Lean Business Planning and Industry Profiles and Analysis
Published January 27, 2012 | 
Success is directly connected with action. That’s why successful people seem to always keep moving. They make mistakes, but they don’t quit. Instead they move to correct any mistakes and turn them into success.
An Industry Analysis is simply the analysis of conditions within a specific industry at a particular point in time. Now this can include the behavior and relations between competition, suppliers, and customers. So the understanding of the different factors that are constantly at work affecting the industry (i.e. market, political, economic etc.) is an extremely critical component of effective lean strategic planning for any company, and requires a comprehensive effort.
Why it’s Important
Industry Analyses bring an understanding of the industry’s big picture to you and your readers. The identification of the mixture of threats and opportunities your business faces at any time, ultimately helps determine strategies and processes to create highly-competitive advantages. The better prepared you are when you enter the market can put you farther down the road to achieving established objectives and goals.
What’s in it?
There are always several factors that can affect the industry which may include government regulations, environmental issues, as well as market conditions and economic circumstances, any of which can have a direct affect on your chances of starting a successful business in the industry.
The size of your industry by both revenue and number of firms.
Industry growth trends, units sold, or the employment situation.
Identifiable growth or declining trends in your industry are important.
Discuss any important historical trends in previous years.
Trends forecast if available for the coming years. Be sure and include supporting research.
Identify critical barriers of entry for your industry.
Future growth in number of companies expected to enter your industry.
The cost of government regulations that may affect your industry and business, and is your industry highly regulated, or not.
Provide a broad explanation of the common methods of distribution for products and services in your industry.
Let’s examine a few of the most common mistakes sometimes found in the industry analysis section of a business plan.
Not demonstrating a solid understanding of how your industry functions. Your experience is important, so don’t let the information indicate a lack of experience.
Appear seemingly unaware about the companies that form your industry. It’s critical to understand and address your market including businesses that may be your direct competition.
Lacking understanding about where and how your business fits into the distribution channel of your industry. Poor understanding of distribution channels is fraught with potential inefficiencies and can be extremely costly.
Appear to carelessly omit growth trends, revenue size, and significant statistics for your industry. Never omit information and industry data that should automatically be included to present a complete picture of what to expect and effectively plan for in the market.
Essential Elements of a Business Plan – First Five
Published December 27, 2011 | Planning is a course of action by which we can imagine and visualize the future, and then build and develop the essential procedures and operations to affect and achieve our envisioned future.
What are the Essential Elements or Sections that should be included in a Business Plan?
A good business plan generally has ten essential components. It is critical for you to provide comprehensive assessments for these individual components in attracting either lenders, investors, or both. Let’s take a look at the first five essential elements.
Executive Summary – The Executive Summary should provide a concise to the point summation of the business plan, along with highlights the main points within the body of the plan. The Executive Summary should communicate to any prospective investor the size and extent of the opportunity you have identified in the market, the endeavor’s business and profitability model, and how the management team of the company is uniquely qualified by resources, skills, and strategic positioning to successfully execute the plan. In short, the Executive Summary must be easy-to-read, yet compelling, and certainly no longer than 2-4 pages.
Company Analysis – This part should provide a tactical and strategic overview of the company, describing the organization of the company, products and services it offers or will offer, and delves into further detail specific to the unique qualifications of the business in serving the needs of its target market niches.
Industry Analysis – This part is an evaluation of the ‘playing field’ your business will be a part of and competing in, and should include clear thought through answers critical market specific questions including the next two components.
Customer Analysis – The Customer Analysis component is an assessment of the customer target market niche that the business serves. In this part, you must express the needs of its target customers, and then show how its products and or services meet the specific needs to an extent that the customer is satisfied enough to pay for them.
Competition Analysis – This part lays out the competitive landscape of your business. It should clearly identify who the direct and indirect (don’t forget indirect) competition is including assessments of their strengths and weaknesses and defines and describes your business’s competitive advantages.
Sparking, and winning an investor’s interest early is crucial. Therefore, the initial five sections of a business plan are almost beyond critical because most of the time, an investor won’t read or even scan through the whole plan. The market research and information that backs up the business opportunity’s potential, in addition to the background on the full business opportunity, are critical factors in gaining an investment.
Entrepreneurs that skillfully and comprehensively lay-out and present these components in their business plan really help themselves to deeply-comprehend and understand the business.
Industry Analysis – Data Sources and Industries
Published December 30, 2010 | Data Sources
Generally speaking, The Industry Analysis normally contains many facts, figures and future industry projections. For this data to be believable, the analysis should be sourced through independent research whenever it is possible. The opinions of the business’s management are basically insufficient to persuade a high-level investor, and dependence on “anecdotal” information can negatively impact the integrity of the entire plan.
Industries
Most businesses compete in multiple overlapping industries. The business that produces and markets medical appliances for doctors, as previously mentioned, participates competitively inside the healthcare industry, the medical appliance industry and the manufacturing industry. In addition to centering attention on the definition and assessment of the relevant market as previously detailed, the Industry Analysis should include full details and complete descriptions 
of all of the markets in which the business participates.
Finally, Industry and market trends should include potential market growth with facts, figures and projections normally over a timeline of two, three, five or sometimes ten years. The estimates you develop should always be supported with detailed information about any changing market trends, latest industrial technological and hi-tech developments, unpredictable customer profiles and any other significant factors related to industry. It is critical to support your researched assumptions with reasonable goals and objectives. If you overstate and exaggerate the projections of market share and size, it will only lead to unwanted questioning and ultimate rejection of your Business Plan by potential investors.
Industry Analysis – Market Trends
Published December 28, 2010 | Important Industry Trends
Once the plan has determined the “relevant market size,” it should talk about industry trends and exactly how those trends might influence the business. 
Questions the plan might to answer include (1) how has the “relevant market size” changed over the past up to five years? (2) What is the growth projection of the relevant market? (3) What factors will affect this growth? (4) Common economic factors? (5) Changing regulatory circumstances? (6) Changing consumer demands? Etc.
It is essential to keep in mind that the Industry Analysis is not simply a research report – each individual fact, figure and projection should substantiate the business’s prospects for success. Take for example, a market research organization that relies solely on opt-in responses from consumers that choose to participate.
This organization’s business plan would not only clarify new and proposed privacy regulations, but how this supports the business’s long-term competitive market position. In addition, the plan should give details about how the business would overcome trends that do not support the long-term business objectives and milestones. 
For example, showing how the company will enjoy success in a most uncertain economic environment relieves certain investor concerns and increases the success of the business plan.
While the facts and figures in the Detailed Industry Analysis should be presented to substantiate the business, it is vital that the data presented be credible and provable as investors (if interested in proceeding from this point) will carry out wide-ranging due diligence on the business plan.
Industry Analysis – Market Size
Published December 27, 2010 | Understand the Industry Analysis should best describe the environment in which a business is currently or will be operating. 
The Analysis works to demonstrate to the reader that there exists an authentic need and resulting demand in the market for the business’ products and or services, that the market size is substantial enough to support significant sales by the business, and that the industry considerations sustain the business’ strategies.
Market Size
You will find that a good starting point is a discussion of the marketplace in which the business’s products and services are presented and the magnitude or size of this particular marketplace. Always crucial to this examination and analysis is the determination of the “relevant market size.” The “relevant market size” equals a particular business’s sales if it were to capture 100% of its specific niche of the market.
Take for instance, if a business develops medical appliances for physicians, the relevant market size clearly is not the trillion dollar healthcare market, but rather it is the size (in units and dollars) of medical appliance sales to physicians, since it is these specifically identified products the business competes against. It’s never very easy determining the relevant market size, and quite often requires stripping numerous layers off an enormous total industry size.