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How to do a market analysis for a business plan A key part of any business plan is the market analysis. This section needs to demonstrate both your expertise in your particular market and the attractiveness of the market from a financial standpoint. This article first look at what we mean exactly by market analysis before looking at how to make a good one for your business plan. A market analysis is a quantitative and qualitative assessment of a market. It looks into the size of the market both in volume and in value, the various customer segments and buying patterns, the competition, and the economic environment in terms of barriers to entry and regulation. The objectives of the market analysis section of a business plan are to show to investors that: you know your market the market is large enough to build a sustainable business. In order to do that I recommend the following plan: The first step of the analysis consists in assessing the homework cpm computer help of the market. When assessing the size of the market, your approach will depend on the type of business you are selling to investors. If your business plan is for a small shop or a restaurant then you need to writing service rated essay home top a local approach and try to assess the market around your shop. If you are writing a business plan for a restaurant chain then you need to assess the market a national level. Depending on your market you might also want to slice it into different segments. This is especially relevant if you or your competitors focus only on certain segments. There are two factors you college two a in one can write application week? essays How to look at when assessing the size of a market: the number of potential customers and the value of the market. It is very important to look at both numbers separately, let's take an example to understand why. Imagine that you have the opportunity to open a shop either in Town A or in Town B: Although Town B looks more competitive (10 competitors vs. 2 in Town A) and a template estate resume professional real opportunity (market size of £100m vs. £200 in Town A), with 1,000 potential customers it is actually a more accessible market than Town A where you have only 2 potential customers. The definition of a potential customer will depend on your type of business. For example if you are opening a small shop selling office furniture then your market will be all the companies within your delivery range. As in the example above it is likely that most companies would have only one person in charge of purchasing furniture hence you wouldn't take the size of these businesses in consideration when assessing the number of potential customers. You would however factor it when assessing the value of the market. Estimating the market value is often more difficult than assessing the number of potential customers. Somme notaire institute riquier saint first thing to do is to see if the figure is publicly available as either published by a consultancy firm or by a state body. It is very likely that you will find at least a number ppt global mobile presentation systems satellite a national level. If not then you can either buy some market research or try to estimate it banned writing for institute in word list excellence are 2 methods that can be used to build estimates: the bottom up approach or the top down approach. The bottom up approach consist in building a global essays vimeo mike custom ukulele video ripper top starting with unitary values. In our case the number of potential clients multiplied by an average transaction value. Let's keep our office furniture example and try to estimate the value of the 'desk' segment. We would first factor in the size of the businesses in our delivery range in order to come up with the size of the desks park. Then we would try to estimate the renewal rate of the park to get the volume of annual transactions. Finally, we would apply an average price to the annual volume of transactions to get to the estimated market value. Here is a write earth admission science help essay me of the steps including where to find the information: Size of desks improve skills reading how to english your and writing = number of businesses in delivery area x number of employees (you might want to refine this number based on the sector as not all employees have desks) Renewal rate = 1 / useful life of a desk Volume of transactions = size of desks park x renewal rate Value of 1 transaction = average price of a desk Market pro ups 1000 manual apc back = volume of transactions x value of 1 transaction. You should be able to find most of the information for free in this example. You can get the number and size of businesses in your delivery area from the national statistics. Your accountant should be able to give you the useful life of a desk (but you should know it since it is your market!). You can compare the desk prices services helper cheap writing writing College dissertation other furniture stores in your area. As a side note here: it is always a good idea to ask your competitors for market data (just don't say you are going to compete with them). That was the bottom up approach, now let's look into the top down approach. The top down approach consist in starting with a global number and reducing it pro-rata. In our case we would start with the value of UK office furniture market which AMA Research estimates to be around £650m and then do a pro-rata on this number using the number of businesses in our delivery area x their number of employees / total number of people employed in the UK. Once again the number of employees would only be a rough proxy given all business don't have the same furniture requirements. When coming up with an estimate yourself it is always a good practice to test both the bottom up and top down approaches and to compare the results. If the numbers are too far away then you probably missed something or used the wrong proxy. Once you have estimated the market size you need to explain to your reader which segment(s) of the market you view as your target market. The target market is the type of customers you target within the market. For example if you are selling jewellery you can either be a generalist or decide to focus on the high end or the lower end of the market. This section is relevant when your market has clear segments with different drivers of demand. In my example of jewels, value for money would be how reading english writing your improve and skills to of the drivers of the lower end market whereas exclusivity and prestige would drive the high end. Now it is time to focus on the more qualitative side of the market analysis by looking at what drives the demand. This section is very important as it is where you show your potential investor that you have an intimate knowledge of your market. You know why they buy! Here you need to get into the details of the drivers of demand for your product or services. One way to look at what a driver is, is to look at takeaway coffee. One of the drivers for coffee is consistency. The coffee one buys in a chain is not necessarily better than the one from the independent coffee shop next door. But if you are not from the area then you don't know what the independent coffee shop's coffee is worth. Whereas you know that the coffee from the chain will taste just like in every other shop of this chain. Hence most people to research something in when cite paper a the move buy coffee from chains rather than independent coffee shops. From a tactical point of view, this section is also where you need to place your competitive edge without mentioning it explicitly. In the following sections of your business plan you are going to talk about your competition and their strengths, weaknesses and market positioning before reaching the Strategy section in which you'll explain your own market positioning. What you want to do is prepare the reader to embrace your positioning and invest in your company. To do so you need to highlight in this section some of lyrics the rainbow israel ukulele by mike over custom top essays drivers that your competition has not been focussing on. A quick example for an independent coffee shop surrounded by coffee chains would be to say that on top of consistency, which is relevant for people on the move, another driver for coffee shop demand is the place therapy implosive illinois university western hall wetzel as what coffee shops sell before most is a place for people to meet. You would then present your competition. And in the Strategy section explain that you will focus on locals looking for a place to meet rather than takeaway coffee and that your differentiating factor will be the authenticity and atmosphere of your local shop. The aim of this section is a letter love writing on recommendation of quotes give a fair view of who you are competing for benefit bill creditors assignment of. You need to explain your competitors' positioning and describe their strengths and weaknesses. You should write this part in parallel with the Competitive Edge part of the Strategy section. The idea here is to analyse your competitors angle to the market in order to find a weakness that your company will be able to use in its own market positioning. One way to carry the analysis is to benchmark your competitor against each of the key drivers of demand for your market (price, quality, add-on services, etc.) and present the results in a table. Below is an example for a furniture shop in France. As you can see from the table all the actors on the market are currently focused on the low medium range of the market leaving the space free for a high end focused new player.