Would it be fair to assume that the most important part of writing a business plan is to start by refining the health of the company's future market? After all, why should anyone bother with a business plan if the current conditions in the market are not ideal? Better yet, is not it just better to understand if that market will be around for the long-term? Answering these three questions starts with an understanding of the importance of performing a market assessment. An assessment aims to identify the market's current path and to provide insight into any potential issues. Any entrepreneur must understand the current health of the market, the major players within the market and that market's short-term, and long-term, growth potential. In this case, the assessment is the first step in terms of pursuing a new business venture. It outlines the current situation and provides guidance on how to proceed with entering the new industry. The entrepreneur must clearly define the conditions for business success by refining the industry's current health. The market assessment helps to do just that.
Why do Entrepreneurs Fail to Review Their Market's Health?
While it's important for entrepreneurs to remain positive, it's also equally important for them to be cognizant of what's really happening. Unfortunately, most entrepreneurs forego the market analysis because they refuse to hear anything that might contradict their business strategy. In this case, they must come to see the assessment as an analysis into the market's future and an essential first step towards business success.
That analysis will help identify any potential pitfalls and provide the new venture with the tools to improve its business plan. The assessment should define where the market is, where it's going and what the new venture's main competitors are. When writing a business plan, start with a thorough analysis of your future market. After all, there may be competitive technologies that could make your new market obsolese. So what type of answers does a market assessment provide?
– Define the Short-Term and Long-Term Market Potential: The most important part of the analysis is to define the short-term and long-term potential of the market. Will the market grow over the next year? What are the 5, 10 and 15 year projections for the market? Defining the market's growth potential is a vital part of any market analysis.
– Define the Product or Service's Potential for Success: Will the new venture's product and service offer be welcomed by customers, or will there be a majority shy away from what the company has to offer? A market assessment will help define the new business venture's overall strategy because it will outline how companies are currently succeeding in the market. In essence, it will provide insight into what customers want and how they want it.
– Define the New Venture's Competition: A market assessment should provide insight into the company's future competitors. It should define how these competitors operate, how they sell, and most importantly, why their customers continue to buy from them.
– Define the Suppliers in the Market: Every company needs good suppliers. As such, identifying those key suppliers is of vital importance to controlling costs. What are the standard payment terms within the industry? Who are the best suppliers to work with? These are the types of questions that must be answered by the market assessment.
Take the time to perform a market assessment. It will address your biggest concerns, and provide guidance on how best to implement your business strategy. Most importantly, it will help you put together a more thorough business plan.
