also check online legal help sites like LegalZoom or Rocket Lawyer.

Tips when writing your market analysis

We wouldn’t be surprised if you feel overwhelmed by the sheer volume of information needed in a market analysis. Keep in mind, though, this research is key to launching a successful business. You don’t want to cut corners, but here are a few tips to help you out when writing your market analysis:

Use visual aids

Nobody likes 30 pages of nothing but text. Using visual aids can break up those text blocks, making your market analysis more visually appealing. When discussing statistics and metrics, charts and graphs will help you better communicate your data.

Include a summary

If you’ve ever read an article from an academic journal, you’ll notice that writers include an abstract that offers the reader a preview.

Use this same tactic when writing your market analysis. It will prime the reader of your market highlights before they dive into the hard data.

Get to the point

It’s better to keep your market analysis concise than to stuff it with fluff and repetition. You’ll want to present your data, analyze it, and then tie it back into how your business can thrive within your target market.

Revisit your market analysis regularly

Markets are always changing and it's important that your business changes with your target market. Revisiting your market analysis ensures that your business operations align with changing market conditions. The best businesses are the ones that can adapt.

Why should you write a market analysis?

Your market analysis helps you look at factors within your market to determine if it’s a good fit for your business model. A market analysis will help you:

1. Learn how to analyze the market need

Markets are always shifting and it’s a good idea to identify current and projected market conditions. These trends will help you understand the size of your market and whether there are paying customers waiting for you. Doing a market analysis helps you confirm that your target market is a lucrative market.

2. Learn about your customers

The best way to serve your customer is to understand them. A market analysis will examine your customer’s buying habits, pain points, and desires. This information will aid you in developing a business that addresses those points.

3. Get approved for a business loan

Starting a business, especially if it’s your first one, requires startup funding. A good first step is to apply for a business loan with your bank or other financial institution.

A thorough market analysis shows that you’re professional, prepared, and worth the investment from lenders. This preparation inspires confidence within the lender that you can build a business and repay the loan.

4. Beat the competition

Your research will offer valuable insight and certain advantages that the competition might not have. For example, thoroughly understanding your customer’s pain points and desires will help you develop a superior product or service than your competitors. If your business is already up and running, an updated market analysis can upgrade your marketing strategy or help you launch a new product.

Final thoughts

There is a saying that the first step to cutting down a tree is to sharpen an axe. In other words, preparation is the key to success. In business, preparation increases the chances that your business will succeed, even in a competitive market.

The market analysis section of your business plan separates the entrepreneurs who have done their homework from those who haven’t. Now that you’ve learned how to write a market analysis, it’s time for you to sharpen your axe and grow a successful business. And keep in mind, if you need help crafting your business plan, you can always turn to business plan software or a free template to help you stay organized.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

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Better Knowledge. Your Insight Is Sharper

From Idea to Implementation: Essential Business Planning Strategies

Updated: August 25, 2024 · Reviewed by: Ahmad Nasrudin

This post may contain affiliate links, meaning we may earn a small commission if you purchase through our links. This helps support our work.

Business planning is a crucial step in starting and growing a successful enterprise. It provides a roadmap for your venture, outlining your goals, strategies, and financial projections.

Whether you’re a budding entrepreneur or an established business owner, a well-crafted business plan can help you:

Define your business goals and objectives
Conduct thorough market research
Develop a sound financial strategy
Attract investors and secure funding
Measure progress and make informed decisions

In this comprehensive guide, we’ll walk you through the process of creating a business plan, from understanding the key components to developing effective strategies. By the end, you’ll be equipped to build a solid foundation for your business and increase your chances of success.

Understanding Business Planning

What is a business plan.

A business plan is a comprehensive document that outlines your business strategy, goals, and financial projections. It serves as a roadmap for your venture, guiding your decisions and attracting potential investors.

There are several types of business plans, each with its own specific focus:

Operational plans: These plans focus on a business’s day-to-day operations, including production, marketing, sales, and customer service.
Strategic plans: Strategic plans outline a company’s long-term goals and objectives, and the strategies for achieving them.
Marketing plans: Marketing plans focus on the specific marketing strategies and tactics that a business will use to reach its target market.

Why is a business plan important?

A well-crafted business plan offers numerous benefits, including:

Improved decision-making: A business plan helps you make informed decisions by providing a clear framework for your business strategy.
Attracting investors and securing funding: Investors are likelier to invest in businesses with well-thought-out plans.
Enhanced credibility: A business plan demonstrates your understanding of the market, your industry, and your business’s potential.
Increased focus and accountability: A business plan helps you stay focused on your goals and measure your progress.
Risk mitigation: By identifying potential risks and challenges, a business plan can help you develop strategies to mitigate them.

A business plan is essential for any entrepreneur or business owner, providing a foundation for success and growth.

Creating a Business Plan

What are the key components of a business plan.

A well-structured business plan typically includes the following key components:

Executive summary: A concise business overview, including your mission, vision, and key value proposition.
Company description: A detailed description of your business, including its legal structure , ownership, and management team.
Market analysis: An in-depth analysis of your target market, competition, and industry trends.
Organizational structure: A breakdown of your company’s organizational chart and responsibilities.
Products or services: A detailed description of your offerings, including their features, benefits, and pricing.
Marketing and sales plan: Your strategy for promoting your products or services and generating sales.
Financial projections: Your projected income statement, balance sheet, and cash flow statement.

Each of these components is essential for a comprehensive business plan. Together, they provide a clear picture of your business, its market potential, and its financial viability.

How long should a business plan be?

While a business plan has no strict length requirement, it is typically 15-25 pages long . However, the length may vary depending on the complexity of your business and the level of detail required.

A shorter plan may be sufficient for a small, simple business, while a larger, more complex business may require a more detailed plan. The key is to ensure that your plan is clear and concise and provides the necessary information to attract investors or secure funding.

Who should read my business plan?

Your business plan can be valuable to a variety of stakeholders, including:

Investors: Investors may use your business plan to assess the potential return on their investment.
Lenders: Lenders may use your business plan to evaluate your creditworthiness and determine whether to provide funding.
Employees: Employees can use the business plan to understand the company’s goals, strategy, and their role within the organization.
Suppliers: Suppliers may use your business plan to assess your financial stability and future growth potential.
Partners: Partners can use your business plan to understand your business goals and how you plan to collaborate.

By sharing your business plan with relevant stakeholders, you can build relationships, secure funding, and gain valuable insights and support.

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Market Analysis

What is market research.

Market research is the process of gathering and analyzing information about a market. It helps you understand your target market, competition, industry trends, and consumer behavior.

There are two main types of market research:

Primary research: Collecting original data through surveys, focus groups, interviews, or observations.
Secondary research: Analyzing existing data from government agencies, industry reports, academic studies, and other sources.

How can I conduct market research?

There are numerous methods for conducting market research, both online and offline. Here are some common approaches and resources:

Surveys: Gather quantitative and qualitative data by creating surveys using online tools like SurveyMonkey or Google Forms.
Focus groups: Conduct group discussions to obtain insights and feedback from potential customers.
Interviews: Interview individuals in your target market to gain deeper understanding and perspectives.
Online research: Use search engines, industry databases, and social media platforms to find information on market trends, competitors, and consumer behavior.
Government data: Utilize government agencies like the U.S. Census Bureau and the Bureau of Labor Statistics for demographic data and economic indicators.
Industry reports: Consult reports from organizations like Forrester, Gartner, and IBISWorld for in-depth market analysis.
Social media listening: Monitor social media platforms to track conversations and sentiment about your industry and competitors.

When conducting market research, consider the following tips:

Define your research objectives: Clearly outline what you want to learn from your research.
Choose appropriate methods: The research methods best suit your objectives and resources.
Develop a sampling plan: Determine who you will survey or interview and how you will select your sample.
Analyze your data: Use statistical tools and techniques to analyze your research data and draw meaningful conclusions.
Interpret your findings: Consider the implications of your research findings and how they can inform your business strategy.

By following these guidelines and combining various research methods, you can gather valuable insights to inform your business decisions and develop effective marketing strategies.

What is a target market?

Your target market is the specific people most likely to purchase your product or service. Identifying your target market is essential for effectively marketing your business and tailoring your offerings to meet their needs.

Here are some strategies to help you identify your target market:

Create customer personas: Develop detailed profiles of your ideal customers, including their demographics (age, gender, income, education, location), psychographics (lifestyle, interests, values, beliefs), and behaviors (purchasing habits, brand preferences, online behavior).
Analyze your existing customers: If you have an existing business, analyze the characteristics of your current customers to identify patterns and trends.
Conduct market research: Use surveys, focus groups, and interviews to gather data about potential customers and their preferences.

By understanding your target market, you can tailor your marketing efforts and product offerings to meet their specific needs and preferences, increasing your chances of success.

Financial Projections

What financial statements should i include.

When creating your business plan, you should include the following financial statements :

Income statement: Also known as a profit and loss statement, this shows your business’s revenue, expenses, and net income over a specific period.
Balance sheet: This statement shows your business’s assets, liabilities, and equity at a specific point in time.
Cash flow statement: This statement shows the cash flow in and out of your business over a specific period.

These three interrelated statements provide a comprehensive picture of your business’s financial health.

How do I create financial projections?

Financial projections are estimates of your business’s future financial performance. To create accurate projections, you’ll need to use a combination of historical data, industry benchmarks, and assumptions about future growth.

Here are some steps to follow:

Gather historical data: Collect data on your past sales, expenses, and cash flow.
Analyze industry trends: Research industry trends and forecasts to identify potential opportunities and challenges.
Make assumptions about future growth: Make reasonable assumptions about your business’s future sales, expenses, and other factors.
Create financial projections: Use this information to create projections for your income statement, balance sheet, and cash flow statement.

Remember that financial projections are just estimates, and actual results may vary. It’s important to regularly review and update your projections as your business grows and changes.

What is a break-even analysis?

A break-even analysis is a financial tool that helps you determine the sales volume you need to cover your costs and start making a profit. It calculates your break-even point, the point at which your total revenue equals your total costs.

To calculate your break-even point, you’ll need to know your fixed costs (costs that remain constant regardless of sales volume) and your variable costs (costs that vary with sales volume). You can then use the following formula:

Break-even point = Fixed costs / (Selling price per unit – Variable cost per unit)

By understanding your break-even point, you can assess the feasibility of your business model and make informed decisions about pricing, sales targets, and cost-cutting measures.

Attracting Investors and Securing Funding

How can i attract investors.

Attracting investors requires effective communication , networking, and showcasing your business’s potential. Here are some key strategies:

Create a compelling pitch deck: Develop a visually appealing and informative presentation highlighting your business idea , market opportunity, financial projections, and team.
Network with potential investors: Attend industry events, connect with investors through online platforms, and leverage your professional network to identify potential investors.
Highlight your business’s potential: Emphasize the growth potential of your business, the return on investment for investors, and the unique value proposition of your product or service.

What types of funding are available?

There are various funding sources available for businesses, each with its own advantages and disadvantages:

Angel investors: Individuals who invest their own money in early-stage businesses. Angel investors often provide capital in exchange for equity.
Venture capital firms: Companies that invest in high-growth businesses. Venture capital firms typically invest larger sums of money and expect higher returns.
Banks: Banks offer loans to businesses, which can be used to finance operations, purchase equipment, or invest in growth.
Crowdfunding platforms: Online platforms that allow individuals to raise funds from many people. Crowdfunding can be a valuable source of funding for startups and small businesses.

The most suitable funding source for your business will depend on your specific needs, its stage, and your ability to meet the requirements of different investors.

What should I include in my funding pitch?

A strong funding pitch should clearly articulate the following:

Your business idea: Explain what your business does and the problem it solves.
Market opportunity: Demonstrate the size and growth potential of your target market.
Competitive advantage: Explain what sets your business apart from competitors.
Financial projections: Present your financial projections, including revenue, expenses, and profitability.
Team: Highlight your team members’ skills, experience, and passion.
Investment requirements: Clearly state the funding you seek and how the funds will be used.

By following these guidelines and tailoring your pitch to your specific audience, you can increase your chances of attracting investors and securing the funding you need to grow your business.

Measuring Progress and Making Informed Decisions

How can i track my business’s progress.

Tracking your business’s progress is essential for identifying areas of strength and weakness, making informed decisions, and ensuring you’re on track to achieve your goals. Key performance indicators (KPIs) are metrics you can use to measure your business’s performance against specific goals.

Some examples of KPIs include:

Sales revenue: Total revenue generated by your business.
Profit margin: The percentage of revenue that remains after deducting expenses.
Customer acquisition cost : The cost of acquiring a new customer.
Customer retention rate: The percentage of customers who continue to do business with you.
Market share: The percentage of a market that your business controls.
Employee satisfaction: The level of satisfaction among your employees.

By tracking these KPIs and comparing them to your goals, you can identify areas where you are succeeding and areas where you need to improve.

How can I make informed decisions?

Making informed decisions is crucial for the success of your business. Here are some tips for making effective decisions:

Regularly review your business plan: As your business evolves, it’s important to review and update it to ensure it aligns with your current goals and strategies.
Analyze data: Use data from your KPIs and other sources to identify trends, opportunities, and challenges.
Be prepared to adapt: The business landscape constantly changes, so adapt your strategy as needed.
Seek advice and guidance: Don’t be afraid to seek advice from mentors, advisors, or other experts.
Trust your instincts: While data and analysis are important, sometimes you must trust your gut and make decisions based on intuition.

By following these tips, you can make informed decisions to help your business grow and succeed.

Additional Tips

How often should i update my business plan.

Your business plan should be a living document that evolves as your business grows and changes. Reviewing and updating your plan regularly is important to ensure it remains relevant and effective.

The frequency of updates will depend on several factors, including:

Business growth: As your business expands, you must update your financial projections and market analysis.
Market changes: If your industry or target market undergoes significant changes, you may need to revise your business strategy.
Performance: If your business is not meeting its goals, you may need to adjust your plan.

A general guideline is to review and update your business plan annually or more frequently if necessary.

Can I use a business plan template?

Using a business plan template can be a helpful starting point, but it’s important to customize it to fit your specific business. Templates can provide a structure and outline but may not include all the necessary sections or address your unique needs.

Advantages of using a template:

Saves time: Templates can help you start quickly and avoid common mistakes.
Provides structure: Templates can help you organize your thoughts and ensure that you include all the essential elements of a business plan.

Disadvantages of using a template:

Lack of customization: Templates may not be tailored to your specific industry or business model.
Limited flexibility: Templates can be restrictive, limiting your ability to add or remove sections as needed.

When choosing a template, look for one that is well-structured, easy to use, and adaptable to your specific business needs.

Should I seek professional help?

While you can create a basic business plan on your own, consulting with a business advisor or accountant can provide valuable guidance and expertise. Professionals can help you:

Develop a comprehensive plan: Ensure that your plan includes all the necessary components and is well-structured.
Conduct market research: Gather and analyze data to inform your business strategy.
Create financial projections: Develop accurate financial projections based on industry benchmarks and your business’s specific circumstances.
Identify potential challenges and opportunities: Assess the risks and rewards associated with your business venture.
Provide guidance and support: Receive ongoing support and advice as you implement your business plan.

If you’re unsure about your ability to create a high-quality business plan, consider consulting with a professional. They can help you develop a plan to increase your chances of success.

Start building your dream business today. Click here to learn more.

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Introverted writer with a passion for storytelling. Leveraged analytical skills from financial background (equity research, credit risk) at a leading rating agency to enhance writing with a unique statistical and macroeconomic perspective. Learn more about me

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Reasons business or organization does not plan to use artificial intelligence (AI) in producing goods or delivering services over the next 12 months, third quarter of 2024 1 , 2 , 3

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Release date: 2024-08-27

Geography: Canada, Province or territory

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39 Free Industry Analysis Examples & Templates ᐅ TemplateLab
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Reasons business or organization does not plan to use artificial
Reasons business or organization does not plan to use artificial intelligence (AI) in producing goods or delivering services over the next 12 months, by North American Industry Classification System (NAICS), business employment size, type of business, business activity and majority ownership, third quarter of 2024. ... Analysis. Stats in brief ...

Business Plan Example and Template

What is a Business Plan?

Contents of a Business Plan

1. Title Page

2. Executive Summary

3. Industry Overview

4. Market Analysis and Competition

5. Sales and Marketing Plan

6. Management Plan

7. Operating Plan

8. Financial Plan

9. Appendices and Exhibits

Business Plan Template

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How to Write The Industry Section of a Business Plan

Finding Information on Your Industry

United States Research

Canadian Research

Doing Business Plan Research

WHAT is Market Analysis?

WHY Should You Do Market Analysis?

External Support

HOW To Do Market Analysis: Step-by-Step

Step 1: Industry Analysis

How Do You Analyze an Industry?

1.1. Economic Conditions

1.2. Industry Description

1.3. Industry Size and Growth

1.4. Industry Trends

Step 2: Target Customer Identification

How Do You Identify an Ideal Target Customer?

2.2. Demographics

2.3. Geographic Location

2.4 Purchasing Patterns

2.5. Psychographics

Step 3: Target Market Analysis

How Do You Analyze a Target Market?

3.1. Target Market Description

3.2. Market Size and Share

3.3. Market Trends

3.4. Demand Growth Opportunity

How Big Should My Target Market Be?

What If My Stats Look Bad?

Step 4: Industry and Market Analysis Research

What is Primary and Secondary Market Research?

Why Do You Need To Do Primary & Secondary Market Research?

7 TOP TIPS For Writing Market Analysis

2. Laser Focus

3. Target Audience

4. Story Time

6. Information Overload

7. Marketing Plan

Final Thoughts

Related Questions

Why are Industry & Market Research and Analysis IMPORTANT?

How Can Industry & Market Research and Analysis BENEFIT a Business?

How To Develop the Industry Analysis of Your Business Plan

What Is The Industry Analysis In A Business Plan?

Industry Analysis vs. Market Analysis

Key Components of an Industry Analysis

Industry Overview

Industry Size

Market Size

Industry Rate of Growth

Market Trends

Competitors

Market Challenges

Strategies and Strengths

How To Write An Industry Analysis For Your Business

1. Action Step: Industry Overview

2. Action Step: Industry Size

3. Action Step: Market Size

4. Action Step: Industry Rate of Growth

5. Action Step: Market Trends

6. Action Step: Competitors

7. Action Step: Market Challenges

8. Action Step: Strategies and Strengths