Market Analysis Section of a Business Plan.



MarketAnalysisSectionofaBusinessPlan

Clarke Ricks

School of Business, Liberty University

BUSI 690: Policy and Strategy in Global Competition

Dr. Hicks

April 9, 2021

MarketAnalysisSectionofaBusinessPlan

What Should a Market Analysis Include?

The market analysis section of your small business plan should include the following:

IndustryDescriptionandOutlook: Describe your industry both qualitatively and

quantitatively by laying out the factors that make your industry an attractive place to start

and grow a business. Be sure to include detailed statistics that define the industry including

size, growth rate, trends, and outlook.

TargetMarket: Who is your ideal client/customer? This data should include

demographics on the group you are targeting including age, gender, income level, and

lifestyle preferences. This section should also include data on the size of the target market,

the purchase potential and motivations of the audience, and how you intend to reach the

market.

MarketTestResults: This is where you include the results of the market research

you conducted as part of your initial investigation into the market. Details about your

testing process and supporting statistics should be included in the appendix.

LeadTime: Lead time is the amount of time it takes for an order to be fulfilled once a

customer makes a purchase. This is where you provide information on the research you've

completed on how long it will take to handle individual orders and large volume purchases,

if applicable.

CompetitiveAnalysis: Who is your competition? What are the strengths and

weaknesses of the competition? What are the potential roadblocks preventing you from

entering the market?

7TipsforWritingaMarketAnalysis

Here is a collection of tips to help you write an effective and well-rounded market

analysis for your small business plan.

UsetheInternet: Since much of the market analysis section relies on raw data, the

Internet is a great place to start. Demographic data can be gathered from the U.S. Census

Bureau. A series of searches can uncover information on your competition, and you can

conduct a portion of your market research online.

BetheCustomer: One of the most effective ways to gauge opportunity among your

target market is to look at your products and services through the eyes of a purchaser. What

is the problem that needs to be solved? How does the competition solve that problem? How

will you solve the problem better or differently?

CuttotheChase: It can be helpful to your business plan audience if you include a

summary of the market analysis section before diving into the details. This gives the reader

an idea about what's to come and helps them zero in on the most important details quickly.

ConductThoroughMarketResearch: Put in the necessary time during the initial

exploration phase to research the market and gather as much information as you can. Send

out surveys, conduct focus groups, and ask for feedback when you have an opportunity.

Then use the data gathered as supporting materials for your market analysis.

UseVisualAids: Information that is highly number-driven, such as statistics and

metrics included in the market analysis, is typically easier to grasp when it's presented

visually. Use charts and graphs to illustrate the most important numbers.

BeConcise: In most cases, those reading your business plan already have some

understanding of the market. Include the most important data and results in the market

analysis section and move the support documentation and statistics to the appendix.

RelateBacktoYourBusiness: All of the statistics and data you incorporate in

your market analysis should be related back to your company and your products and

services. When you outline the target market's needs, put the focus on how you are

uniquely positioned to fulfill those needs. The management section of a business plan helps

show how your management team and company are structured.

The first section shows the ownership structure, which might be a sole

proprietorship, partnership, or corporation.

The internal management section shows the department heads, including sales,

marketing, administration, and production.

The external management resources help back up your internal management and

include an advisory board and consultants.

The human resources section contains staffing requirements—part-time or full-time

—skills needed for employees and the costs.

OwnershipStructure

This section outlines the legal structure of your business. It may only be a single

sentence if your business is a sole proprietorship. If your business is a partnership or a

corporation, it can be longer. You want to be sure you explain who holds what percentage

of ownership in the company.

InternalManagementTeam

The internal management section should describe the business management

categories relevant to your business, identify who will have responsibility for each category,

and then include a short profile highlighting each person's skills.

The primary business categories of sales, marketing, administration, and production

usually work for many small businesses. If your business has employees, you will also need a

human resources section. You may also find that your company needs additional

management categories to fit your unique circumstances.

It's not necessary to have a different person in charge of each category; some key

management people often fill more than one role. Identify the key managers in your

business and explain what functions and experience each team member will serve. You may

wish to present this as an organizational chart in your business plan, although the list format

is also appropriate.

Along with this section, you should include the complete resumés of each

management team member (including your own). Follow this with an explanation of how

each member will be compensated and their benefits package, and describe any profit-

sharing plans that may apply.

If there are any contracts that relate directly to your management team members,

such as work contracts or non-competition agreements, you should include them in an

Appendix to your business plan.

ExternalManagementResources

While external management resources are often overlooked when writing a business

plan, using these resources effectively can make the difference between the success

or failure of your managers. Think of these external resources as your internal management

team's backup. They give your business credibility and an additional pool of expertise.

AdvisoryBoard

An Advisory Board can increase consumer and investor confidence, attract talented

employees by showing a commitment to company growth and bring a diversity of

contributions. If you choose to have an Advisory Board, list all the board members in this

section, and include a bio and all relevant specializations. If you choose your board

members carefully, the group can compensate for the niche forms of expertise that your

internal managers lack.

When selecting your board members, look for people who are genuinely interested

in seeing your business do well and have the patience and time to provide sound advice.

Note

Recently retired executives or managers, other successful entrepreneurs, and/or

vendors would be good choices for an Advisory Board.

ProfessionalServices

Professional Servicesshould also be highlighted in the external management

resources section. Describe all the external professional advisors that your business will use,

such as accountants, bankers, lawyers, IT consultants, business consultants, and/or business

coaches. These professionals provide a web of advice and support outside your internal

management team that can be invaluable in making management decisions and your

new business a success.

HumanResources

The last point you should address in the management section of your business plan

is your human resources needs. The trick to writing about human resources is to be specific.

To simply write, "We'll need more people once we get up and running," isn't sufficient.

Follow this list:

Detail how many employees your business will need at each stage and what they will

cost.

Describe exactly how your business's human resources needs can be met. Will it be

best to have employees, or should you operate with contract workers or freelancers? Do

you need full-time or part-time staff or a mix of both?

Outline your staffing requirements, including a description of the specific skills that

the people working for you will need to possess.

Calculate your labor costs. Decide the number of employees you will need and

how many customers each employee can serve. For example, if it takes one employee to

serve 150 customers, and you forecast 1,500 customers in your first year, your business will

need 10 employees.

Determine how much each employee will receive and total the salary cost for all

your employees.

Add to this the cost of Workers' Compensation Insurance (mandatory for most

businesses) and the cost of any other employee benefits, such as company-sponsored

medical and dental plans.1

After you've listed the points above, describe how you will find the staff

your business needs and how you will train them. Your description of staff recruitment

should explain whether or not sufficient local labor is available and how you will recruit

staff.

Note

When you're writing about staff training, you'll want to include as many specifics as

possible. What specific training will your staff undergo? What ongoing training opportunities

will you provide your employees?

Even if the plan for your business is to start as a sole proprietorship, you should

include a section on potential human resources demands as a way to demonstrate that

you've thought about the staffing your business may require as it grows.

Business plans are about the future and the hypothetical challenges and successes

that await. It's worth visualizing and documenting the details of your business so that the

materials and network around your dream can begin to take shape.

Whatisthemanagementsectionofabusinessplan?

The 'management section' describes your management team, staff, resources, and

how your business ownership is structured.

Whatarethe5sectionsofabusinessplan?

A business plan provides a road map showing your company's goals and how you'll

achieve them. The five sections of a business plan are as follows:

The market analysis outlines the demand for your product or service.

The competitive analysis section shows your competition's strengths and

weaknesses and your strategy for gaining market share.

The management plan outlines your ownership structure, the management team,

and staffing requirements.

The operating plan details your business location and the facilities, equipment, and

supplies needed to operate.

The financial plan shows the map to financial success and the sources of funding,

such as bank loans or investors.

Students also viewed