When researching and writing a business plan, the focus of the Market Analysis section is critical and a thorough examination of your target market needs to take place first. Target market are those people that you intend to sell your products or services to.
The first step is to define your target market. If you want to know more about how to do this, see my new book titled Full BRAIN Marketing that is available on www.amazon.com and www.fullbrainmarketing.com.
Even if you intend on selling a product or service only in your own city or state, you're not selling that product or service to everyone who lives there. The first step is to identify exactly what the people who might be interested in buying your product or service are like, and how many of them there are.
The next step is to make some projections about your target market, in terms of how much of your product or service they may buy, and how the target market may be affected by trends and policies.
When developing a business plan, research is the key. Before writing the market analysis section of the business plan, use these general questions to start your research:
Target Market
• How old is the identified target market?
• What gender are they?
• Where do they live?
• What is their family structure (number of children, extended family, etc.)?
• What is their income?
• What do they do for a living?
• What is their lifestyle?
• How do they spend their spare time?
• What motivates them?
• What is the size of your target market?
Don’t stop here. To define a target market, ask the specific questions that are directly related to your products or services. For instance, if you plan to sell computer-related services, identify such things as how many computers prospective customers own.
If you plan to sell garden furniture and accessories, what kinds of garden
furniture or accessories have they bought in the past and how often?
Projections About the Target Market
• What percentage of your target market has used a similar product?
• How much product or service might the target market buy? (Estimate this in gross sales and/or
in units of product/service sold.)
• What proportion of the target market might be repeat customers?
• How might they be affected by demographic shifts?
• How might they be affected by economic events (e.g., a local manufacturing plant closing or a
large retailer opening locally)?
• How might they be affected by larger socioeconomic trends?
• How might they be affected by government policies (e.g., new bylaws or changes in taxes)?
Writing the Market Analysis Section of the Business Plan
All of the above information may feel overwhelming. When writing a business plan with a market analysis section, it needs to be a thorough examination of your target market, those people to whom you intend to sell your products or services. This is the time to determine target markets in terms of how much of your product or service they may purchase and how they may be affected by trends and policies.
Once you have all this information, write the market analysis in the form of several short paragraphs that are clear and precise. Use appropriate headings for each paragraph. If there are several target markets, consider numbering each or identifying each by a subcategory under the main target market category.
Properly cite sources of information within the body of the market analysis. This will help you and others reading the plan to know the sources of the statistics or opinions gathered from others.
DJ Heckes, CEO & Author
Full BRAIN Marketing
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