How to Analyze the Market for Your Business Plan

In gathering material for a business plan, by now you’ve established a vision and values and looked at the past and present. Now it’s time to become a prognosticator. Peer into the future and start to gather that information.

Instructions

Difficulty: Easy

1. Where is the market going?
   What are the changes in society that open an opportunity for you? How will technology affect the market? What are the interesting trends you discern? How is government policy going to affect what you do? Mobile home manufacturers thrived after Hurricane Katrina hit. Now they are worried that those barely used temporary shelters will flood their market depressing prices.
   
   Research your industry thoroughly by looking at trade publications. Stay on top of related news through newspapers and the Internet. TV news is a good, quick snapshot of the world on a given day but it’s hard to provide any in-depth analysis in a 20 second story.
2. Where are the good opportunities facing you due to these market forces?
   
   Microsoft is probably the premiere example of a company responding to technological changes, but rather than rehash the story of Bill Gates, I’ll share one about B&B Systems. It was founded by a couple of engineers at the dawn of stereo television in the late seventies. They noticed that if the two channels were mismatched or out of phase when fed through a monophonic speaker, the two audio channels would cancel each other out. An out of phase stereo broadcast of Beethoven’s Ninth Symphony at the demolished Berlin Wall would have produced utter silence in mono. It’s the same audio principal now used in noise canceling headphones. The B&B engineers developed a phase meter to check the audio signals prior to sending them out over the air. The meter became the industry standard. At the market for stereo television grew, the B&B phase meter was almost universally installed in broadcast facilities across the United States.
3. How will the competition respond?
   Few of us have the luxury creating an utterly innovative product like the B&B systems phase meter. Let’s say that you are an accomplished still photographer who has truly mastered the art of capturing images on film. You keep an eye on digital image making, but your objective assessment tells you that digital photography hasn’t caught up to 35mm yet, so you keep shooting on film, but your competitors start to switch over. Speed starts to become more important. Clients start to demand the ability to look over your shoulder and view what you’ve taken. Newspapers want digital images and expect you to deliver. Where does this shift lead you?
4. What are the other threats to your success?
   Is the demand for your product or services changing? If the market trends are very pronounced, your entire way of doing business can be affected. Kodak didn’t adapt to digital image making quickly enough. This pioneering company founded by George Eastman in 1888 has recently gone through a round of massive layoffs. Just a couple of years ago incandescent light makers faced a bright future. Now to meet the threat of global warming a California legislator has introduced a bill that would ban them from the state.
   
   In looking at the future, let your imagination wander. Jules Verne was remarkably prescient about going to the moon, although he was wrong about voyaging to the center of the Earth. Get creative. You can censor later. At this point you’re looking for threats and opportunities that others just might overlook.