The first thing you need to do before you launch your new business idea is to validate the idea and learn more about your market, both of which can be accomplished through market analysis. Your business plan will rely heavily on this data to determine whether or not the idea has any real potential and should be pursued further, so it’s important to get this process right from the start.
What is a Market Analysis?
A market analysis is critical in helping you understand how your business will compete in its industry and who your target customers are. That doesn’t mean you need to write an entire section about your competitors. Still, it does mean making sure you have taken their presence into account before determining what customers want and what they will buy.
There are some points to follow on how to conduct a Market Analysis for your business:
Determine Your Purpose
Whether you’re writing a business plan or raising funds for your business, knowing your main objective is important because it tells you which elements are most important and helps prevent extraneous information from creeping into your plan or pitch. In other words, stay focused on why someone should fund/invest in your idea or company—not on every aspect of how things work.
Research The State of The Industry
One of your first steps would be researching what’s going on in your market. Look at competitors, market growth, and demand. Ideally, you want high growth and great demand because those are signs that you can compete effectively within that space.
If there are ten similar businesses in town, customers won’t support all of them—or even any of them. To raise funds for business, it makes sense to start in an industry with enough room for everyone; after all, you don’t want competition chasing off clients! So how do you know if an industry has potential?
Identify Your Target Customer
All people around the globe are not likely to be your client, so it will cost you time trying to make everyone interested in your offering. Instead, determine the most likely people to purchase your product by analyzing your target market and concentrating your efforts on it. It is important to know the size of your market and who your clients are, where they’re from, and what could affect their purchasing decisions taking into consideration factors like these:
● Age
● Gender
● Location
● Occupation
● Education
● Needs
● Interests
Understand Your Competition
To become a successful businessman is to know the details of your competitors, including their market penetration and unique strategy, strengths and weaknesses, and the benefits of the market. Begin by listing your primary competitors. Next, review the list and perform a SWOT analysis of each competitor. What is the reason a potential customer would select that company over yours? Imagine yourself in the shoes of the customer.
It will also help you cover business credit health checks with answers on how businesses can raise credit scores.
Put Your Analysis To Work
Once you’ve done your analysis, put it to work. It is where you take your data and turn it into concrete information that will help direct your efforts as you raise funds for your business. Instead of simply telling investors how much money they can make if they give you money, tell them how many people are in their market and estimate what percentage will be interested in your product. When choosing investors, show them that you’ve given thought to what kind of business idea would be profitable and which kind would be able to bring some serious capital back in return.
Create Credit Report for Business
A credit report business can be especially valuable when raising funds for your business. However, business credit health checks aren’t just useful when you’re applying for funding; they also provide valuable insight into your company’s financial situation and predict how likely you are to be able to repay loans or other forms of debt.
There are some ways to get a credit report for your business—you could join CreditQ, take advantage of many online services (which often include extra features like credit-score monitoring), or create one yourself by using information from various sources.
