When preparing a business plan for fresh Start-Ups, I often ask the following questions:
- What do you know about the industry you want to enter?
- Who are the players in the industry?
- What is the current trend in the industry?
Simple questions you may say, but I have never received a direct and confident response from any of them. Many people are certain that they will succeed in business because they have the money or they are very passionate about what they want to do. However, in today’s ever changing world, money and talent are not just enough for you to be in business, you need a mental compass of where you are going, those that you will be up against, what advantages or challenges you are likely to face so you don’t get swallowed or missing in the market. Only an industry analysis will provide you such information.
Many small businesses are actually missing in the market because they underestimated the need for proper industry analysis. Industry analysis is not about knowing your customers or audience but its about knowing other competitors and what they are doing. A good industry analysis -
- helps you to identify the un-served market;
- identifies a segment you can profitably serve;
- identifies a niche that is tangible;
- helps sharpen your business focus;
- strengthens your strategy;
- exposes the weaknesses of your competitor’s strategy;
- identifies the best market entry mode for you;
- tells you what type of pricing method to adopt;
- makes your product or service significant to your audience;
- and shows you at what level you can comfortably do business without suffocating.
Unfortunately, many have failed to analyze the industry very well hence their lack of presence in the market, and the struggle to get notice by the consumers. They had no idea of the intensity of the competition they were likely to face, unsure and unclear about the market segment, displayed low quality competitive edge, and more importantly, failed to identify the variables that will best differentiate their business.
You can’t compete in a battle when you don’t know your opponents
You need to identify companies your business cannot challenge yet in the market, and strategically avoid direct competition with them. Understanding your industry, its players, current technology and the industry trend saves you the embarrassment of being in the market and yet no one can find you.
Analyze your industry before you make a move so that you don’t get missing in the market.