One thing you will notice about your business plan development is that there are lots of parts. You’ll have to do a lot of research to get the answers that enable you to create your business plan. Analyzing your Market is one of the things that you need to do to gather the right information. If you don’t go through this process, you may make decisions based on erroneous information.
A market analysis answers the following questions:
- Who Are Your Ideal Customers? – Depending on your business, you may have several ideal target customers. Make a list of who your customers are. Describe them and give them a name so that it’s easy to know who you’re targeting with each new offer.
- What Process Does Your Ideal Customer Go Through When Shopping? – In marketing, this is called the “buying journey.” It’s basically standard depending on where they are in the marketing funnel. Understand this so that you can differentiate the content you use to target them.
- How Big Is Your Target Audience? – If you don’t know how many people are out there needing your solution, how do you know you can earn enough money. Pricing depends on many factors, such as how many people you can attract plus your production cost or time available to perform the services. If there are only 100 people who need what you’re offering, can you profit?
- How Much Is Your Ideal Customer Willing to Pay? – Understanding who your customer is helps you also know how to price your products or services. Knowing their budgets and what keeps them up at night is enormously helpful.
- Who is Your Competition and What Are Their Strengths and Weaknesses? – Understanding who and how your competition does business is also helpful. If you don’t have customers yet, you can learn almost everything you need to know by immersing yourself in studying them.
To get the information, you need to make good choices for your life and your business. Don’t try to skimp market research. Not only do you need to research before starting your business, but you should also continuously research your ideal customers over time.
While your customers may stay the same demographics, they can change their principles and values over time. Imagine creating a commercial for DOVE soap today compared to the 1940s and 1950s. Many old ads offend people today. You don’t ever want to offend your audience, so keep studying them and your market so that your communication with them fits.
- Know Why You Are Doing the Research – Before you start researching, have a reason to do it. For example, if you want to find out where your ideal customer in the awareness stage finds their information, you should search for it; don’t just look at the information randomly, have a point for your research.
- Stay Up to Date on Your Industry’s Outlook – One thing some business owners forget to study is the overall industry. You need to be on the lookout for killer technologies that might end the need for your product or service or otherwise change something drastic in your business. Remember, no one is still making VHS tapes. (Those used to have movies on them.)
- Focus on Finding and Identifying Exactly Who Your Ideal Customer Is – You may think you know who your customer is already. If you do, it’s because you decided who they are before you even created your product. But if you already have a service or product, you may need to work a little harder finding the customer, but it is still possible.
- Study Your Competition Regularly – Don’t just study the competition one time. Join their lists, get to know them. Become members of their community. The truth is, you never know when the competition might become a wonderful colleague.
- Use the Data You Discover – Don’t just do all this work for nothing. Use the information you gather. Once you’ve collected the data and analyzed it make changes based on the facts. Then do it all again. And Again.
There is no point doing all this work researching if you’re not going to make changes and adjustments to your ideas. Once in a blue moon, your assumptions may be right, and your research confirms it, but often assumptions can be wrong, so always match your assumptions with the metrics and data that show the truth.
Blog Post Series
Thirty Blog Posts to help you Build a Business you Love!!!
Day 10: Components of a Business Plan
Day 16: Creating Your Executive Summary
Day 17: Can You Describe Your Business?