How to Do Market Analysis for a Business Plan
A business plan highlights the future objectives of a company, often relating to how the company will sell their product. It also explains proposed strategies to meet sales goals. And market analysis communicates information regarding business.
But market analysis is a broad term. In a business plan, it means you must understand your market/industry and prove to potential investors it’s worth providing funds to your company.
Specifically, you can include:
- Your industry
- Your target market
- The product you intend to sell
- Information about competitors and
- Your marketing plan
This section can appear after introducing your products and/or services. The market analysis section should be fully fleshed out, backed with statistics and reliable data.
A breakdown of market analysis in business plans
You’ll be including the following information:
Your industry: Through data and analytics, this section highlights the trends and buying behavior within your industry. The point is to prove to investors this is a viable market by providing statistics on growth rate and industry size.
Your target market: These are your prospective customers. You tell who they are, their salary, biggest ailments, where to find them, location, and social factors that affect their purchasing decisions.
The product you intend to sell: You’ve mostly explained this in a previous section, but it can be smart to introduce it again, backed with any data collected that proves your product’s worth in the market.
Information about competitors: You’ll explain the strengths and weaknesses of major competitors in your industry. You’ll want to explain how you’ll utilize the weaknesses to market your product. SWOT analysis is perfect for this.
Your marketing plan: The strategies used to market your product should be based on data, research, and competitors. This section will highlight offline, online, digital, and various technologies required to market your product.
The research necessary to complete these sections may be extensive. But there are several avenues you can use to collect it.
Custom surveys: If you’ve ever provided a survey to existing clients from a road test or testimonial phase, you can include their feedback to prove your product is desirable.
Become your customer: Many businesses create a product because it didn’t exist for their problem. If you’re one of them, you’ve already assessed your product through the eyes of a buyer. But if you didn’t, it’s time you sit down and look at it from their point of view. Why would you want your product? How would you buy it? Does the competitor do it better and if so, how?
Google. Statistics and facts from official publications, such as the government, are often readily available online. These statistics can be inputted to strengthen your points related to demographics, industry research, and the competition. But the stats you choose must be linked to your business and/or product positively. Otherwise, they’re useless.
Chop it down. Your business plan should be concise. Include the most relevant facts, information, and statistics then cut the fat from the rest. Investors don’t want to sift through endless information to get to the conclusion.
The section about market analysis in your business plan is crucial. It must explain the strengths of your industry, product, and marketing strategies. It requires statistics and data to prove to your investors they will make their money back — meaning your company is a profitable investment.
You can use tools such as SWOT analysis to identify strengths, weaknesses, opportunities, and threats regarding your products, industry, or the competition. And every piece of information, from the analysis to the data, must point back positively to your company.