Part 1: Writing a Business Plan: The Market Analysis
When writing a business plan, the focus of the Market Analysis section is a thorough examination of your target market those people that you intend to sell your products or services to.
The first step is to define your target market. Even if you intend on selling a service only in your own town, you're not selling that service to everyone who lives there. You need to know exactly what the people who might be interested in buying your product or service are like, and how many of them there are.
Then you need to make some projections about your target market, in terms of how much of your products or service they might buy, and how they might be affected by trends and policies.
How to Write a Business Plan: The Market Analysis
As always when you're writing a business plan, research is the key. Before writing the Market Analysis section of the business plan, use these general questions to start your research. After completing the Market analysis you are in the position to give all the answers of the followings.
Target Market
How old are they?
What gender are they?
Where do they live?
What is their family structure (number of children, extended family, etc.)?
What is their income?
What do they do for a living?
What is their lifestyle like?
How do they like to spend their spare time?
What motivates them?
What is the size of your target market?
But don't stop here when you're writing a business plan. To define your target market, you need to ask the specific questions that are directly related to your products or services. For instance, if you plan to sell computer-related services, you need to know things such as how many computers your prospective customer owns. If you plan on selling garden furniture and accessories, you need to know what kinds of garden furniture or accessories your potential customers have bought in the past, and how often.
Projections about the Target Market
What proportion of your target market has used a product similar to yours before?
How much of your product or service might your target market buy? (Estimate this in gross sales and/or in units of product/service sold.)
What proportion of your target market might be repeat customers?
How might your target market be affected by demographic shifts?
How might your target market be affected by economic events (e.g. a local mill closing or a big-box retailer opening locally)?
How might your target market be affected by larger socioeconomic trends?
How might your target market be affected by government policies (e.g. new bylaws or changes in taxes)?
Business Plan Outline
The essential elements
Thinking of writing a business plan? Here is a business plan outline, listing the sections of the business plan in the order in which they will appear in your completed business plan with a brief explanation of each section to help you get organized and guide you through the writing a business plan process.
The Executive summary
While appearing first, this section of the business plan is written last. It summarizes the key elements of the entire business plan.
The Industry
An overview of the industry sector that your business will be a part of, including industry trends, major players in the industry, and estimated industry sales. This section of the business plan will also include a summary of your business plan within the industry.
Market Analysis
An examination of the primary target market for your product or service, including geographic location, demographics, your target market's needs and how these needs are being met currently.
Competitive Analysis
An investigation of your direct and indirect competitors, with an assessment of their competitive advantage and an analysis of how you will overcome any entry barriers to your chosen market.
Marketing Plan
A detailed explanation of your sales strategy, pricing plan, proposed advertising and promotion activities, and product or service's benefits.
Management Plan
An outline of your business's legal structure and management resources, including your internal management team, external management resources, and human resources needs.
Operating Plan
A description of your business's physical location, facilities and equipment, kinds of employees needed, inventory requirements and suppliers, and any other applicable operating details, such as a description of the manufacturing process.
Financial Plan
A description of your funding requirements, your detailed financial statements, and a financial statement analysis.
Appendices and Exhibits
Any additional information that will help establish the credibility of your business idea, such as marketing studies, photographs of your product, and/or contracts or other legal agreements pertinent to your business.
Each article linked above is part of this writing A Business Plan series and explains how to research and write a particular section of the business plan in detail. The sidebar also lists more business plan resources you may find useful.
