Industry Research for Business Plans
One of the more challenging sections to write for a business plan is the industry research, economic research, competitive analysis, and demographic section. Generally, this section of the business plans referred to as the market and strategic analysis. One of the primary issues that most people have in regard to this matter is sourcing the industry research specific for their business. Also, many people often have difficulty determining what industry there and given that they may offer a number of different products or services through one corporate entity. The best place to start is the US Economic Census as it provides a complete overview of every single industry within the
United States. This census overviews all of the revenues, aggregate payrolls, and aggregate expenses that these businesses have within the country. You can look up what industry you're involved in simply by entering keywords into the website or by looking up the NAICS or SIC number. Typically, this information is compiled every five years. Most banks and financial institutions do compare the anticipated revenues of the business to industry-standard figures that are available on this platform. There are also a number of different private information sources that can be used and can be easily found on the Internet. However, privately sourcing market research information can be extremely expensive. Specific industry research reports can often range anywhere from $50 all the way to $2,000 depending on the depth of the market research.
As it relates to the economic analysis, many people mistake this for an overview of how their business will do in any economic climate. While this is a component of the economic analysis, a specific focus should be paid as to how the economy is doing as a whole. This includes over viewing unemployment rates, interest rates, how the stock market is doing, the housing market, and other major indexes that view the health of the economy. There are a number of publicly available information sources where this information can be found. Additionally, many good entrepreneurs always keep tabs on how the economy is doing as a whole given that it will assist them in planning for any positive or negative changes that may occur. This is especially true among businesses that rely heavily on debt capital as part of their day-to-day operations as rises in interest rates can significantly impact a businesses profit and loss statement. If you are uncertain as to develop
this type of information for your business plan you may want to speak to a business plan writing firm or a certified public accountant who can assist you in making these forward-looking financial statements.
The demographic analysis portion of this document is somewhat easy to develop given that you know who your target customer is going to be. In this section the business plan you should outline the anticipated annual household income, median family income, median net worth, age, gender, and any other defining characteristics of the customers that you will be targeting. Almost always, this section of the business plan is developed in conjunction with the marketing plan given that specific demographics use specific channels to get their information. If you are having difficulty with the section of the business plan that you may want to speak with a marketing firm that can assist you in developing this type of documentation. Many marketing firms maintain huge databases of demographic profiles that they can tap in order to provide you with who they feel is going to be your most likely customer.
The final section of this analysis typically deals with competitors at the business will face on a day-to-day basis. For local businesses, this information is usually easy to obtain given that the owner is aware of other companies that provide similar services. For Internet-based businesses and companies that operate on a regional or national level – this information can be a little more difficult to gather given that there may be tens of thousands of competitors within the market. Usually, only the largest competitors are discussed by name within this section of the business plan. One of the other things is often discussed are going to be the competitive advantages that the business will have over other service providers. Competitive advantages often include being able to provide a product or service at a lower cost, being able to operate more time effectively than competitors, and related information to why the business is better than other
businesses. Of course, an entrepreneur should spend a significant amount time analyzing the competitors and how they can either emulate similar services or provide better services at a lower rate.
In closing, the section analysis usually takes the most time and if any part of the business plan with the exception of the financials. Usually, most business plan writing firms actually complete the market and industry research first before they write the rest of the business plan. This allows the entrepreneur to get over the most difficult section of the document while thinking about the ways that the business can be highly competitive as compared to other market agents.