Starting a new business or a new segment includes a marketing analysis.
By conducting a market analysis, we will be able to gather valuable data that will help you get to know your customers, determine appropriate pricing, and figure out your competitors’ vulnerabilities.
Market analysis and your business plan.
It’s smart to write a business plan, especially if you are beginning a new business.
Even if you’re a sole proprietor or don’t intend to borrow any money to get your business off the ground, it’s important to have a clear plan in place. The market analysis isn’t just one part of a successful business plan—it’s one of the best reasons to write one.
If you need to raise money from banks or investors to jump on board, a market analysis is required, as savvy lenders or investors will need to know that the business you’re pitching has viable market appeal.
Either way, a solid business plan complete with market analysis will be invaluable. We will identify your potential customers and attract investors, and it will help you to be clear about what you want to do with your business, both now and in the future.
The time we spend doing the research and putting it all together will come back to you many times over in dollars earned and heartbreaks avoided: you’ll look like a professional, and you’ll outshine the competitors that didn’t write one.
A market analysis can be a measuring stick you use over time to see how far you’ve come, and it allows you to make projections based on data rather than guesswork.
What to include in your market analysis?
Our market analysis will include an overview of your industry, a look at your target market, an analysis of your competition, your own projections for your business, and any regulations you’ll need to comply with.
- Industry description and outlook
This is where we will discuss the current state of your industry overall and where it’s headed. Relevant industry metrics like size, trends, life cycle, and projected growth should all be included here. This will let banks or investors see that you know what you’re doing, and have done your homework and come prepared with the data to back up your business idea.
- Target market
In the previous section of your market analysis, we were able to look at the general scope. In this section, we have got to be specific. It’s important to establish a clear idea of your target market early on. A lot of new entrepreneurs make the rookie mistake of thinking that everyone is their potential market. To put it simply, they’re not.
This is a good thing—by narrowing in on your real customers, we will be able to direct your marketing dollars efficiently while attracting loyal customers who will spread the word about your business.
The target market section of your business plan will include the following:
- User persona and characteristics: we will have to include demographics such as age, income, and location here. We will also need to dial into your customers’ psychographics as well. We should know what their interests and buying habits are, as well as be able to explain why you’re in the best position to meet their needs.
- Market size: This is where you want to get real, both with the potential readers of your business plan and with yourself. We will do research and find out who and where your competitors are, and how much your customers spend annually on your product or service. How big is the potential market for your business?
- Competitive analysis
This is the section in which we get to dissect your competitors, which is important for a couple of reasons. Obviously, it’s a good idea to know what you’re up against, but it also lets you spot the competition’s weaknesses. Are there customers out there being underserved? What can you offer that similar businesses aren’t offering? The competitive analysis will contain the following components:
- Market: How big is the market for goods and services similar to what you plan on offering? What’s the growth rate? Include the general outlook and trends for this market. Who are your main competitors? Are there any secondary competitors who could impact your business?
- Competitor strengths and weaknesses: What is your competition good at? Where do they fall behind? Get imaginative to spot opportunities to excel where others are falling short.
- The importance of your target market to competitors: Ideally, you’re going after customers whose needs aren’t being met by your competitors.
- Barriers to entry: What are the potential pitfalls of entering your particular market? What’s the cost of entry—is it prohibitively high, or can anyone enter your market? This is where you examine your weaknesses. Be honest, with investors and yourself. Being unrealistic is not going to make you look good.
- Window of opportunity: Does your entry into the market rely on time-sensitive technology? Do you need to get in early to take advantage of an emerging market?
Market share: When you know how much money your future customers spend, you’ll know how much of the market you have a chance to grab. Be practical, but don’t sell yourself short. Make sure you are able to explain how you came up with your numbers.
Pricing and gross margin: This is where we will lay out your pricing structure and discuss any discounts you plan to offer. Your gross margin is the difference between your cost and the sales price. Again, be realistic yet optimistic. Optimistic projections not only serve as a guide, they can be a motivator. Our team will help you to determine the right pricing and gross margin.
Are there any specific governmental regulations or restrictions on your market?
If so, we will need to bring them up here and discuss how you’re going to comply with them. We will also need to address the cost of compliance. Addressing these issues is essential if you are seeking investment or money from a lender, and everything has to be legally squared away and above board.