How to Write the Market Analysis Section of a Business Plan
Your business plan’s market analysis section follows the services or products section. It should give a comprehensive overview of the industry in which you plan to sell your product/service, as well as statistics that support your claims. The market analysis section should contain information about your industry, target market, competition, and your plans to place your product or service there. This section should be included as an appendix to the end. Only the most essential statistics should be included in the market section.
What Should a Market Analysis Look Like?
The following should be included in the market analysis section of your small-business plan:
- Industry Description & Outlook: Provides detailed statistics about the industry, including its size, growth rate, trends, as well as outlook.
- Target Market – Who are your ideal clients/customers? These data should include demographics about the target market, such as age, gender, income level, and lifestyle preferences. You should also include information about the market size, potential purchase opportunities, motivations, and the methods you plan to reach it.
- Market Testing Results: Here you will include the results from the market research that you did as part of your initial market investigation. The appendix should contain details about your testing and supporting statistics.
- Lead time is the time it takes to fulfill an order once a customer has made a purchase. Here you can provide details about the research that you have done on the time it will take to process individual orders or large volumes of purchases.
- Competitive Analysis – Who are your competitors? What are their strengths and weaknesses? What obstacles could you face in entering the market?
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7 Tips to Write a Market Analysis
This collection contains tips that will help you create a market analysis for your small business plan.
- Use Internet. The market analysis relies heavily on raw data. The Internet is a great place for starting. The U.S. Census Bureau can provide demographic data. You can do some market research online by conducting a series of searches to uncover information about your competitors.
- Be the customer: One way to determine the potential market for your product or service is to see it through the eyes of a buyer. What problem is it that must be solved? What is the solution to this problem for competition? What can you do to solve this problem differently or better?
- Let’s get to the Chase. It is helpful for your audience to include a summary section of the market analysis before getting into the details. This provides a preview of what’s coming and allows the reader to quickly identify the most important details.
- Conduct thorough market research: Take the time to study the market, and get as much information as possible. When you can, send out surveys and conduct focus groups. Use the data you collect to support your market analysis.
- Use Visual Aids – Information that is heavily number-driven, such as statistics and metrics in market analysis, will be easier to understand visually. To illustrate the most important numbers, use graphs and charts.
- Keep It Concise. Most people who read your business plan have some knowledge of the market. Move the supporting documentation and statistics to an appendix and include the most important data and market results.
- Link to Your Business All statistics and data that you include in your market analysis must be linked back to your business and products. After defining the needs of your target market, focus on what you can do to meet them.