Outside of the financials, market research may the most important aspect of a business plan. However, this may not seem obvious from the outset, especially if you are new to writing a business plan. Market Research is an extensive process that should inform many of the decisions you ultimately make about your business.
Market research should be one of the first steps in writing a business plan. It may seem like one of the final aspects to round out a specific section of the Business Plan but, it is actually more fundamental than that.
Market research covers a lot of ground. It isn’t just about understanding the size of the market. It’s about understanding the key players in the market, otherwise known as your competitors. It is only through understanding the competition that you can truly decide how to position yourself. You must have a point of differentiation. Whether that is through pricing, difference in product, or a differentiated marketing approach, market research will create the foundation for all of these decisions.
The first part to market research for your business plan is usually getting information about the overall market. This is imperative as it proves there is an appetite for your product or service. This can be difficult when you are starting something completely new but, the most informative market data providers should be versed in whatever your market/industry is if it is truly something where this is potential. Those market research resources are at the top of their game and usually well ahead of the curve in terms of trends. If you can’t find valuable information through them you need to question if there is a real market for your products or decide if you are truly just that ahead of the curve.
In pricing analysis, there are a number of factors that will go into setting your price. Part of it will be based on your costs. You have to ensure you are going to make margin on what you sell. Beyond that, pricing will largely be informed by Market Research. Things like what competitors charge and what the market will tolerate are vital considerations. These things will be revealed through Market Research.
Another key in market research is competitor analysis. If there is a market for your products or services that is half the battle but, the next question is whether or not there is space in the market for your business. The only way to understand this is through knowing the main competitors in the space. These competitors could be on a national or local level. It all depends on the scope of your business. The important thing is to identify who these key competitors are and to study them. You need to have a rough idea of how much of the market they currently capture and whether or not you can carve out part of the market for your business to be successful.
There are a number of important considerations when writing your business plan. However, Market Research will have an impact on numerous portions of the plan and influence a great deal of your early decisions. This is necessary to ensure that you aren’t just considering your business in isolation but, rather how it will fit into the overall tapestry of the full market and economy, regardless what scale that may be at for the entire business. If you’re unsure how to conduct meaningful market research, consider hiring an expert. It’s worth it to ensure your plan is truly viable, not just on paper for your Business Plan but, in reality and execution as well.
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