This is the 5th post in our “Writing a Business Plan” series.
The first thing to note when creating your market analysis is that it is NOT your marketing and sales section. The two are very different. The analysis section focuses on your target market, your competition, and the marketplace in general. This is the strategy section, while the marketing and sales section is the tactical section.
What You Get
To complete this section, you have to do a lot of research. No, seriously – a lot. After writing this section you’ll have a much better understanding of the marketplace that will include your products. You’ll have a much easier time describing and planning your sales tactics because you’ll have the data available that enables quick decision making. Don’t skimp on the research; but you won’t need to include all of it in the plan.
What To Include
The main goal of this section is to describe in detail how your product(s) fit in the the marketplace. You’ll need to describe the marketplace, how you fit into it, and how you compare to all the relevant competitors. This section is almost like an expanded SWOT Analysis, Customer Analysis, and Competitor Analysis all rolled together.
I like to start the writing process with generating a spreadsheet matrix for the SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats). You’ll want your research version to have every possible competitive threat, as well as all possible opportunities. When putting the chart in the plan, you should only include the most important points for each section. Don’t try hiding the weakness and threats. Most people reading this far will have those questions, and by addressing them in the plan it demonstrates that you understand your market. It’s a great place to start the description of your marketplace.
One of the other things I sometimes see is a complete absence of competitors or competitive threats. I’ve even seen a marketing section begin with “It may be hard to believe, but we don’t have any competition!” That’s a huge red flag that the business has no idea what they’re doing. For any product or service, there’s always, always, ALWAYS competition. It may not be direct, but it’s there. Include a good competitive analysis of your top 3 competitors. Including as much detail as possible. This helps show that you understand the industry as well as what’s in store for your sales and growth.
I also recommend including a good industry analysis in this section. Illustrating the growth and adoption curve for an industry can help your case for entering the market. Proven industry growth is a positive and you can reinforce your position by describing your industry in detail and including your conclusions and opinions about the research. Show that you’ve made decisions and opinions based on research and data.
Finish up this section by describing your general customer analysis. Your research should include most, if not all, of your possible customers. You should include as much demographic information as possible. Describe the pros and cons for your potential customer base. Be sure to keep this analysis as a very “high level” overview. The details in this section will be used to determine your specific target market and niche in the next section.
What The Reader Wants
The investors reading this section will want to know that you understand the entire business landscape for your products. Seeing that you understand the competition, that you’ve identified the market, and you can address your initial weaknesses, relates to your competency as a whole. This section also outlines and introduces your marketing plan, so it will be a reference for your Marketing Plan section.
Coming up next: The Marketing Plan