How to Write the Business Plan Market Research Section
“The best vision is insight.” – Malcolm Forbes
In developing your business plan market research section, conducting a comprehensive study of your customers, market, competition, and strategic position relative to all three is essential.
You must show a strong need for your product or service and have a unique selling point distinguishing you from your rivals. This will generate a lot of interest and attention.
This analysis can reveal new information you may not have been aware of before. Take the time to reflect on any exciting insights it offers. It could mean rethinking some elements of your strategy. However, it might also just confirm what you already knew.
Regardless, you can better understand what it takes to succeed.
When to do the business plan market research section
You should include a market research or analysis section after your business plan’s products or services section. This section should provide a detailed industry overview with statistics to support your claims.
Generally speaking, your market analysis section should provide information on the industry, target market, competition, and strategy for carving out a niche for your product or service. You should include extensive data in the appendices at the end of your business plan, with only the most essential statistics in the market analysis section.
What information should be included in a business plan’s market research analysis?
A comprehensive market research section is essential when creating a small business plan. This section should cover the following areas:
- Industry Description and Outlook: Clearly describe your industry and provide qualitative and quantitative information. This should include the aspects that make your drive a desirable place to start and grow a business and detailed statistics such as industry size, growth rate, trends, and outlook.
- Target Market: Define your ideal customer by providing information on their demographics, including age, gender, income level, and lifestyle preferences. You should also include data on your target market’s size, purchase potential motivations, and your plan for reaching them.
- Market Test Results: Include the results of any market research you have conducted and details about your testing process and supporting statistics. This information should be included in the appendix.
- Lead Time: Provide information on how long it will take to fulfill customer orders, both for individual purchases and large-volume orders, based on the research you have gathered on customer orders and any considerations (i.e., supply, resource availability, postage).
- Competitive Analysis: Identify your competition, including their strengths and weaknesses, and any potential roadblocks that may prevent you from entering the market.
Your business plan’s market research should address these critical questions:
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 people you want to reach, including their age range, income levels, lifestyle choices, interests, and more. What makes them tick?
- What are their current buying habits? 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 synthesize the answers to the first three questions. It would help if you could demonstrate how your strategy would satisfy your target market in a way your competitors have failed to implement.
Doing your business plan market research due diligence
To convince your readers of the thoroughness of your analysis, it’s crucial to conduct a rigorous, thorough exploration backed up by ample and accurate data. Mere words won’t cut it, as people will expect substantial evidence to support your claims.
Although it may take up a significant amount of your time, doing your due diligence is a necessary investment to prioritize as a must-do activity when creating your business plan.
There are two types of research you can include in your analysis.
- Primary Research: Primary research focuses on data you gather about your customers and your competition. Companies will frequently use interviews, focus groups, and surveys to get feedback and acquire data on their target market.
- Secondary research: 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 similar companies in size, age, service area, and structure.
Choosing the right market for your business is essential, as selecting the wrong one can result in inaccurate outcomes. This can make your situation appear better or worse than it is, which can lead to your readers doubting your results. This can impact any funding you seek for your business plan.
Describe your niche and market position in your business plan market research.
Please describe your niche and market position in your business plan market research.
- Targeting a broad 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.
- These are your distinguishing features, the elements of your business that differentiate you in the marketplace.
- This includes your business model, team, offerings, and how you plan to market yourself.
Try to provide as many enriched details as possible to ensure your readers fully understand how your puzzle piece will fit with the rest of your industry.
Are you utilizing the Internet for market research?
Regarding how to write the business plan market research section, the Internet can be a valuable resource as it provides access to raw data. The USA Census Bureau and UK Gov ONS are excellent sources for gathering demographic information.
By conducting various online searches using Google, you can uncover data about your competition and show a significant part of your market research.
Accessing information about your competition is essential. You can distinguish your business and emphasize your competitive advantages by reviewing their website, social media, industry PR, and company registration information.
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