Business Basics

Every business operates within the larger classification of an industry. Your business plan must address the forces at work in your industry, the basic trends and growth over time, and where your company fits in. Demonstrating to outsiders that you understand and have anticipated the important factors of your industry builds a case for your company's success.

Think of your industry as those companies providing products and services similar to yours. This includes those companies selling similar products and services, as well as complementary or supplementary products or services.

In the industry section of your business plan, provide answers to the following types of questions. Organize your facts, thoughts, and insights into a well-written summary.

>> What is the size of your industry by both revenue and number of firms?
>> Discuss the characteristics of this industry such as growth trends, units sold, or employment.
>> What factors are influencing growth or decline in your industry?
>> What have been the trends in previous years?
>> What trends are expected in the coming years? (include supporting research)
>> What are the barriers of entry for your industry?
>> How many companies are expected to enter your industry in the future?
>> What government regulations effect your industry and your business?
>> Provide a general explanation of the distribution system for products and services in your industry.
>> What role does technology play in the growth and future of your industry?

Common Mistakes to Avoid

The following are the some of the most common mistakes found in the industry analysis section:

>> Not demonstrating a solid understanding of how your industry functions.
>> Appearing unaware about the companies that form your industry.
>> Lacking understanding as to where your business fits into the distribution channel of your industry.
>> Omitting growth trends, revenue size, and significant statistics for your industry.