Industry Analysis [Business Plan Basics #2]
As part of our Business Plan Basics series, we’re going in deep, looking at what a business plan – a written plan outlining your idea, your goals, and your approach for making them happen – actually is and breaking it down into bite-sized chunks. This section provides information to help you complete the all important Industry Analysis.
As a recap, a standard business plan includes: an Executive Summary, a Business Description, an Industry Analysis, a Market Description, a Competitive Analysis, a Marketing Plan, a Design & Development Plan, an overview of the Management Team, and a Financial Plan.
In part 1, we looked at the Business Description, which gives the reader an overview of your company or idea. In Part 2 of our Business Plan Basics series, we’re going to tackle the Industry Analysis.
An Industry Analysis is just like what it sounds like – an analysis or closer look at the business arena the idea fits into. For example, if you were making homemade cards, the industry analysis would provide an overview of the greeting card industry, and would explain how and where your concept fits in.
Read on and we’ll break down what you’ll want to include. Then, to help you get started, download our Industry Analysis Worksheet. By answering the questions on this worksheet, you’ll end up with the raw material to piece together for the analysis. Most, if not all, of this information can be accessed by doing keyword searches, online.
But first things first – here’s a summary of what makes up the Industry Analysis:
- Industry Identification: Define the actual industry or “space” your idea lives in. The industry depends on what your business revolves around. Clothing for teens would be the teen apparel industry; cupcakes would be the baked goods industry; an app would be the mobile phone app design industry, and so on.
- Industry Definition: Once you’ve identified the industry your idea belongs in, write a few sentences describing the industry itself. You don’t need to go into a ton of detail here (you’ll do that later in the Competitive Analysis), but you’ll want to include some statistics on the industry itself, such as how many companies are thriving, what are the current trends, how big the industry is, who the major players are, and so on.
- Prediction of the Future: We don’t expect you to consult your crystal ball, but you will want to do some online research and see if you can find any data or expert insight about the future of the industry you’re looking to break into. If an industry is young but experts are expecting it to be the next big thing, you’ll want to point that out, as it could make your idea more interesting to potential investors down the road.
- Primary Competitors: Again, you’ll go into this in more detail in the Competitive Analysis, but in this section, you’ll want to highlight who and what you see as your idea’s main competition, including one or two stats about the size or success of those competitors.
- Your Stake in the Ground: You’ll want to briefly explain how and where you and your idea fits in to the industry you’ve just described. How does your idea fit in and why does it make sense to move forward? Spell it out here.
Start by printing out our Industry Analysis Worksheet and answer the questions. When you’re finished, you can use the worksheet as a kicking off point for your first draft of the analysis. Good luck and let us know if you have any questions!
Next: Market Description