Industry Analysis: Business Plan Basics
Every business operates within the larger classification of an industry. Your business plan must address the forces at work in your industry, the basic trends and growth over time, and where your company fits in. Demonstrating to outsiders that you understand and have anticipated the important factors of your industry builds a case for your company's success.
Think of your industry as those companies providing products and services similar to yours. This includes those companies selling similar products and services, as well as complementary or supplementary products or services. Any business that falls between the supplier of raw materials to the end of the distribution channel for your type of product or service are part of your industry.
In the industry section of your business plan, provide answers to the following types of questions:
- What is the size of your industry by both revenue and number of firms?
- Discuss the characteristics of this industry such as growth trends, units sold, or employment.
- What factors are influencing growth or decline in your industry?
- What have been the trends in previous years?
- What trends are expected in the coming years? (include supporting research)
- What are the barriers of entry for your industry?
- How many companies are expected to enter your industry in the future?
- What government regulations effect your industry and your business?
- Is your industry highly regulated or does it fall below the government's radar?
- Provide a general explanation of the distribution system for products and services in your industry.
- Is it difficult to gain distribution access to your industry? Explain.
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