Next Step? Industry and Market.
Last week we looked at what goes into starting a business plan. This week I want to look at the next steps of your plan by discussing how to research your industry and determine your market. You have to know the need for your services and, know how you’ll source products and materials within your industry. More importantly you must know who is likely to need your services and products and how you will find these people.
An important part of starting a business is knowing the industry in which you plan to operate. So, to write a good business plan an Industry Analysis is required. To get started you must look at your entire industry and outline how you fit in it.
Having trouble determining the industry? Think about the other businesses and people you will interact with or rely on to help you succeed...
Are you offering hiking tours in rural communities? That activity falls within the tourism industry.
Have you developed an application to help delivery drivers work more efficiently for multiple businesses? Look into restaurants and hospitality.
Are you looking to open a gallery? Well, maybe you are operating within multiple industries… tourism, arts & culture, retail.
To effectively research your industry, you will have to know how much money is spent within your industry annually. Are you a supplier, or are you an end-user who relies on suppliers to offer your services? What is the general structure of your industry? Look at other businesses that are currently operating in your industry and their structures. How will your business compare to their structure? For example, if you are a restaurant, what options do you have to buy your ingredients? Will it change seasonally? What kinds of shortages should you expect? Who are your competitors? The purpose of this section of your business plan is to prove that your business has a place in its industry.
Once you have done your industry research, it is important to know who will be using your products and services. The next section is an analysis of who you are planning to sell to. Now that you have introduced the industry and how you fit into it, your business plan should explore what segment of that industry you are targeting and the type of customer who is using the product. You are not allowed to say everyone. Be as specific as possible here.
One practice is to create personas of the people you think will use your business. If you are offering hiking tours in rural Nova Scotia, look into what kind of person is likely to seek out that kind of tour. Someone who is active, any gender, likely they live in urban areas and looking to escape the city, or maybe they are locals who want to get to know the area they live in better. They will likely be adults that are able to drive to a rural location, maybe between the ages of 18 – 65. How much money do they make annually? What do they like to buy? Where do they shop? Probably stores that offer outdoor equipment like Mountain Equipment Co-op or SportsCheck. Think about the reasons why they will use your services. You want the people reading your business plan to be able to put themselves into the shoes of your customer and see why this person would use your products. If you are already offering products and services look to the people who are already your clients, who are they? Can you find the similarities between them and make a persona?
Another part of your market analysis should be the size of your market. How many people are out there to buy your products? How far will people travel to get to your business? Do they even need to travel? Can you guess your share in your market? Are there any trends in the market? This is a small example of trends, but if we go back to our hiking example, if you have noticed that for some reason the people taking your tours are all interested in foraging, or have talked about geo-caching… would there be a way to incorporate that into your services to add to the experience? These could be future plans on how to better reach the market.
You can also look more at your competitors in your market analysis. Identify your biggest competitors, their locations, the years they were founded, and the share they hold in the market. If you can, estimate their growth and sales and identify any strengths or weaknesses you think they have.
Finally, after you have outlined your market, you should finish your analysis by addressing how you will reach out to that market. Outline the specifics of your products, in detail, describe the need you are filling, anything that makes your product unique and if you need patents or trademarks. Outline if your services/products require specific training. Then, tell your reader how you are going to sell? Online? From a Store-front? Both? How will you distribute the products? Determine your prices and justify them. Let us know how it compares to the averages within your industry. Lastly, tell us your plan to promote your business. Outline traditional methods of advertising but know that as more and more businesses begin to operate online you should also include information about your business’ online presence. If possible, outline a budget for marketing and promoting your business.
It’s a lot to consider, but once you have answered all these questions you are closer to completing a business plan. Answering these questions up front also means that you are starting or continuing your business on a solid foundation. As I said before, if you get stuck CBDC Blue Water is here to help. So, do what you can and then give us a call! There are a couple more recommended sections of a business plan. Next blog we will look at Business Operations and Financials!