Write a Market Analysis
The market analysis is a section in a business plan that presents information about the commercial market in which your business operates, the purchasing habits of customers in that market, and information about competitors. Based on market research and intended to attract investors, a strong analysis will show why your business is a strong addition to a given market and how it will earn money. These steps will guide you through the process of how to write a market analysis and give some tips for making a strong impression on investors.
Steps
- Describe your market in general terms that are relevant to your business.
- In addition to geographic and demographic information, include details about industry in the area, purchasing trends, and spending power.
- Describe which area of the local economy your business contributes.
- Identify what type of customer you are targeting and their trends and include figures and predictions for future growth.
- Describe the market research you have done, covering past developments in your given segment and typical revenues and profits.
- Describe customer behavior and preferences, as well as areas for improvement in the segment of the economy that includes your business.
- Include information on how your business will improve on services or goods offered by competitors.
- Indicate how the structure of your business responds to needs discovered during market research.
- Most importantly, distinguish your business from the competition and show, with statistical backing, how your business will grow.
- Identify competitors and explain their strengths and weaknesses.
- Provide an analysis of the future growth of the market, including any predicted changes in customer behavior or spending.
- Describe your business' role in the market and its advantage over competitors.
- Describe your business' place in the future of the market.
- Describe any weaknesses in your business model and how these will be addressed.
- End your analysis by providing another brief overview of market trends and competition, and how your business will address market needs and compare favorably to competitors.
Tips
- The form of your market analysis will vary depending on the type of business plan you are writing. For a formal plan that will be presented to investors, write at least one paragraph for each of the steps above, including charts, graphs and other pertinent information that shows the amount of market research you have done.
- Your market research should be directed primarily at identifying types and trends of customers in your market. When writing a market analysis, you want to prove that there is a demand for your product and that you have the means to meet that demand; providing detailed information about buying trends--backed up with statistics--will go most of the way to showing investors that you can succeed in your market.
Warnings
- Do not attempt to fudge numbers or pass over troubling data. Investors will notice these oversights, and it is better to admit troubling information from your market research--and, especially, how you plan to address these problems--than to leave the impression that you have not done enough analysis.
Things You'll Need
- Business plan
- Market research
