Writing a Business Plan: A Template (Part 2)

The Market and Competitors

This section is where you describe the potential market you wish to enter or describe a new market that you want to develop. This is also where, you discuss details about the competitors in your market. Based on your needs, this section can then be subdivided into smaller subsections:

1. Market Analysis

In this subsection you can discuss the market, your geographical area, the behaviour of consumers in your market and the market segmentation.

Some important terms you should understand are:

Market. This is the people and/or organisation that will participate in the buying and/or selling process of your product and/or service, or will use the product/service.

Geographical area. This would refer to the geographical zone as defined by product usage. A good example would be the computer market in London.

Consumer behaviour. These are the needs and behaviour of your target market. You must define who they are and what they could potentially need from your product or service.

Market segmentation. A market can always be split into individual segments. Each segment could describe a set of customers that have similar requirements, characteristics or lifestyles. By segmenting your market you can identify gaps in the market, highlight the needs of different users and enable you to position your products to meet these different needs.

2. Demand Analysis

This subsection can be devoted to making an evaluation of the market as well as the market segments that you have defined based on the following areas:

Potential demand. This is the most number of products the consumers can buy given a set time period.

Actual demand. This is the recorded demanded for the product or service for the year or the previous year. Data for this can be acquired from different sources. If there is no data available for your market and/or your product, you can make estimates.

Future demand. This is an estimated increase in demand for your product and/or service for the next year as a percentage of the actual demand. You can also opt to make a more long-term estimate that will cover from three to five years. A more long-term estimate will also give you the opportunity to prepare future strategies for sales.

Evolution of demand. Making a graph or chart of historical sales in the market or sector you’ve chosen will allow you to see market trends and also identify the phases of the product life cycle.

By using the actual, potential and future demand figures and putting them to use in the context of the market segments that were previously identified, certain business objectives can then be formulated.

A crucial reminder when doing this section is to avoid being overly optimistic with demand forecasts.

3. Competition Analysis

In this subsection you can discuss the competitors in the market you are about to enter. Try to find out their histories, resources, their products and services, and the means they use to operate in the market.

Try to analyse your competitors the way you analyse your own company – what are their capabilities? What volumes can they distribute to the market? What are their strengths and weaknesses?

It is important that you gain a good understanding of your competition so that you can more effectively attack their market position as well as defend against their own moves against you in the market place.

Do not forget to illustrate your company’s difference from the competitors.

(To be continued in Part 3)

Business Issues
Business Plan
Countries
Finance
Marketing
Start up
Strategies
Taxation
Technology


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