Analyzing your industry to understand the trend and the other factors affecting the health of the industry is very basic. What happens to the industry clearly impacts the life and health of your business. There are external factors you need to evaluate, whether you can control it or not, you should know how to respond on its highs and lows. A thorough understanding about how your industry works and where your business fits in is critical to strategic risk management and control.
If you join the wrong market and the wrong industry in the most inappropriate time, then it would be difficult for you to grow your business. Some things to look into are the barriers to entry, dominant players in the market, who dictates the price, and who creates the demand. You have to do some evaluations if the market demand and the industry environment can support and grow your business.
You operate in the same conditions and environment that affect the industry as a whole. As you develop your plan, you also need to identify as well as develop a strategic response to factors that may impact the performance of your company. While it is still possible to make money in the industry during hard times, it can be done only if you were able to properly position your brand appropriately.
It is difficult to expand a business and raise your income in a troubled industry, which is one reason investors are more receptive in investing more with a healthy and expanding industry. This includes looking into the demographic and lifestyle trends in light of their potential influence on the market behavior and of your business opportunities. Be careful not to build a business based on passing fads.
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Change is inevitable and the rate of change, due to technology, is even getting faster these days. You need to train your employees to be adaptable to change. You need to anticipate change and respond with the right tools at the most appropriate time. Timing is everything!
Description of the industry. The business description in your market analysis section usually starts with a short, concise description of the industry. A startup should have more knowledge about its target market and industry than any other person in the room.
Explain what is going on in your industry and if you can, give a more complete view about the industry life cycle. If your startup business is affected by any changes in the market, such as the seasonal or cyclical changes, you must be able to explain how those changes affected your business.
An analysis of the products and services, specifically the unique value proposition, offered by the competitors and the manufacturers of the alternative products are important in determining how well you can position yourself as a startup.
Your industry analysis should include the nature and scope of the industry, which should comment on the data on historical performance, industry growth prospects, assumptions supported by projections, and conclusion with a highlight of the strategic opportunity. The documents supporting the assumptions, projections, and conclusions should be included. If possible, reference the life cycle stage.
Here are some guide questions you can use to write a complete description of your industry
- How do businesses make money in your industry?
- What are the prices and other interesting offers they give to increase sales?
- What percentage can you mark up and still be competitive?
- What are the alternative products or services your target market may most likely buy instead of the leading brands?
- What are the legal restrictions?
- What are the local issues?
- What are the existing trade and labor regulations?
- What is the current situation of the business environment and the potential changes that could affect the industry?
- How do they store and obtain their raw materials?
- Where does your company fit into the industry?
- What are the potential risks to your industry that may impact your business?
- What is your business classification code?
- What is trending in your industry?
- What is the growth rate of the players within the industry?
- What are the barriers you may encounter when entering the industry?
- What are the sales and profit trends in your sector?
- How do you expect your industry to change in the next year?
- Are there particular demographic factors at work in this industry?
- Can you find projections of growth trends in the industry?
- Are there any potentially adverse political, social, economic, or environmental conditions?
- Are there significant barriers to growth in this industry?
The description of your industry is in fact a short analysis about your industry, which would be used as the foundation of your marketing and sales plan later. The market and industry section reflect your knowledge about your industry. It should present the highlights and an in-depth analysis of your market research.
This may help you
- Description of the industry
- Size of the industry
- Industry characteristics and trends
- Major competitors
- Alternative products and competitors
- Market pie chart
- Channel of distribution
Tools and websites you can use for reference
- American industry classification system
- Security of Exchange Commission
- Federal statistics
- National Census
- Bureau of Labor Statistics
- Google Trends
- Financial and market trends of competition
- Product lines carried by the competition
- Go to hoovers.com
- Use the Prizm data
- Use the ESRI at infods.com or esribis.com
- Look at the ACORN segmentation system
- Look at The Right Site for easy to use demographic reports
- Use the Hispanic-market.com
- Try the Nielsen Media Research
Here is a good example of how you are going to write your detailed description of industry, courtesy of
Different sectors may require different effort. Knowing your industry and your market in particular can help you in your market positioning and launch. Actually, you should be more focused on the unique value proposition, the marketing channel, and the channels of distribution.
There are lots of success stories coming from people who entered crowded markets and managed to make names for themselves. Your goal is to do better and offer a unique value proposition than what others have already done well.
You can muscle your way in through creativity and using a little bit of innovation. Keeping track of the competitions is important for goal setting and product development.
Visit similar businesses and see what customers are actually buying in there. Talk to customers and find out what they like about the product. Routine customer comments offer sources of innovation.
All you have to do is translate the wishes into products that would appeal to a broader market. Know what is hot and what your competitors do to make their products hot! By adapting the right market research techniques, you can collect information and translate them into clear, deliverable product or service features.
This section should emphasize opportunity. Setting up benchmarks for strategic opportunity is critical in establishing the existence of a commercially and financially attractive opportunity. Industry analysis is an ongoing process. You cannot leave nor ignore this aspect even after submission of your business plan.
The essence of operating and managing a business is decision making and strategic planning. Critical factors for managing these two areas are gathering, analyzing and determining the trends about the market and the industry in a timely manner.