How to Write a Business Plan: Market Analysis

Posted: July 13, 2010 by Stacey Abler/ Last modified: July 9, 2010

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The market analysis part of the business plan is one of the most time consuming parts of writing a business plan. This is because much of the information for this section of the plan is found outside of the company rather than inside. It requires research into your competitors and searching for information that may not be easily accessible.

SWOT Analysis

First, this part of the plan starts with a SWOT analysis. SWOT stands for:

– Strengths
– Weaknesses
– Opportunities
– Threats

Many people confuse strengths with opportunities and weaknesses with threats. An easy way to remember the difference is that strengths and weaknesses are internals influences whereas opportunities and threats are external influences.

Strengths are the parts of your business that give you a competitive advantage over the competition. These are areas where the business excels.

Weaknesses are classified as areas of improvement for the business. This could be an area where you are weak that could enable a competitor to take advantage of it and gain an edge in the marketplace.

Opportunities and threats may be summed up by outside influences that can impact your business in a positive or negative way. This includes economic climate, new laws and regulations, barriers to entry and competitor patents that could hinder product innovation.

Brainstorming SWOT Analysis

A great way to foster teamwork among employees is to bring them together for a brainstorming session for the SWOT analysis of the business plan. Employees from different departments may have perspectives that those in management do not possess. Working together to brainstorm may also spark new ideas and areas for expansion and improvement.

Competitor Analysis

One very important element of market analysis is analyzing the main competitors of the business. Some businesses have a tendency to either name every business in the market that exists or operate under the misguided belief that their product or service is so different that they don’t have any competitors. All businesses have competitors. This part of the business plan should identify your main competitors in the market. If your product or service wasn’t available, what business is the most likely one your customers would go to in order to fulfill their needs? That is your competitor list.

Detail these facts in your competitor analysis:
– Names of competitors and demographic date (location(s), age of company, executive management)
– Summary of product and service offerings (type of product, how they market it, how it is distributed, pricing and how it is different from your offerings)
– Strengths and weaknesses (the weaknesses could identify areas of opportunity for your business to overtake the competition)
– Competitive advantage

To complete the competitor analysis, access the company website and any marketing materials. If the company publishes an annual report, this can contain a goldmine of information detailing company strengths as well as where they have failed. It may also outline future goals and plans. If it is possible to speak to their customers and suppliers, they can also offer great insight into the company and areas where a competitive advantage can be established.

Next up is the product and service descriptions for all that your company offers. If all of this seems overwhelming, consider hiring a business plan writer to write your business plan. Contact me for more details on getting started on your business plan.
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