How to Write the Market Analysis Section of a Business Plan
When it comes to business plan, market analysis falls under “must-do” category. Market analysis should include information about the industry, your target market, your competition and how you intend to make a place for your own product and service.
The market analysis section of your business plan should include the following parts:
- Industry Description and Outlook: Detailed statistics that define the industry including size, growth rate, trends, and outlook.
- Target Market: Who is your ideal client/customer? This data should include demographics on the group you are targeting including age, gender, income level and lifestyle preferences. This section should also include data on the size of the target market, the purchase potential and motivations of the audience, and how you intend to reach the market.
- Market Test Results: This is where you include the results of the market research you conducted as part of your initial investigation into the market. Details about your testing process and supporting statistics should be included in the appendix.
- Lead Time: Lead time is the amount of time it takes for an order to be fulfilled once a customer makes a purchase. This is where you provide information on the research you’ve completed on how long it will take to handle individual orders and large volume purchases, if applicable.
- Competitive Analysis: Who is your competition? What are the strengths and weaknesses of the competition? What are the potential roadblocks preventing you from entering the market?
As an added bonus, here is a collection of tips to help you write an effective and well-rounded market analysis for your business plan.
- Relate to the customer
One of the most effective ways to gauge opportunity among your target market is to look at your products and services through the eyes of a purchaser. What is the problem that needs to be solved? How does the competition solve that problem? How will you solve the problem better or differently?
It can be helpful to your business plan audience if you include a summary of the market analysis section before diving into the details. This gives the reader an idea about what’s to come and helps them zero in on the most important details quickly.
- Conduct thorough market research
Put in the necessary time during the initial exploration phase to research the market and gather as much information as you can.
Send out surveys, conduct focus groups, and ask for feedback when you have an opportunity. Then use the data gathered as supporting materials for your market analysis.
- Use visual aids
Information that is highly number-driven, such as statistics and metrics included in the market analysis, is typically easier to grasp when it’s presented visually. Use charts and graphs to illustrate the most important numbers.
- Relate Back to Your Business
All of the statistics and data you incorporate in your market analysis should be related back to your company and your products and services.
When you outline the target market’s needs, put the focus on how you are uniquely positioned to fulfill those needs. Get to it now!