Analysis and description of the market as recommended in this chapter require complete,detailed information. That information comes from market research.The term market research suggests complex matters such as regression analysis and academic studies. More often, it is a straightforward accumulation of data available from published sources such as government or industry-association statistics and news articles, as well as from executives’ inquiries.Needed information can also come from the experience that management team members have had in working for other companies in the market. If your executives have held management positions elsewhere in your industry, they will know which companies are the key players and how buying decisions are made. The most important aspect of market research, however, is feedback from current and prospective buyers.
How do they feel about the product or service you are offering?
What do they like, and what do they dislike?
How likely are they to buy under various conditions and at different prices?
Getting such information, of course, requires that you speak with these customers and prospects or get them to fill out questionnaires. If you have an established business and are in contact with your customers, gathering the information you need will be easier than if you are starting a new business.In any case, the more hard data you have from current and potential buyers about their needs and preferences, the more convincing the marketing section of your business plan will be. Too often, executives avoid this part of market research and simply extrapolate from raw data to arrive at market projections. They take the total number of prospective customers, estimate that their company can secure some percentage, say 3 or 5%, as customers, and then calculate sales. This is not only unconvincing to outside readers of the plan; it is dangerous for internal planning purposes as well.Your business plan should completely, yet concisely, describe your products or services and explain how they are produced or delivered. You need not describe every nut and bolt or service provision, but you should explain what your product or service is and what need it fills. Your description should give the potential investor some idea of how your product or service differs from that of the competition. The potential investor must be convinced that your offering is more effective or efficient than that of the competition.The challenge in this section of the business plan is not so much describing the product or service in positive terms most company executives can easily do that as truly analyzing it in terms of features and the cost of those features.This means developing a list of the key features and making some judgments about their importance. This list often raises important questions. For example, it could be that including a newly developed electronic component in the specialty equipment you sell will improve performance slightly, but not enough to justify the increased cost and potential for breakdown. In addition, this section of the business plan must convince potential backers that you can do what you say you can do with regard to production or service delivery. They must feel confident that your company can produce the product or service described, on schedule, with high quality, and at the cost anticipated.
How do they feel about the product or service you are offering?
What do they like, and what do they dislike?
How likely are they to buy under various conditions and at different prices?
Getting such information, of course, requires that you speak with these customers and prospects or get them to fill out questionnaires. If you have an established business and are in contact with your customers, gathering the information you need will be easier than if you are starting a new business.In any case, the more hard data you have from current and potential buyers about their needs and preferences, the more convincing the marketing section of your business plan will be. Too often, executives avoid this part of market research and simply extrapolate from raw data to arrive at market projections. They take the total number of prospective customers, estimate that their company can secure some percentage, say 3 or 5%, as customers, and then calculate sales. This is not only unconvincing to outside readers of the plan; it is dangerous for internal planning purposes as well.Your business plan should completely, yet concisely, describe your products or services and explain how they are produced or delivered. You need not describe every nut and bolt or service provision, but you should explain what your product or service is and what need it fills. Your description should give the potential investor some idea of how your product or service differs from that of the competition. The potential investor must be convinced that your offering is more effective or efficient than that of the competition.The challenge in this section of the business plan is not so much describing the product or service in positive terms most company executives can easily do that as truly analyzing it in terms of features and the cost of those features.This means developing a list of the key features and making some judgments about their importance. This list often raises important questions. For example, it could be that including a newly developed electronic component in the specialty equipment you sell will improve performance slightly, but not enough to justify the increased cost and potential for breakdown. In addition, this section of the business plan must convince potential backers that you can do what you say you can do with regard to production or service delivery. They must feel confident that your company can produce the product or service described, on schedule, with high quality, and at the cost anticipated.
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