Business Plan Writing: Market Research & Competitor Analysis
Updated: Dec 12, 2019
“The best vision is insight.” – Malcolm Forbes
In developing a business plan, it’s vital that you thoroughly research your customers, your market, and your competition, as well as your strategic position relative to all three.
Investors and others will be exceedingly interested to see that you understand your industry and the forces that drive it, that you can prove there’s a strong demand for your product or service, and that your unique selling proposition will effectively distinguish you from your competition.
This analysis will likely uncover new information you were previously unaware of, and you should take the time to reflect on exciting insights. Therefore, this could require you to rethink elements of your strategy. It may also merely confirm what you already know. In either case, you’ll acquire a deep understanding of what it will take to be successful.
Crucial Questions Your Business Plan Needs to Answer
Customers are the lifeblood of any business. People looking to invest in your company or provide financing need to see that you understand what they want and that you have a detailed plan for reaching them. To do this, you should focus your attention on four questions.
Who are your customers? Describe your target market. Perhaps create a marketing persona profile of the sorts of people you’re looking to reach, including their age range, income levels, lifestyle choices, interests, and more. What makes them tick?
What are their buying habits currently? Concerning the sorts of products or services you offer, what are they buying now? From whom are they buying and is it a repeat purchase? What do they generally spend monthly or annually?
What motivates them to buy? What are the features that drive their purchase decisions? Do they seek a low-price or value? How important is the choice?
How will you make them buy from you? Take the time to complete a synthesis of the answers to the first three questions. It would help you much if you can demonstrate how your strategy would satisfy your target market in a way that your competitors have failed to implement.
Market Analysis and Due Diligence
Detailed, rigorous exploration supported by ample, accurate data is critical if you are to convince your readers of your thorough analysis. No one is going to take your word for anything you write, and they’re going to expect to see significant evidence. Doing your due diligence takes quite a bit of time, but it’s a necessary investment, and you should prioritise as a must-have activity, as part of creating your business plan.
There are two types of research you can include in your analysis. Primary research focuses on data you gather yourself about your customers and your competition. Frequently companies will use interviews, focus groups, and surveys to get feedback and acquire data on their target market.
Secondary research takes a broader view, usually looking at your industry, and generally involves a meta-analysis of previously existing research. Important areas to check are trade groups, government agencies, and third-party research firms (which may charge a fee for their services).
A point to include is the importance of balanced analysis. For your rationality, you should aim to compare yourself to companies that are similar in size, age, service area, and structure.
Choosing the wrong market can skew your results, making your situation look bleaker or rosier than it is. If your readers notice this, they may invalidate your results, and this may impact any funding you are requesting as part of creating your business plan.
Describe Your Niche and Your Place in the Market
Trying to target too broad a range of customers within your market can water down your offerings and make you less appealing. In the medical world, it’s the difference between a general practitioner and a specialist.
The latter focuses on a narrower band of patients but is in higher demand because they can demonstrate thorough expertise in the services needed.
It would help if, within your research, you articulate how your niche will service the band of customers you’re planning to target.
Without a doubt, this is your distinguishing feature, the elements of your business that differentiate you in the marketplace. Crucially, this includes not only your business model, your team and your offerings but also the way you plan to market yourself.
Try to provide as many enriched details as you can, to ensure your readers gain a full understanding of how your puzzle piece is going to fit with the rest of your industry.
We at Noirwolf are Business Plan Market Research Experts
We’re exhaustive but efficient researchers, and we know how to translate our findings into an impactful analysis for your business plan creation, and that will have your readers pining for more.
Want an expert “second opinion” before you start to create your business plan or financial forecasts? Let’s talk!
Noirwolf Consulting is a global strategy and change management consulting firm in Leeds. Noirwolf works with clients in the UK and international markets to develop their comprehensive strategic plans and business change programs.
We help entrepreneurs, small and mid-size business with creating business plans, optimise operations performance and help you to implement technology to improve productivity to grow their businesses.
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