When working on any part of your business plan, it’s crucial to remember who you’re making this plan for; there’s a difference in how you go about forming and articulating a plan if it’s for internal use (just for you and your team to use as a road map going forward) versus using it as tool to win over investors. In either scenario, you’ll want to include the necessary degree of detail – and not a whole lot more. Prioritizing your energy and focusing on the information that’s most valuable is the central method that will make your business plan come out as clean and effective as possible, with as little wasted time as possible.
At no point is this truer – and more often messed up – than when it comes to drawing up a market analysis. In the hopes that you can really make your market analysis work for you rather than the other way around, here are 10 guidelines to take note of when working on this often tedious section of your business plan.
1) For internal use business plans, focus on need-to-know info
For a lot of budding entrepreneurs, your business idea is built entirely from having an intimate, working knowledge of your market, as opposed to having to learn about a market for the purpose of successfully serving it. If this is true for your company, and you’re developing a business plan as simply a tool for your own use, there’s no real need to belabor a lengthy, detailed account of a market which you and your team already know inside and out. This would, however, be an excellent space to find and record facts about your customer base that maybe you didn’t know – but keep it at that.
2) For investors, go a bit further
On the other hand, if your business plan is intended to convince investors to back your company, you will want to go into more detail than you or your team needs; chances are, the people you’re presenting your plan to aren’t as familiar with your market as you are. But again, overdoing the details isn’t necessary. This is an opportunity for you to demonstrate your knowledge of your market – investors need to feel confident that you are very well-acquainted with your audience and competitors, but they don’t necessarily need enough info to become experts themselves. Just be sure to include enough that they know you are the expert.
3) Explain yourself
Before just launching into the nitty-gritty on your analysis, take a moment to explain how you went about breaking down the info, and why you chose to present it that way. Any chance you have to show potential investors that you know how to prioritize information – not to mention your time and theirs – only reinforces their overall view of you as someone who knows how to respectfully, efficiently do business. And you pretty much never want to overlook the details that make you look extra competent.
4) While you’re at it, offer a quick summary
It’s nice for both you and your presentation audience to have a sense of where you’re going before you jump in and make the trip. Before you launch into the details, it’s helpful to give a brief summary of what you’re about to cover.
5) Give true analysis
Too frequently, small-business owners include a ton of data in their market analysis without going a step further to actually analyze it. When going over your market information, continuously put your findings in context – what conditions or problems in your industry does this info indicate? What gaps exist? And most critically, how does your company service this market in a new way that fills in those gaps, and solves those problems?
6) Show trend awareness
How is your market changing? How has it changed already? What factors are fueling change or lack of? How does your company play into all of that? These are essential questions to answer in your market analysis. Very few (okay, no) industries are entirely static, so it’s inevitable that the market data you amass is, in reality, just one point on a trend line. Explain how that line is moving, and what it means for both the future of your market and your business.