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How to Conduct an Industry Analysis? Steps, Template, Examples

Appinio Research · 16.11.2023 · 39min read

Are you ready to unlock the secrets of Industry Analysis, equipping yourself with the knowledge to navigate markets and make informed strategic decisions? Dive into this guide, where we unravel the significance, objectives, and methods of Industry Analysis.

Whether you're an entrepreneur seeking growth opportunities or a seasoned executive navigating industry shifts, this guide will be your compass in understanding the ever-evolving business terrain.

What is Industry Analysis?

Industry analysis is the process of examining and evaluating the dynamics, trends, and competitive forces within a specific industry or market sector. It involves a comprehensive assessment of the factors that impact the performance and prospects of businesses operating within that industry. Industry analysis serves as a vital tool for businesses and decision-makers to gain a deep understanding of the environment in which they operate.

Key components of industry analysis include:

• Market Size and Growth: Determining the overall size of the market, including factors such as revenue, sales volume, and customer base. Analyzing historical and projected growth rates provides insights into market trends and opportunities.
• Competitive Landscape: Identifying and analyzing competitors within the industry. This includes assessing their market share , strengths, weaknesses, and strategies. Understanding the competitive landscape helps businesses position themselves effectively.
• Customer Behavior and Preferences: Examining consumer behavior , preferences, and purchasing patterns within the industry. This information aids in tailoring products or services to meet customer needs.
• Regulatory and Legal Environment: Assessing the impact of government regulations, policies, and legal requirements on industry operations. Compliance and adaptation to these factors are crucial for business success.
• Technological Trends: Exploring technological advancements and innovations that affect the industry. Staying up-to-date with technology trends can be essential for competitiveness and growth.
• Economic Factors: Considering economic conditions, such as inflation rates, interest rates, and economic cycles, that influence the industry's performance.
• Social and Cultural Trends: Examining societal and cultural shifts, including changing consumer values and lifestyle trends that can impact demand and preferences.
• Environmental and Sustainability Factors: Evaluating environmental concerns and sustainability issues that affect the industry. Industries are increasingly required to address environmental responsibility.
• Supplier and Distribution Networks: Analyzing the availability of suppliers, distribution channels, and supply chain complexities within the industry.
• Risk Factors: Identifying potential risks and uncertainties that could affect industry stability and profitability.

Objectives of Industry Analysis

Industry analysis serves several critical objectives for businesses and decision-makers:

• Understanding Market Dynamics: The primary objective is to gain a comprehensive understanding of the industry's dynamics, including its size, growth prospects, and competitive landscape. This knowledge forms the basis for strategic planning.
• Identifying Growth Opportunities: Industry analysis helps identify growth opportunities within the market. This includes recognizing emerging trends, niche markets, and underserved customer segments.
• Assessing Competitor Strategies: By examining competitors' strengths, weaknesses, and strategies, businesses can formulate effective competitive strategies. This involves positioning the company to capitalize on its strengths and exploit competitors' weaknesses.
• Risk Assessment and Mitigation: Identifying potential risks and vulnerabilities specific to the industry allows businesses to develop risk mitigation strategies and contingency plans. This proactive approach minimizes the impact of adverse events.
• Strategic Decision-Making: Industry analysis provides the data and insights necessary for informed strategic decision-making. It guides decisions related to market entry, product development, pricing strategies, and resource allocation.
• Resource Allocation: By understanding industry dynamics, businesses can allocate resources efficiently. This includes optimizing marketing budgets, supply chain investments, and talent recruitment efforts.
• Innovation and Adaptation: Staying updated on technological trends and shifts in customer preferences enables businesses to innovate and adapt their offerings effectively.

Importance of Industry Analysis in Business

Industry analysis holds immense importance in the business world for several reasons:

• Strategic Planning: It forms the foundation for strategic planning by providing a comprehensive view of the industry's landscape. Businesses can align their goals, objectives, and strategies with industry trends and opportunities.
• Risk Management: Identifying and assessing industry-specific risks allows businesses to manage and mitigate potential threats proactively. This reduces the likelihood of unexpected disruptions.
• Competitive Advantage: In-depth industry analysis helps businesses identify opportunities for gaining a competitive advantage. This could involve product differentiation, cost leadership, or niche market targeting .
• Resource Optimization: Efficient allocation of resources, both financial and human, is possible when businesses have a clear understanding of industry dynamics. It prevents wastage and enhances resource utilization.
• Informed Investment: Industry analysis assists investors in making informed decisions about allocating capital. It provides insights into the growth potential and risk profiles of specific industry sectors.
• Adaptation to Change: As industries evolve, businesses must adapt to changing market conditions. Industry analysis facilitates timely adaptation to new technologies, market shifts, and consumer preferences .
• Market Entry and Expansion: For businesses looking to enter new markets or expand existing operations, industry analysis guides decision-making by evaluating the feasibility and opportunities in target markets.
• Regulatory Compliance: Understanding the regulatory environment is critical for compliance and risk avoidance. Industry analysis helps businesses stay compliant with relevant laws and regulations.

In summary, industry analysis is a fundamental process that empowers businesses to make informed decisions, stay competitive, and navigate the complexities of their respective markets. It is an invaluable tool for strategic planning and long-term success.

How to Prepare for Industry Analysis?

Let's start by going through the crucial preparatory steps for conducting a comprehensive industry analysis.

1. Data Collection and Research

• Primary Research: When embarking on an industry analysis, consider conducting primary research . This involves gathering data directly from industry sources, stakeholders, and potential customers. Methods may include surveys , interviews, focus groups , and observations. Primary research provides firsthand insights and can help validate secondary research findings.
• Secondary Research: Secondary research involves analyzing existing literature, reports, and publications related to your industry. Sources may include academic journals, industry-specific magazines, government publications, and market research reports. Secondary research provides a foundation of knowledge and can help identify gaps in information that require further investigation.
• Data Sources: Explore various data sources to collect valuable industry information. These sources may include industry-specific associations, government agencies, trade publications, and reputable market research firms. Make sure to cross-reference data from multiple sources to ensure accuracy and reliability.

2. Identifying Relevant Industry Metrics

Understanding and identifying the right industry metrics is essential for meaningful analysis. Here, we'll discuss key metrics that can provide valuable insights:

• Market Size: Determining the market's size, whether in terms of revenue, units sold, or customer base, is a fundamental metric. It offers a snapshot of the industry's scale and potential.
• Market Growth Rate: Assessing historical and projected growth rates is crucial for identifying trends and opportunities. Understanding how the market has evolved over time can guide strategic decisions.
• Market Share Analysis: Analyzing market share among industry players can help you identify dominant competitors and their respective positions. This metric also assists in gauging your own company's market presence.
• Market Segmentation : Segmenting the market based on demographics, geography, behavior, or other criteria can provide deeper insights. Understanding the specific needs and preferences of various market segments can inform targeted strategies.

3. Gathering Competitive Intelligence

Competitive intelligence is the cornerstone of effective industry analysis. To gather and utilize information about your competitors:

• Competitor Identification: Begin by creating a comprehensive list of your primary and potential competitors. Consider businesses that offer similar products or services within your target market. It's essential to cast a wide net to capture all relevant competitors.
• SWOT Analysis : Conduct a thorough SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis for each competitor. This analysis helps you identify their internal strengths and weaknesses, as well as external opportunities and threats they face.
• Market Share Analysis: Determine the market share held by each competitor and how it has evolved over time. Analyzing changes in market share can reveal shifts in competitive dynamics.
• Product and Pricing Analysis: Evaluate your competitors' product offerings and pricing strategies . Identify any unique features or innovations they offer and consider how your own products or services compare.
• Marketing and Branding Strategies: Examine the marketing and branding strategies employed by competitors. This includes their messaging, advertising channels, and customer engagement tactics. Assess how your marketing efforts stack up.

Industry Analysis Frameworks and Models

Now, let's explore essential frameworks and models commonly used in industry analysis, providing you with practical insights and examples to help you effectively apply these tools.

Porter's Five Forces Model

Porter's Five Forces is a powerful framework developed by Michael Porter to assess the competitive forces within an industry. This model helps you understand the industry's attractiveness and competitive dynamics.

It consists of five key forces:

• Threat of New Entrants: This force evaluates how easy or difficult it is for new companies to enter the industry. Factors that increase barriers to entry include high capital requirements, strong brand loyalty among existing players, and complex regulatory hurdles. For example, the airline industry has significant barriers to entry due to the need for large capital investments in aircraft, airport facilities, and regulatory approvals.
• Bargaining Power of Suppliers: This force examines the influence suppliers have on the industry's profitability. Powerful suppliers can demand higher prices or impose unfavorable terms. For instance, in the automotive industry, suppliers of critical components like microchips can wield significant bargaining power if they are few in number or if their products are highly specialized.
• Bargaining Power of Buyers: The bargaining power of buyers assesses how much influence customers have in negotiating prices and terms. In industries where buyers have many alternatives, such as the smartphone market, they can demand lower prices and better features, putting pressure on manufacturers to innovate and compete.
• Threat of Substitutes: This force considers the availability of substitute products or services that could potentially replace what the industry offers. For example, the rise of electric vehicles represents a significant threat to the traditional gasoline-powered automotive industry as consumers seek eco-friendly alternatives.
• Competitive Rivalry: Competitive rivalry assesses the intensity of competition among existing firms in the industry. A highly competitive industry, such as the smartphone market, often leads to price wars and aggressive marketing strategies as companies vie for market share.

Example: Let's consider the coffee shop industry . New entrants face relatively low barriers, as they can set up a small shop with limited capital. However, the bargaining power of suppliers, such as coffee bean producers, can vary depending on the region and the coffee's rarity. Bargaining power with buyers is moderate, as customers often have several coffee shops to choose from. Threats of substitutes may include energy drinks or homemade coffee, while competitive rivalry is high, with numerous coffee chains and independent cafes competing for customers.

SWOT Analysis

SWOT Analysis is a versatile tool used to assess an organization's internal strengths and weaknesses, as well as external opportunities and threats. By conducting a SWOT analysis, you can gain a comprehensive understanding of your industry and formulate effective strategies.

• Strengths: These are the internal attributes and capabilities that give your business a competitive advantage. For instance, if you're a tech company, having a talented and innovative team can be considered a strength.
• Weaknesses: Weaknesses are internal factors that hinder your business's performance. For example, a lack of financial resources or outdated technology can be weaknesses that need to be addressed.
• Opportunities: Opportunities are external factors that your business can capitalize on. This could be a growing market segment, emerging technologies, or changing consumer trends.
• Threats: Threats are external factors that can potentially harm your business. Examples of threats might include aggressive competition, economic downturns, or regulatory changes.

Example: Let's say you're analyzing the fast-food industry. Strengths could include a well-established brand, a wide menu variety, and efficient supply chain management. Weaknesses may involve a limited focus on healthy options and potential labor issues. Opportunities could include the growing trend toward healthier eating, while threats might encompass health-conscious consumer preferences and increased competition from delivery apps.

PESTEL Analysis

PESTEL Analysis examines the external macro-environmental factors that can impact your industry. The acronym stands for:

• Political: Political factors encompass government policies, stability, and regulations. For example, changes in tax laws or trade agreements can affect industries like international manufacturing.
• Economic: Economic factors include economic growth, inflation rates, and exchange rates. A fluctuating currency exchange rate can influence export-oriented industries like tourism.
• Social: Social factors encompass demographics, cultural trends, and social attitudes. An aging population can lead to increased demand for healthcare services and products.
• Technological: Technological factors involve advancements and innovations. Industries like telecommunications are highly influenced by technological developments, such as the rollout of 5G networks.
• Environmental: Environmental factors cover sustainability, climate change, and ecological concerns. Industries such as renewable energy are directly impacted by environmental regulations and consumer preferences.
• Legal: Legal factors encompass laws, regulations, and compliance requirements. The pharmaceutical industry, for instance, faces stringent regulatory oversight and patent protection laws.

Example: Consider the automobile manufacturing industry. Political factors may include government incentives for electric vehicles. Economic factors can involve fluctuations in fuel prices affecting consumer preferences for fuel-efficient cars. Social factors might encompass the growing interest in eco-friendly transportation options. Technological factors could relate to advancements in autonomous driving technology. Environmental factors may involve emissions regulations, while legal factors could pertain to safety standards and recalls.

Industry Life Cycle Analysis

Industry Life Cycle Analysis categorizes industries into various stages based on their growth and maturity. Understanding where your industry stands in its life cycle can help shape your strategies.

• Introduction: In the introduction stage, the industry is characterized by slow growth, limited competition, and a focus on product development. New players enter the market, and consumers become aware of the product or service. For instance, electric scooters were introduced as a new mode of transportation in recent years.
• Growth: The growth stage is marked by rapid market expansion, increased competition, and rising demand. Companies focus on gaining market share, and innovation is vital. The ride-sharing industry, exemplified by companies like Uber and Lyft, experienced significant growth in this stage.
• Maturity: In the maturity stage, the market stabilizes, and competition intensifies. Companies strive to maintain market share and differentiate themselves through branding and customer loyalty programs. The smartphone industry reached maturity with multiple established players.
• Decline: In the decline stage, the market saturates, and demand decreases. Companies must adapt or diversify to survive. The decline of traditional print media is a well-known example.

Example: Let's analyze the video streaming industry . The introduction stage saw the emergence of streaming services like Netflix. In the growth stage, more players entered the market, and the industry saw rapid expansion. The industry is currently in the maturity stage, with established platforms like Netflix, Amazon Prime, and Disney+ competing for market share. However, with continued innovation and changing consumer preferences, the decline stage may eventually follow.

Value Chain Analysis

Value Chain Analysis dissects a company's activities into primary and support activities to identify areas of competitive advantage. Primary activities directly contribute to creating and delivering a product or service, while support activities facilitate primary activities.

• Primary Activities: These activities include inbound logistics (receiving and storing materials), operations (manufacturing or service delivery), outbound logistics (distribution), marketing and sales, and customer service.
• Support Activities: Support activities include procurement (acquiring materials and resources), technology development (R&D and innovation), human resource management (recruitment and training), and infrastructure (administrative and support functions).

Example: Let's take the example of a smartphone manufacturer. Inbound logistics involve sourcing components, such as processors and displays. Operations include assembly and quality control. Outbound logistics cover shipping and distribution. Marketing and sales involve advertising and retail partnerships. Customer service handles warranty and support.

Procurement ensures a stable supply chain for components. Technology development focuses on research and development of new features. Human resource management includes hiring and training skilled engineers. Infrastructure supports the company's administrative functions.

By applying these frameworks and models effectively, you can better understand your industry, identify strategic opportunities and threats, and develop a solid foundation for informed decision-making.

Data Interpretation and Analysis

Once you have your data, it's time to start interpreting and analyzing the data you've collected during your industry analysis.

You can unlock the full potential of your data with Appinio 's comprehensive research platform. Beyond aiding in data collection, Appinio simplifies the intricate process of data interpretation and analysis. Our intuitive tools empower you to effortlessly transform raw data into actionable insights, giving you a competitive edge in understanding your industry.

Whether it's assessing market trends, evaluating the competitive landscape, or understanding customer behavior, Appinio offers a holistic solution to uncover valuable findings. With our platform, you can make informed decisions, strategize effectively, and stay ahead of industry shifts.

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1. Analyze Market Size and Growth

Analyzing the market's size and growth is essential for understanding its dynamics and potential. Here's how to conduct a robust analysis:

• Market Size Calculation: Determine the total market size in terms of revenue, units sold, or the number of customers. This figure serves as a baseline for evaluating the industry's scale.
• Historical Growth Analysis: Examine historical data to identify growth trends. This includes looking at past year-over-year growth rates and understanding the factors that influenced them.
• Projected Growth Assessment: Explore industry forecasts and projections to gain insights into the expected future growth of the market. Consider factors such as emerging technologies, changing consumer preferences, and economic conditions.
• Segmentation Analysis: If applicable, analyze market segmentation data to identify growth opportunities in specific market segments. Understand which segments are experiencing the most significant growth and why.

2. Assess Market Trends

Stay ahead of the curve by closely monitoring and assessing market trends. Here's how to effectively evaluate trends within your industry.

• Consumer Behavior Analysis: Dive into consumer behavior data to uncover shifts in preferences, buying patterns, and shopping habits. Understand how technological advancements and cultural changes influence consumer choices.
• Technological Advancements: Keep a keen eye on technological developments that impact your industry. Assess how innovations such as AI, IoT, blockchain, or automation are changing the competitive landscape.
• Regulatory Changes: Stay informed about regulatory shifts and their potential consequences for your industry. Regulations can significantly affect product development, manufacturing processes, and market entry strategies.
• Sustainability and Environmental Trends: Consider the growing importance of sustainability and environmental concerns. Evaluate how your industry is adapting to eco-friendly practices and how these trends affect consumer choices.

3. Evaluate Competitive Landscape

Understanding the competitive landscape is critical for positioning your business effectively. To perform a comprehensive evaluation:

• Competitive Positioning: Determine where your company stands in comparison to competitors. Identify your unique selling propositions and areas where you excel.
• Market Share Analysis: Continuously monitor market share among industry players. Identify trends in market share shifts and assess the strategies that lead to such changes.
• Competitive Advantages and Weaknesses: Analyze your competitors' strengths and weaknesses. Identify areas where you can capitalize on their weaknesses and where you need to fortify your own strengths.

4. Identify Key Success Factors

Recognizing and prioritizing key success factors is crucial for developing effective strategies. To identify and leverage these factors:

• Customer Satisfaction: Prioritize customer satisfaction as a critical success factor. Satisfied customers are more likely to become loyal advocates and contribute to long-term success.
• Quality and Innovation: Focus on product or service quality and continuous innovation. Meeting and exceeding customer expectations can set your business apart from competitors.
• Cost Efficiency: Strive for cost efficiency in your operations. Identifying cost-saving opportunities can lead to improved profitability.
• Marketing and Branding Excellence: Invest in effective marketing and branding strategies to create a strong market presence. Building a recognizable brand can drive customer loyalty and growth.

5. Analyze Customer Behavior and Preferences

Understanding your target audience is central to success. Here's how to analyze customer behavior and preferences:

• Market Segmentation: Use market segmentation to categorize customers based on demographics, psychographics , and behavior. This allows for more personalized marketing and product/service offerings.
• Customer Surveys and Feedback: Gather customer feedback through surveys and feedback mechanisms. Understand their pain points, preferences, and expectations to tailor your offerings.
• Consumer Journey Mapping: Map the customer journey to identify touchpoints where you can improve engagement and satisfaction. Optimize the customer experience to build brand loyalty.

By delving deep into data interpretation and analysis, you can gain valuable insights into your industry, uncover growth opportunities, and refine your strategic approach.

How to Conduct Competitor Analysis?

Competitor analysis is a critical component of industry analysis as it provides valuable insights into your rivals, helping you identify opportunities, threats, and areas for improvement.

1. Identify Competitors

Identifying your competitors is the first step in conducting a thorough competitor analysis. Competitors can be classified into several categories:

• Direct Competitors: These are companies that offer similar products or services to the same target audience. They are your most immediate competitors and often compete directly with you for market share.
• Indirect Competitors: Indirect competitors offer products or services that are related but not identical to yours. They may target a slightly different customer segment or provide an alternative solution to the same problem.
• Potential Competitors: These companies could enter your market in the future. Identifying potential competitors early allows you to anticipate and prepare for new entrants.
• Substitute Products or Services: While not traditional competitors, substitute products or services can fulfill the same customer needs or desires. Understanding these alternatives is crucial to your competitive strategy.

2. Analyze Competitor Strengths and Weaknesses

Once you've identified your competitors, you need to analyze their strengths and weaknesses. This analysis helps you understand how to position your business effectively and identify areas where you can gain a competitive edge.

• Strengths: Consider what your competitors excel at. This could include factors such as brand recognition, innovative products, a large customer base, efficient operations, or strong financial resources.
• Weaknesses: Identify areas where your competitors may be lacking. Weaknesses could involve limited product offerings, poor customer service, outdated technology, or financial instability.

3. Competitive Positioning

Competitive positioning involves defining how you want your business to be perceived relative to your competitors. It's about finding a unique position in the market that sets you apart. Consider the following strategies:

• Cost Leadership: Strive to be the low-cost provider in your industry. This positioning appeals to price-conscious consumers.
• Differentiation: Focus on offering unique features or attributes that make your products or services stand out. This can justify premium pricing.
• Niche Market: Target a specific niche or segment of the market that may be underserved by larger competitors. Tailor your offerings to meet their unique needs.
• Innovation and Technology: Emphasize innovation and technology to position your business as a leader in product or service quality.
• Customer-Centric: Prioritize exceptional customer service and customer experience to build loyalty and a positive reputation.

4. Benchmarking and Gap Analysis

Benchmarking involves comparing your business's performance and practices with those of your competitors or industry leaders. Gap analysis helps identify areas where your business falls short and where improvements are needed.

• Performance Benchmarking: Compare key performance metrics, such as revenue, profitability, market share, and customer satisfaction, with those of your competitors. Identify areas where your performance lags behind or exceeds industry standards.
• Operational Benchmarking: Analyze your operational processes, supply chain, and cost structures compared to your competitors. Look for opportunities to streamline operations and reduce costs.
• Product or Service Benchmarking: Evaluate the features, quality, and pricing of your products or services relative to competitors. Identify gaps and areas for improvement.
• Marketing and Sales Benchmarking: Assess your marketing strategies, customer acquisition costs, and sales effectiveness compared to competitors. Determine whether your marketing efforts are performing at a competitive level.

Market Entry and Expansion Strategies

Market entry and expansion strategies are crucial for businesses looking to enter new markets or expand their presence within existing ones. These strategies can help you effectively target and penetrate your chosen markets.

Market Segmentation and Targeting

• Market Segmentation: Begin by segmenting your target market into distinct groups based on demographics , psychographics, behavior, or other relevant criteria. This helps you understand the diverse needs and preferences of different customer segments.
• Targeting: Once you've segmented the market, select specific target segments that align with your business goals and capabilities. Tailor your marketing and product/service offerings to appeal to these chosen segments.

Market Entry Modes

Selecting the proper market entry mode is crucial for a successful expansion strategy. Entry modes include:

• Exporting: Sell your products or services in international markets through exporting. This is a low-risk approach, but it may limit your market reach.
• Licensing and Franchising: License your brand, technology, or intellectual property to local partners or franchisees. This allows for rapid expansion while sharing the risk and control.
• Joint Ventures and Alliances: Partner with local companies through joint ventures or strategic alliances. This approach leverages local expertise and resources.
• Direct Investment: Establish a physical presence in the target market through subsidiaries, branches, or wholly-owned operations. This offers full control but comes with higher risk and investment.

Competitive Strategy Formulation

Your competitive strategy defines how you will compete effectively in the target market.

• Cost Leadership: Strive to offer products or services at lower prices than competitors while maintaining quality. This strategy appeals to price-sensitive consumers.
• Product Differentiation: Focus on offering unique and innovative products or services that stand out in the market. This strategy justifies premium pricing.
• Market Niche: Target a specific niche or segment within the market that is underserved or has particular needs. Tailor your offerings to meet the unique demands of this niche.
• Market Expansion : Expand your product or service offerings to capture a broader share of the market. This strategy involves diversifying your offerings to appeal to a broader audience.
• Global Expansion: Consider expanding internationally to tap into new markets and diversify your customer base. This strategy involves thorough market research and adaptation to local cultures and regulations.

International Expansion Considerations

If your expansion strategy involves international markets, there are several additional considerations to keep in mind.

• Market Research: Conduct in-depth market research to understand the target country's cultural, economic, and legal differences.
• Regulatory Compliance: Ensure compliance with international trade regulations, customs, and import/export laws.
• Cultural Sensitivity: Adapt your marketing and business practices to align with the cultural norms and preferences of the target market.
• Localization: Consider adapting your products, services, and marketing materials to cater to local tastes and languages.
• Risk Assessment: Evaluate the political, economic, and legal risks associated with operating in the target country. Develop risk mitigation strategies.

By carefully analyzing your competitors and crafting effective market entry and expansion strategies, you can position your business for success in both domestic and international markets.

Risk Assessment and Mitigation

Risk assessment and mitigation are crucial aspects of industry analysis and strategic planning. Identifying potential risks, assessing vulnerabilities, and implementing effective risk management strategies are essential for business continuity and success.

1. Identify Industry Risks

• Market Risks: These risks pertain to factors such as changes in market demand, economic downturns, shifts in consumer preferences, and fluctuations in market prices. For example, the hospitality industry faced significant market risks during the COVID-19 pandemic, resulting in decreased travel and tourism .
• Regulatory and Compliance Risks: Regulatory changes, compliance requirements, and government policies can pose risks to businesses. Industries like healthcare are particularly susceptible to regulatory changes that impact operations and reimbursement.
• Technological Risks: Rapid technological advancements can disrupt industries and render existing products or services obsolete. Companies that fail to adapt to technological shifts may face obsolescence.
• Operational Risks: These risks encompass internal factors that can disrupt operations, such as supply chain disruptions, equipment failures, or cybersecurity breaches.
• Financial Risks: Financial risks include factors like liquidity issues, credit risk , and market volatility. Industries with high capital requirements, such as real estate development, are particularly vulnerable to financial risks.
• Competitive Risks: Intense competition and market saturation can pose challenges to businesses. Failing to respond to competitive threats can result in loss of market share.
• Global Risks: Industries with a worldwide presence face geopolitical risks, currency fluctuations, and international trade uncertainties. For instance, the automotive industry is susceptible to trade disputes affecting the supply chain.

2. Assess Business Vulnerabilities

• SWOT Analysis: Revisit your SWOT analysis to identify internal weaknesses and threats. Assess how these weaknesses may exacerbate industry risks.
• Financial Health: Evaluate your company's financial stability, debt levels, and cash flow. Identify vulnerabilities related to financial health that could hinder your ability to withstand industry-specific challenges.
• Operational Resilience: Assess the robustness of your operational processes and supply chain. Identify areas where disruptions could occur and develop mitigation strategies.
• Market Positioning: Analyze your competitive positioning and market share. Recognize vulnerabilities in your market position that could be exploited by competitors.
• Compliance and Regulatory Adherence: Ensure that your business complies with relevant regulations and standards. Identify vulnerabilities related to non-compliance or regulatory changes.

3. Risk Management Strategies

• Risk Avoidance: In some cases, the best strategy is to avoid high-risk ventures or markets altogether. This may involve refraining from entering certain markets or discontinuing products or services with excessive risk.
• Risk Reduction: Implement measures to reduce identified risks. For example, diversifying your product offerings or customer base can reduce dependence on a single revenue source.
• Risk Transfer: Transfer some risks through methods such as insurance or outsourcing. For instance, businesses can mitigate cybersecurity risks by purchasing cyber insurance.
• Risk Acceptance: In cases where risks cannot be entirely mitigated, it may be necessary to accept a certain level of risk and have contingency plans in place to address potential issues.
• Continuous Monitoring: Establish a system for continuous risk monitoring. Regularly assess the changing landscape and adjust risk management strategies accordingly.

4. Contingency Planning

Contingency planning involves developing strategies and action plans to respond effectively to unforeseen events or crises. It ensures that your business can maintain operations and minimize disruptions in the face of adverse circumstances. Key elements of contingency planning include:

• Risk Scenarios: Identify potential risk scenarios specific to your industry and business. These scenarios should encompass a range of possibilities, from minor disruptions to major crises.
• Response Teams: Establish response teams with clearly defined roles and responsibilities. Ensure that team members are trained and ready to act in the event of a crisis.
• Communication Plans: Develop communication plans that outline how you will communicate with employees, customers, suppliers, and other stakeholders during a crisis. Transparency and timely communication are critical.
• Resource Allocation: Determine how resources, including personnel, finances, and equipment, will be allocated in response to various scenarios.
• Testing and Simulation: Regularly conduct tests and simulations of your contingency plans to identify weaknesses and areas for improvement. Ensure your response teams are well-practiced and ready to execute the plans effectively.
• Documentation and Record Keeping: Maintain comprehensive documentation of contingency plans, response procedures, and communication protocols. This documentation should be easily accessible to relevant personnel.
• Review and Update: Continuously review and update your contingency plans to reflect changing industry dynamics and evolving risks. Regularly seek feedback from response teams to make improvements.

By identifying industry risks, assessing vulnerabilities, implementing risk management strategies, and developing robust contingency plans, your business can navigate the complexities of the industry landscape with greater resilience and preparedness.

Industry Analysis Template

When embarking on the journey of Industry Analysis, having a well-structured template is akin to having a reliable map for your exploration. It provides a systematic framework to ensure you cover all essential aspects of the analysis. Here's a breakdown of an industry analysis template with insights into each section.

Industry Overview

• Objective: Provide a broad perspective of the industry.
• Market Definition: Define the scope and boundaries of the industry, including its products, services, and target audience.
• Market Size and Growth: Present current market size, historical growth trends, and future projections.
• Key Players: Identify major competitors and their market share.
• Market Trends: Highlight significant trends impacting the industry.

Competitive Analysis

• Objective: Understand the competitive landscape within the industry.
• Competitor Identification: List direct and indirect competitors.
• Competitor Profiles: Provide detailed profiles of major competitors, including their strengths, weaknesses, strategies, and market positioning.
• SWOT Analysis: Conduct a SWOT analysis for each major competitor.
• Market Share Analysis: Analyze market share distribution among competitors.

Market Analysis

• Objective: Explore the characteristics and dynamics of the market.
• Customer Segmentation: Define customer segments and their demographics, behavior, and preferences.
• Demand Analysis: Examine factors driving demand and customer buying behavior.
• Supply Chain Analysis: Map out the supply chain, identifying key suppliers and distribution channels.
• Regulatory Environment: Discuss relevant regulations, policies, and compliance requirements.

Technological Analysis

• Objective: Evaluate the technological landscape impacting the industry.
• Technological Trends: Identify emerging technologies and innovations relevant to the industry.
• Digital Transformation: Assess the level of digitalization within the industry and its impact on operations and customer engagement.
• Innovation Opportunities: Explore opportunities for leveraging technology to gain a competitive edge.

Financial Analysis

• Objective: Analyze the financial health of the industry and key players.
• Revenue and Profitability: Review industry-wide revenue trends and profitability ratios.
• Financial Stability: Assess financial stability by examining debt levels and cash flow.
• Investment Patterns: Analyze capital expenditure and investment trends within the industry.

Consumer Insights

• Objective: Understand consumer behavior and preferences.
• Consumer Surveys: Conduct surveys or gather data on consumer preferences, buying habits , and satisfaction levels.
• Market Perception: Gauge consumer perception of brands and products in the industry.
• Consumer Feedback: Collect and analyze customer feedback and reviews.

SWOT Analysis for Your Business

• Objective: Assess your own business within the industry context.
• Strengths: Identify internal strengths that give your business a competitive advantage.
• Weaknesses: Recognize internal weaknesses that may hinder your performance.
• Opportunities: Explore external opportunities that your business can capitalize on.
• Threats: Recognize external threats that may impact your business.

Conclusion and Recommendations

• Objective: Summarize key findings and provide actionable recommendations.
• Summary: Recap the most critical insights from the analysis.
• Recommendations: Offer strategic recommendations for your business based on the analysis.
• Future Outlook: Discuss potential future developments in the industry.

While this template provides a structured approach, adapt it to the specific needs and objectives of your Industry Analysis. It serves as your guide, helping you navigate through the complex landscape of your chosen industry, uncovering opportunities, and mitigating risks along the way.

Remember that the depth and complexity of your industry analysis may vary depending on your specific goals and the industry you are assessing. You can adapt this template to focus on the most relevant aspects and conduct thorough research to gather accurate data and insights. Additionally, consider using industry-specific data sources, reports, and expert opinions to enhance the quality of your analysis.

Industry Analysis Examples

To grasp the practical application of industry analysis, let's delve into a few diverse examples across different sectors. These real-world scenarios demonstrate how industry analysis can guide strategic decision-making.

Tech Industry - Smartphone Segment

Scenario: Imagine you are a product manager at a tech company planning to enter the smartphone market. Industry analysis reveals that the market is highly competitive, dominated by established players like Apple and Samsung.

Use of Industry Analysis:

• Competitive Landscape: Analyze the strengths and weaknesses of competitors, identifying areas where they excel (e.g., Apple's brand loyalty ) and where they might have vulnerabilities (e.g., consumer demand for more affordable options).
• Market Trends: Identify trends like the growing demand for sustainable technology and 5G connectivity, guiding product development and marketing strategies.
• Regulatory Factors: Consider regulatory factors related to intellectual property rights, patents, and international trade agreements that can impact market entry and operations.
• Outcome: Armed with insights from industry analysis, you decide to focus on innovation, emphasizing features like eco-friendliness and affordability. This niche approach helps your company gain a foothold in the competitive market.

Healthcare Industry - Telehealth Services

Scenario: You are a healthcare entrepreneur exploring opportunities in the telehealth sector, especially in the wake of the COVID-19 pandemic. Industry analysis is critical due to rapid market changes.

• Market Size and Growth: Evaluate the growing demand for telehealth services, driven by the need for remote healthcare during the pandemic and convenience factors.
• Regulatory Environment: Understand the evolving regulatory landscape, including changes in telemedicine reimbursement policies and licensing requirements.
• Technological Trends: Explore emerging technologies such as AI-powered diagnosis and remote monitoring that can enhance service offerings.
• Outcome: Industry analysis underscores the potential for telehealth growth. You adapt your business model to align with regulatory changes, invest in cutting-edge technology, and focus on patient-centric care, positioning your telehealth service for success.

Food Industry - Plant-Based Foods

Scenario: As a food industry entrepreneur , you are considering entering the plant-based foods market, driven by increasing consumer interest in health and sustainability.

• Market Trends: Analyze the trend toward plant-based diets and sustainability, reflecting changing consumer preferences.
• Competitive Landscape: Assess the competitive landscape, understanding that established companies and startups are vying for market share.
• Consumer Behavior: Study consumer behavior, recognizing that health-conscious consumers seek plant-based alternatives.
• Outcome: Informed by industry analysis, you launch a line of plant-based products emphasizing both health benefits and sustainability. Effective marketing and product quality gain traction among health-conscious consumers, making your brand a success in the plant-based food industry.

These examples illustrate how industry analysis can guide strategic decisions, whether entering competitive tech markets, navigating dynamic healthcare regulations, or capitalizing on shifting consumer preferences in the food industry. By applying industry analysis effectively, businesses can adapt, innovate, and thrive in their respective sectors.

Conclusion for Industry Analysis

Industry Analysis is the compass that helps businesses chart their course in the vast sea of markets. By understanding the industry's dynamics, risks, and opportunities, you gain a strategic advantage that can steer your business towards success. From identifying competitors to mitigating risks and formulating competitive strategies, this guide has equipped you with the tools and knowledge needed to navigate the complexities of the business world.

Remember, Industry Analysis is not a one-time task; it's an ongoing journey. Keep monitoring market trends, adapting to changes, and staying ahead of the curve. With a solid foundation in industry analysis, you're well-prepared to tackle challenges, seize opportunities, and make well-informed decisions that drive your business toward prosperity. So, set sail with confidence and let industry analysis be your guiding star on the path to success.

How to Conduct Industry Analysis in Minutes?

Introducing Appinio , the real-time market research platform that transforms how you conduct Industry Analysis. Imagine getting real-time consumer insights in minutes, putting the power of data-driven decision-making at your fingertips. With Appinio, you can:

• Gain insights swiftly: Say goodbye to lengthy research processes. Appinio delivers answers fast, ensuring you stay ahead in the competitive landscape.
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Home » Business Plans

How to Write a Business Plan Industry Analysis

How do you conduct industry analysis for a business plan? Do you need help conducting market research and industry analysis for your business plan? Then I advice you read on. So you have a great business idea, you have refined and fine-tuned it, and you are ready to launch. You are going to offer a product or service with a clearly defined customer base, and you are confident that you will be successful in the long term.

Well, if the above applies perfectly to you, then you have not completed your assignment. What happens when you enter an examination hall without having studied for the exam at all? You’d spend all your time in the hall blaming yourself for being silly, right? Now, starting a business is even much more important because there’s a lot more at stake than passing or failing a grade. So, you must not leave out any aspect of research undone.

In this section of your business plan, you will demonstrate that the industry’s market size is worth going after, who your main competitors will be if you decide to take a plunge, and how you will be able to carve out a niche for yourself and give your competitors a run for their money. Planning a business goes beyond analyzing the potential of your offer. You must analyze the following three factors as well:

• The strengths and weaknesses of your business
• The competition
• Who your customers are, what they want, and how they want it

These are the major components of a business plan’s market or industrial analysis and it is also known as a SWOT (Strength, Weaknesses, Opportunities and Threats) analysis. This section of your business plan reveals the chances of your business to achieve success with its offers. And that’s why the industry analysis is a very important section of your business plan, which must be carefully conducted and documented.

So in this article, we will be looking at how to conduct industry analysis for a business plan. If you are a budding entrepreneur, or you are planning to start a new business; then below are the exact steps to follow when conducting an industry analysis for a new business:

How to Conduct Industry Analysis for a Business Plan

1.  analyze the competition.

Of the three factors listed above, the competition may prove the most difficult to analyze, especially if you are new to the industry. But there are ways to simplify the task. You can start by looking at your direct competitors. If you are planning to start a new restaurant in an area, your direct competitors are other restaurants within that locality, while your indirect competitors are those that are slightly remote but still around.

Now, you are not just counting the number of rivals you have. You are trying to see how you can push ahead of them by filling a loophole they never noticed all these while. Some people find it hard to leave their workplace for the restaurant at lunchtime, but it’s either they do it or go hungry. You can disrupt the market’s status quo by offering to deliver lunch to people right in their workplaces. Filling loopholes like this one should be your goal.

If you don’t device strategies for pushing ahead of the competition, you will just enter the industry and join the survival race that you may never win. So, you need to introduce an innovation that will threaten your rivals. Remember, it’s either you differentiate or you fizzle out fast!

2.  Assess the industry / market size

After analyzing your direct and indirect competitors, you will need to analyze your chances of standing firm even in the face of stiffer competition. Your first step in market research is to get an idea of how big the opportunity is and why it’s worth going after.

This means finding out how many customers you are catering to and much revenue you are likely to make. This is a convincing first step to lure in whoever is reading your business plan to become intrigued and dig further into your findings. Here are some factors you should consider:

• The individual strengths and weaknesses of your competitors.
• The rate at which new competitors enter the market or the rate at which old competitors are leaving the market.
• The products or services that fetch most revenue for your competitors.
• How you will overcome the threat of substitute goods.

You can get lots of helpful information about your market from government sources, trade associations, financial services firms, online data providers, and free resources on the web.

3. Analyze industry forces and trends

You will need to outline what’s happening in the industry from many perspectives that would help the reader get the full gist on whether the market is lucrative or not. A great general-purpose tool for doing just that is the PEST Analysis. Here’s what it stands for and what you should consider:

• P – Political factors ( the role government plays in your industry )
• E – Economic factors ( the state of the economy on both local and national level )
• S – Social factors ( relevant changes in matters like lifestyle trends, demographics, consumer attitudes, buying patterns and opinions )
• T – Technological factors ( the impact of changing technological trends on your industry )

4.  Develop your marketing plan

Developing your marketing plan entails answering the following questions:

• What products or services are you offering?
• How much will you charge for your offers?
• Where will you sell your product, and who are your target customers?
• What special incentives would you use to encourage customers to buy your product?

In short, this section of your industry analysis outlines how you will deliver your product to the customers and how you will win customers to your side.

5.  Craft your growth plan

While some entrepreneurs are of the opinion that this step should come only after you have established your business, crafting your market development plan helps you envision your company growing in a few years. Your growth plan should address the following questions:

• According to recent data, is the market for your product growing or dwindling?
• Do you plan to introduce new products or line extensions in the next few years?
• If you plan to introduce new offers, would they be closely related to your current offers or within another niche entirely?
• Are there strategies for giving your business the competitive advantage in the industry?
• Are there plans to handle increasing demand?

6.  Fine-tune your analysis

After the steps discussed above, cross check your analyses to ensure that your findings are factual and your figures are accurate. Another handy tool to have in your arsenal when conducting industry research is the almighty Porter’s 5 Forces Analysis . ( Don’t worry if you’ve never attended a business strategy class in your life, it’s actually quite straightforward ). Here’s the breakdown:

Threat of new entrants

How difficult ( or easy ) is it for someone to enter your specific vertical? If it’s very easy then most likely the space will be crowded with competitors fighting for margins. Conversely, if it’s very difficult, that that in itself can become a competitive advantage.

Threat of substitute products or services

How likely is it that another product or service could decrease demand or displace you and potentially the entire industry all together?

Bargaining power of customers

When it comes to pricing and terms, how much power does your customer have? Are they organized enough to exercise their purchase power, or is there so much competition that they have their pick resulting in pricing wars amongst providers?

Bargaining power of suppliers

This refers to how dependent you are on a given supplier to operate your business. If it’s difficult or near impossible for you to switch, that means they have the upper hand, whereas, if the switching costs are low, you can negotiate better terms for yourself.

Competitive rivalry of the market

Factoring in the first four forces, you can arrive at a good understanding of the playing field and whether it’s in your favor if you enter it, how long you’ll be able to last, through what means you’ll carve a space for yourself, and what you’re up against.

As a final note, you must never forget that the industry analysis is a vital part of your business plan and it will probably be the most extensive portion of it. So, take your time to conduct extensive research on your competitors and market trends over the recent years.

• Go to Chapter 9 Part B: Writing a Business Plan Competitive Market Analysis
• Go Back to Chapter 8: Writing your Company’s Profile
• Go Back to Introduction and Table of Content

More on Business Plans

Industry Analysis – Definition, Types, Examples & How-to Guide

Studying the market trends and the competition level is important for businesses because it helps them to lay out their future strategies. Therefore, they use various tools and methods to achieve their goals. Industry analysis is the same process. Today, we’ll discuss industry analysis, its types, examples, and guide. 

Table of Contents

What is Industry Analysis?

Industry analysis is a market evaluation tool that businesses and companies use to comprehend and analyze the degree of competition in a certain industry. It helps you to understand the market position of the industry. Like the external factors impacting the industry, credit system, technological changes and how shaping the future, other competitive developing industries, competition level within the industry, and statistics of supply and demand.

Industry analysis helps an entrepreneur or a startup company to comprehend the position of a business relevant to the other competitive businesses in the industry. Most importantly, it helps you to recognize the upcoming threats and opportunities and how you can handle them with your strong points. The only way to survive in today’s business environment is to distinguish yourself from the competitors within the industry. 

Types of Industry Analysis

Businesses and companies use three main tools and methods to perform industry analysis, and they’re as follows; 

Competitive Force Model (Porter’s Five Forces)

Michael Porter introduced this model in the 1980s and it goes by the name of Porter’s 5 Forces. It analyzes the five forces impacting the industry. They are as follows; 

• The intensity of Industry Rivals. The businesses operating in the same industry and their market share makes them industry rivals. Some of the factors that make the competition intense are; increasing fixed cost, lower differentiation, and high exit cost. 
• The threat of Potential Entrants. The entrance of the new business in the industry makes the business environment competitive. If the entrance is easier, then it makes the business environment risky. If the entrance is difficult, then they could enjoy benefits for a long time. 
• Bargaining Power of Supplier. If a business depends on the supplies of suppliers, then they would have a significant influence over your businesses. It could directly impact the price and quality of your product. 
• Bargaining Power of Buyer. Here the customers have more negotiating power over the business. They would demand discounts, better quality, and economical price. It usually happens when there are more competitors in the industry. 
• Threats of Substitute Products. It’s when competitive businesses are offering similar substitute products of the other industry. A business usually has to face competitors from various industries and they impact your revenue stream. However, the substitute’s products are of two types; same product features with the higher price and same product features with lower price. 

SWOT Analysis

SWOT analysis comprises strengths, weaknesses, opportunities, and threats, and its analysis studies the impact on the business. It further consists of two parts; 

• Internal Factors. The strengths and weaknesses fall under the category of internal factors. They exist within any business and continue to play their role. 
• External Factors. The opportunities and threats are the external factors. They tell us the impact of potential happenings and how the company should react. Now it depends on the management whether it has the ability to exploit the opportunities and ignore threats. 

PESTLE Analysis

PESTLE analysis comprises six macro-environmental factors like political, economical, social, technological, legal, and environmental factors. 

• Political. Political factors mean government regulations, trade policies, tariffs, and the country’s overall stable environment. 
• Economical. Economical factors include revenue, GDP, net income, import and exports, taxation, unemployment, growth rate, interest rate, and many other factors. 
• Social. The social factor comprises fashion, trends, shopping, attitude and behavior, demography, healthy standards, and cultures. 
• Technological. Technological factors consist of research and development, latest innovation and creativity, internet, and digital tech trends. 
• Legal. Legal factors comprise labor laws, regulations, minimum wage, employment contracts, paychecks, leaves, and other issues. 
• Environmental. The environmental factor comprises environmental issues like deforestation, pollution, carbon emission, soil degradation, and others.

Reasons to Perform an Industry Analysis

Industry analysis allows you to have an insight into the competitive business environment. The weaknesses of your competitors would be your strong suits. You can integrate such information to make the marketing plan to grow your business. 

The result of industry analysis provides you an insight into the future growth of your business. If the report tells you upcoming threats, then you can take preventive measures to avoid them. 

The analysis confirms and ensures the credibility of your business, and it would help you attract investors. It means that you’re familiar with competitors and knows what your customers want. 

How to Perform Industry Analysis Effectively

Review available documented/reports.

You should take some time to find and study already published reports relevant to your industry. You would probably find a well-detailed report, and studying it would answer your questions. It doesn’t mean that you should completely rely on such published reports. 

Therefore, you should choose the most report of your industry. It’s because trends and statistics change over time. If you rely on the old report, it won’t give you conclusive results. 

Carefully Choose the Industry You Analyze

You must select the most relevant industry for your business. It’s because every industry has got many sub-categories. For instance, a chemical industry would have sub-categories of pesticides, organic, inorganic, and so on. 

Come up with the Supply and Demand of Industry

Supply and demand play a significant role in controlling the market. You should study the past trends and product and product scenarios, and the findings would help you to predict the future. 

Know Your Competitors

You should consider studying your competitors and their expectations and plans from the market. Porter’s 5 forces model would help you in this regard. 

Follow Recent Developments in the Industry

Most importantly, you should study the macro-environmental factors that could impact your industry. Like the technological development, the latest tech trends, and technology innovation would impact many businesses worldwide. 

Focus on dynamics of the Industry

The industry analysis should focus on the particular industry in question and understand the various dynamics of the industry. It should be direct, to the point, and in-depth. For instance, if your focus industry is aluminum, then you should be aware of the per capita consumption within the industry along with production and total consumption. 

Examples and Templates of Industry Analysis

If you want to study the industry analysis of other businesses relevant to the industry as an example, it’s because it helps business owners to understand the position of their business. It answers them that how they can get a competitive edge over competitors.

• Industry Analysis Example, Templates, and Reports

Advantages of Industry Analysis

• It helps you to touch the unexplored opportunities
• It helps startup companies to know the position of their business relevant to the competitors
• Its focus is to point out the opportunities and threats 
• It helps you to find out those points that could provide you the best results 
• It helps you to develop a competitive strategy that would defend you in the competition
• It helps you to evaluate the profitability of the relevant industries

Disadvantages of Industry Analysis

• Misinterpretation of the statistics and data could lead you to make the wrong decision 
• It’s a one-sided approach and it doesn’t guarantee success 
• If inflation decreases the sale and company’s revenue stream, it would badly impact the report 
• Season factors usually have a good and bad impact on the business, if the interpreter doesn’t consider these factors, it would impact the conclusions. 

About The Author

Ahsan Ali Shaw

How To Develop the Industry Analysis of Your Business Plan

Just like other key success factors of your business plan , the industry analysis section explains why your new or growing business is valuable to investors or lenders. The word, “analysis” doesn’t mean you’ll have to research in libraries or collect statistics from all over the world; it only means readers will be able to learn some facts about the industry in which your business operates. Why is this important? The industry analysis facts help explain why an investment in your business is a good idea for important reasons.  

What Is The Industry Analysis In A Business Plan?

The industry analysis is a collection of facts that build the story of your business and the industry within which it operates. An industry analysis usually contains some details about the size of the industry. It will offer numbers that show how active the industry is overall and how much it’s growing. An industry analysis may also include industry trends and information about the competitive landscape. Along with other facts, the industry analysis will outline why your business is a solid opportunity for investors or lenders and this is why it is an important part of your business plan.

Here’s what you should know about creating an industry analysis: it’s not hard to do. In the following paragraphs, we will walk you through the places where you can find information and you’ll see how to set up the industry analysis like a pro. Use this analysis to show investors or lenders how much you know about the industry in which your own business operates.  

Industry Analysis vs. Market Analysis

While building your industry analysis, you’ll probably find terms like “market analysis” or “market trends.” Where do these terms fit into an industry analysis? Let’s first look at the term, “industry analysis.” Think of the industry in which your business operates as an entire world. It is made up of businesses that are like yours or similar to yours. An industry analysis is the “big picture” view of a particular kind of business in a national or even global view.

If an industry analysis is the big picture, a “market analysis” is just one part of that big picture. A market analysis usually shows facts about two key areas within business: potential customers and major competitors of your business. There are several parts to your industry analysis, which you’ll build in the following section, but the market analysis is especially important to investors or lenders. It is a forecast of the potential success of your business.  

Key Components of an Industry Analysis

There are several parts inside the “big picture” of an industry analysis; however, you only need to include those that relate to your business and industry. To help make this analysis easy to build, you’ll find the “key components” of an industry analysis listed here. While these are all important, if you are in an industry that needs more explanation, you can add analysis facts to this section, as well. The main idea here is to showcase the industry in which your business operates and detail why your business in this industry is a winning opportunity for investors or lenders.

First, read about the key components that you will place in an effective industry analysis. You’ll find out why each is important to the readers of your business plan. Then, in the following section, find what you will need to complete each key component in your industry analysis.  

Industry Overview

The overview is a general look at your industry. Explain what you know about the industry. What products or services are sold? Is this industry worldwide or within the US? This section is a few sentences of explanation about the industry overall.  

Industry Size

The size of the industry will tell readers just how big your business might become. It tells readers there is an audience of buyers who want the products or services sold and it suggests that there is potential in the industry for new products, new technology, and new ideas.  

Market Size

The target market size relates only to two factors: the potential customers of your business and the main competitors of your business. This is not a highly-detailed examination, but it should be a specific one. You’ll want to include the most reliable facts possible to help investors or lenders understand the potential of your business.  

Industry Rate of Growth

The rate of growth shows the age of any particular industry. Investors use it to gauge how much potential might be in a business. If the industry is in a fast-paced growth stage, a mature stage, or a declining stage, readers will want this information to make informed strategic decisions about the health of the industry.  

Market Trends

In this section, you’ll show facts about trends among customers in the industry in general. For example, if you own a coffee shop, are industry suppliers suggesting customers want more varieties of coffee from which to choose? Are coffee shop owners in general bringing in new business with drive-through service? These kinds of details tell part of the industry story as it relates to customers in general.  

Competitors

Every growing industry has competition among businesses and, while it is a positive sign for industry growth, it can also signal challenges and obstacles for new or growing businesses. Offering facts about the status of competition in your industry, including their strengths and weaknesses, pricing strategies, and marketing strategies, will help readers understand the health of your competitors in the industry.  

Market Challenges

Just as there are always opportunities, there are also always challenges to an industry. This may include government regulations, labor laws, union requirements, or other issues that are challenges for the success of the industry overall. These should be included in your industry analysis report to give a full understanding to readers of the current status of the industry.  

Strategies and Strengths

This key component of your industry analysis looks at strategies that may be used to overcome challenges. It also sketches out how the strengths of the industry meet any obstacles within the industry.  

How To Write An Industry Analysis For Your Business

Each key component for a comprehensive industry analysis is defined above. However, these components cannot be presented in your business plan unless you know how to find the information you need. The following is an “action list” with resources you can search to find the information for each key component. In no time, you’ll be a pro at finding the information and facts you need to write your industry analysis.  

1. Action Step: Industry Overview

To find basic facts about the industry in which your business operates, conduct an online search to discover various websites that hold industry information. Look for industry information in:

• National trade associations
• Labor unions
• Governmental agencies
• National advertising firms
• Business database groups
• National business associations

2. Action Step: Industry Size

The size of the industry in which your business operates may be a major consideration for investors or lenders. You may offer historical growth, projected growth, global growth or local growth rates. It is preferable for industries to show thriving businesses and growing numbers; however, it is also important to note that newly-established industry groups are often intriguing and inviting to investors. Use specific industry size facts from reliable sources in this section of your industry analysis.

Look for industry information in:

• Governmental agencies (Economic Census, Bureau of Labor Statistics)
• Competitor information
• Manufacturing reports

3. Action Step: Market Size

The market size for your business will be a more detailed look at your business competition than the larger industry size research. You’ll want to search for verifiable facts and statistics online and via trade association information.

• IBISWorld (reliable, paid-subscription)
• Statista (online portal)
• D&B Hoovers (industry/business directory)
• Trade associations
• Industry manufacturing reports

4. Action Step: Industry Rate of Growth

This important fact will tell a crucial story to investors or lenders: the rate of growth, year over year, will suggest a rapid growth industry, a mature industry, or a declining industry. Search for reliable information for the year prior to the current one (i.e. if 2024, look at 2023):

• Trade association magazines
• Government reports or filings
• Market watch reports
• Advertising/marketing reports

5. Action Step: Market Trends

If you are unsure of the industry trends, look at recent business magazines for updated or new information and check the following resources for news:

• Online search of competitors
• Union and labor group associations
• Industry trade magazines

6. Action Step: Competitors

If you are unsure of who your business competitors are or where they are located, this is the perfect time to conduct market research to find these details. Note how big their businesses might be, when they were each established, who owns the companies, how many employees they have, and add any details regarding yearly revenues that can be found. Also, note any signs of growth or loss in the competitor businesses. Look in the following for information:

• Local business groups
• City or state governmental information
• Businesses that may want to collaborate with yours

7. Action Step: Market Challenges

Every business has challenges from competitors, growth trends, shifting business suppliers, and other variables. List these for potential investors or lenders. Acknowledge the challenges, and explain your strategy for overcoming each challenge. In this way, readers will understand that you’ve pre-determined a course or action by forecasting the challenge and preparing for it. This is the type of decision-making and leading that investors and lenders want to see.  

8. Action Step: Strategies and Strengths

To complement your strategies to meet any market challenges, list ways in which you will use the strengths of your business to put solid growth plans into place and meet those business objectives and goals. Indicate any strategies you’ve designed to overcome competitor advantages and outline the competitive edge or unique value your business will offer over others. In this key component, allow your own vision and goals to shine for readers.  

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Industry analysis: why it’s important & how to analyze an industry.

Conducting an industry analysis is the best way to understand your competition and any opportunities in the market.

Think about a time when you put all your energy and effort into something, only for someone else to do it better or do it first. It’s discouraging, isn’t it? You then think back through your process to identify where you went wrong.

Did you overlook some external factors? Were you not up-to-date with industry trends? The degree of competition is important to recognize when developing a competitive strategy.

It’s always easier to look back and see what went wrong. You could have missed technological factors or competitive factors. Or your business plan and competitive analysis might not have taken into account the market size.

So how do you figure out the degree of competition and use that information to set your business apart? You perform an industry analysis! Here’s everything you need to know.

Here’s What We’ll Cover:

What Is an Industry Analysis?

The importance of analyzing an industry in business, what you need for industry analysis , different methods to perform industry analysis, key takeaways .

There’s no difference if you have been in business for decades or you’re new to the market. Performing an industry analysis is important to better understand your niche. Essentially, industry analysis is a look into your market to see how your business compares to your competition. 

An industry analysis looks into every element of your business and how it lines up with others. It’s important to fully understand your strengths and weaknesses to identify any opportunities or threats. When you know your market conditions and any financial factors, you get ahead of your competition.

By taking a look into what makes your industry tick you get a better sense of your company’s position. Industry analysis can assess demand and supply and technological changes. It can also find external factors that influence the competition. 

You’re able to better forecast your growth rate and plan for evolving industry dynamics. The result is the best possible strategy to increase your market power. If you don’t take the steps to understand how you stack up compared to your competition and gain a competitive edge, they definitely will. 

Conducting an industry analysis requires more than doing a simple search. You need to find and understand any competitive advantages, and there are a few different ways you can do it. 

Some businesses hire outside firms to use mathematical forecasting for quantitative analysis. Others use qualitative analysis to come to make business decisions based on the information they gather. Whatever route you go, it will include specific market research and competitive analysis. 

Here is everything you need to know to conduct your own in-depth industry analysis and get ahead of the competition!

Understand the competition:

• When you know your competitor’s products and services, you know how you can differentiate
• Are you targeting similar audiences? 
• What products and services are your competition offering?

Use market research:

• Look into the demand of your market, the market size, and any economic indicators
• Where do your customers live? How saturated is the market? What do your customers usually pay for similar products and services?

Analyze the data that you have collected:

• Knowing your own strengths and weaknesses is important. But knowing the strengths and weaknesses of your competition is equally as important
• Assess what your competition offers and compare it against your own
• Are the features and benefits that you offer meeting the demands and needs of your consumer base?

Evaluate your position in the market:

• What’s your market share compared to your competitors?
• Understand if you need to adjust the price of your product or service 
• Find any advantages that you have and identify possible threats in the future
• Similarly, find any weaknesses your company has and address how you can turn them into advantages

When you compile all of this information into an industry analysis, you can make better business decisions moving forward. You can identify any gaps in the market and how you can fill them. Plus, knowing what your competition is doing is the best way to know how to beat them.

The points outlined above are an excellent starting block to understand your business and where it stands in the market. But there are some industry research and analysis models designed to take it even further. 

Competitive Forces Model (Porter’s 5 Forces)

The main purpose of using this model is to formulate a strategy and understand the competitive landscape. It consists of the Five Forces of Analysis.

• Industry rivalry and the amount of competition in the market
• The threat of new products or services entering the market 
• The bargaining power of buyers and how they can influence pricing
• The bargaining power of suppliers and how they can limit your profit
• The threat of new competition potentially entering the market

SWOT Analysis

The SWOT Analysis is commonly used across many different industries. It represents identifying and understanding any strengths, weaknesses, opportunities, and threats.

• Identify the strengths of your business and what currently sets up apart from the competition
• Recognize the weaknesses that may be present and where you have any disadvantages compared to your competitors
• Find the opportunities that are available in the market and how you can develop a strategy to increase profitability
• Determine any threats to your business, both internal and external. How could they affect the way you operate, your profits, or overall integrity?

It’s one thing to find information and conduct an industry analysis, but it’s another thing to understand the data you collect. Markets are constantly fluctuating and can change at the snap of a finger. It can be overwhelming!

But the power and influence that you can generate from understanding how your industry and competition work can set you apart. You will be more knowledgeable and better prepared to leverage opportunities and stop any threats in their tracks.

Find more relevant articles for your small business on our resource guide .

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Industry Analysis

What is an industry analysis.

An industry analysis is a marketing process that provides statistics about the market potential of your business products and services. This section of your plan needs to have specific information about the current state of the industry, and its target markets. An industry analysis may contain reference materials such as spreadsheets, pie charts, and bar graphs in order to represent the data.

Navigation:

Step-by-step checklist.

• Library Business Research Resources
• Government Websites, Including Labour Market Information Sources

Identify your industry and provide a brief overview. You may need to explore your industry on a local, regional, provincial, national, and/or global level. Be sure to define relevant industry codes. Provide statistics and historical data about the nature of the industry and growth potential for your business, based on economic factors and conditions.

Summarize the nature of the industry. Include specific information about growth patterns, fluctuations related to the economy, and income projections. Be sure to document recent developments, news, and  innovations. Also, discuss marketing strategies, and the industry's prevalent operational and management trends.

Provide a forecast for your industry. Compile economic data and industry predictions at different time intervals (5, 10, 20 years). Be sure to cite sources. Note: the type and size of the industry will determine how much information you will be able to find about a particular industry. Define if it is new and emerging, growing, maturing or declining.

Identify government regulations that affect the industry. Include any recent laws pertaining to your industry, and any licenses or authorizations you would need to conduct business in your target market. This section may include information about fees and costs involved.

Explain your unique position within the industry. Once you have completed your Competitive Analysis (in the next section) you can list the leading companies in the industry, and compile an overview of data of your direct and indirect competition. This will help you communicate your unique value proposition.

List potential limitations and risks. Write about factors that might negatively impact your business and what you foresee in the short-term and long-term future.  Outline what you know about the driving forces: new regulations, technology, globalization, competitors, changing customer needs.

Talk to people! Go to tradeshows, do cold calls, talk to people in relevant associations and go to business events.

Tip: How to generate keywords to search databases

Before you access the resources and databases below, it is best practice to consider the key words you can use as search terms to find information about your industry. Follow the steps below: 

• Pinpoint the main words/phrases that describe your industry.  (i.e. "bar")
• Brainstorm several alternative words/phrases that will bring you additional search results. These may be direct synonyms, or tangentially related.  (i.e. "pub," "nightclub," "drinking place," "tavern," "restaurant.")

Tip: How to use NAICS codes

At the start of your research, it may not be clear what specific industry you should be examining. A good strategy is to find out if your business idea is classified in an industrial classification system. These systems organize industries by assigning them a numeric code. The most commonly used system is the North American Industry Classification System (NAICS).  Once you know your Industry Classification Code you can use this number to :

• Find industry-specific statistics on government websites or in library databases
• Generate lists of competitors in company directories

Another common classification system is the Standard Industry Code (SIC). NAICS have most replaced the SIC, but the SIC is still used by some commercial databases. Finding and using these classification systems to effectively search can be tricky, so don't hesitate to ask a librarian for help.

You can keyword search for your industry NAICS code here:

Search or browse all NAICS or SIC codes on the  NAICS Association website . Some NAICS codes are different in Canada — you can search by keyword or browse Canadian NAICS codes at  Statistics Canada  or  Canadian Industry Statistics. To search for a SIC code using a NAICS code and vice versa, use the NAICS & SIC Crosswalks.   

For more information about planning your industry research, including identifying your industry codes, check out the video tutorial for  Module 3: Planning Your Industry Research .

Don't forget to take a look at our Industry Guides for detailed industry-specific market research resources!

Library Business Research Resources:

Business resources at academic libraries .

Colleges and Universities with business programs will have useful business collections you may be able to get access to through their academic library. Often these academic libraries can provide the general public with access to their collections, which include electronic resources like databases and e-books. For example, they could have alumni or community cards, and can provide temporary "guest" passes in certain situations. Contact your local college or university library to see what they can provide. Please note: you probably will not get access to their electronic resources with remote access.

UBC Library Business Databases

How to access: If you are a UBC student, staff, faculty or in-person library visitor you may have access to business databases through the David Lam Management Research Library and Canaccord Learning Commons through the links below.

Full Listing By Title or Full Listing By Subject

There are two different ways to identify databases: Use "by title" if you already know the name; otherwise you can search the list "by subject" to find starting places for undertaking market research, finding articles or researching companies. To learn more about how you can access library resources if you are a community user or temporary visitor, check out the UBC Library  Community Users & Visitors Guide . Community users and temporary visitors may have additional access restrictions to specific databases because of license agreements.

Discovering where you can access the information you need to complete your research can be tricky. Below, we have a few examples of potential sources that collect the type of information you will need.

Ibis World Industry Reports

Business Source Complete

Canadian Business and Current Affairs

Canadian Newsstream

Trade Publications, Journals, and Magazines:

Industry and trade associations work to keep people within an industry informed about the industry through newsletters, magazines, and trade fairs. The information can range from a detailed focus on a specific product line, to general coverage of an industry or key business risk and trends. Industry and professional association websites can be excellent sources of free information whether or not you are a member of that organization. In addition, you can find news about industries via government websites, news databases, as well as news directories and search engines.

Ulrichsweb Provides publisher information on more than 300,000 periodicals of all types. Use this to create a list of relevant ones to check out in your industry. Search by keyword, publisher or geographic location.

Trade Associations:

Trade associations often publish free industry newsletters that are excellent sources of information for your business plan. Such newsletters often have articles that cover in-depth topics on business management, manufacturing practices, how-tos, current industry news and much more. One good reason to create a list of relevant associations is to see if any of them publish a monthly industry newsletter on their website.

ASAE Gateway to Associations Directory Use this directory to search for an association by name, interest area, or international geographic location (including Canada and BC). You can also search using a combination of various fields.

Associations Canada This library database covers Canadian, as well as some international, industry, professional or special interest associations. Searchable by type or keyword. You can use this to  identify key associations' websites and search for freely available newsletters, blogs or reports they they may publish on your industry. Please contact your local public or research library for access. Use of your library card may be required for online access to this resource. Print copies may also be available for in-person users.

Web searching tip: Use Google or another search engine to search for industry associations relevant to your industry in your location. If you don't find a relevant industry association, try broadening your geographic area (e.g. from Vancouver to British Columbia, or from Canada to the U.S. or international). If your industry is very specialized or new, look for associations for broader or similar industries.

Government Websites, Including Labour Market Information Sources:

BC Stats |  Current reports and statistics from British Columbia's central statistical agency including labour market information, economic statistics and bankruptcies. Start by searching their Industry section  and narrowing by industry type or go to the Business, Industry & Trade page to skim all the different business-related topics.

WorkBC  |  Find current employment outlooks, labour market information, relevant links, and a geographic representation of the BC workforce. Start by searching your  Industry Profile .

Innovation, Science, and Economic Development Canada Provides market research, industry statistics, licensing information for intellectual property, and information about doing business internationally. The Industry Canada site features interactive applications such as customizable trade reports, cost calculators, and online business planning guides. You can also search broad Canadian industry statistics .

Entrepreneurship Indicators Database This database is intended to provide comprehensive business demography statistics and performance indicators for enterprises in Canada. This information is available upon request.

What Is an Industry Analysis and Trends Business Plan?

An industry analysis and trends business plan is a component of a business plan that provides a comprehensive insight into industry conditions and trends. 3 min read updated on February 01, 2023

An industry analysis and trends business plan is a component of a business plan that provides a comprehensive insight into industry conditions and trends that can impact a company's success and growth. A thorough analysis of your industry and its trends can give you and other people a clearer idea of the feasibility and relevance of your business idea or goals.

Elements of a Business Plan

There are many different types of business plans. When you are creating your business plan, the information you choose to include will depend on your audience and personal preferences, as well as the questions you wish to answer and problems you seek to solve. While business plans may vary greatly, most of them contain the following elements:

• Executive summary
• Business description
• Analysis of business environment analysis
• Industry analysis
• Market analysis
• Competitive analysis
• Marketing plan
• Management plan
• Operations plan
• Financial projections
• What Is an Industry Analysis?

An industry analysis enables you to gain a better understanding of the industry and market in which you will be conducting business. By conducting an industry analysis before you start writing your business plan , you will be able to:

• Identify industry trends, such as potentially problematic aspects of the industry
• Identify trends and opportunities in products and services
• Calculate capital requirements
• Determine business risks and find ways to reduce them

An industry analysis must be specific to the industry in which you are conducting or are planning to conduct business. With the information you obtain from the analysis, you can devise a long-term strategy to mitigate risks and take full advantage of growth opportunities.

It is important not to confuse an industry analysis with a competitor or market analysis. An industry analysis seeks to describe the products or services offered in a specific industry and the boundaries of the marketplace in relation to economic, political, and regulatory issues. In other words, it defines the scope of the marketplace. A market analysis , on the other hand, helps you determine whether or not a market within your industry will be profitable for your products or services.

Conducting an Industry Analysis

The most widely used method for evaluating any industry was devised by Michael E. Porter from Harvard University. This method can help you create an effective strategy for competing in your industry. According to Porter, all industries and markets are influenced by five forces, which include:

• Ease of entry — Companies that are already operating in an industry will enjoy a competitive advantage over newcomers. However, their profits will be reduced unless they find a way to slow down or block the new entries. As for new businesses, they will face a variety of barriers, including government regulations, patents and copyrights, and customer loyalty.
• Suppliers' power — Suppliers of materials, products, or services can have a significant impact on a business' ability to compete. In the event that there are few suppliers offering the products or materials or few alternative products, the suppliers have the power to dictate quantities, prices, and delivery times for companies that have no choice but to buy from them.
• Buyers' power — In an industry where buyers can choose from many competing products, consumers will have strong bargaining power. This can affect the ability of a company to price its products or services without being afraid of losing customers.
• Availability of alternative products — In the situation where two businesses with similar products are competing within an industry, both of them will benefit as their marketing efforts will generally increase demand for their products. However, their market share will be reduced if there is another company selling a different kind of products that can serve as a substitute for theirs.
• Competitive rivalry — Competitive rivalry takes into account the number of competitors present in a particular industry, as well as their relative strength. In an industry where many companies are selling similar products, there is little opportunity for one company to control consumers' or suppliers' tendency to go elsewhere.

There are many free industry analysis tools and resources available to business owners who are preparing to create a business plan, such as:

• Securities and Exchange Commission
• U.S. Census Bureau
• Hoover's Online
• Thomas Register
• Library of Congress Legislative Information
• Websites of trade associations and companies

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How to Write The Industry Section of a Business Plan

Writing a Business Plan: Section 2

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Geber86 / Getty Images

When writing a business plan, the Industry section is best organized as two parts: an overview of the industry and a summary of your business's position within the overall industry.

Before writing this section of the business plan, use these questions to focus your research:

• What is the size of your industry?
• What sectors does this industry include?
• Who are the major players in this industry?
• What are the markets and customers for this industry?
• What are the industry's estimated sales this year? Last year? The year before?
• What national and economic trends have affected this industry and how?
• What national and economic trends might affect it in the future and how?
• What is the long-term outlook for this industry?
• What products or services will your business be selling?
• What is your Unique Selling Proposition? (What is it about your business that makes it unique and sets it apart from competitors?)
• What are the barriers to entry in your industry?
• How will you overcome these barriers?
• Who are your competitors?
• What is the market share of your competitors?
• What is your business's competitive advantage (i.e., your market niche or estimated market share)?
• What is your target market?
• How are you protecting your product or process (i.e., patents, copyrights, trademarks, franchise rights that you either hold or plan to acquire)?

Once you have all this information, you'll write this section of the business plan in the form of several short paragraphs. (Remember, each of these paragraphs is a summary, not a detailed point-by-point explanation.) Use appropriate headings for each paragraph. 

Finding Information on Your Industry

But where do you find the information that you need for writing the Industry Overview section of your business plan?

United States Research

In the United States, you may want to start your research by reviewing information from the U.S. Census Bureau, Industry Statistics Portal. This site provides data for selected industries separated into categories using the North American Industry Classification System (NAICS). The Bureau of Labor Statistics also offers a large selection of information grouped by NAICS industry.

There are also other sources of information—some free and some paid sources—including IBIS World, Select USA, and the U.S. the Department of Commerce Bureau of Economic Analysis.

Canadian Research

When you're writing a business plan and looking for information on Canadian industries, Industry Canada is your logical first stop. Their Find Statistics by Industry  page lets you see key economic indicators for different sectors of the Canadian economy, access industry profiles, and analysis and research small businesses in Canada generally.

Another primary source for industry and economic information that you can easily access online when you're writing a business plan is Statistics Canada. From this homepage you can find a wealth of free statistical information; use this page, to search for Statistics Canada publications back to 1980.

There are also provincial statistics websites where you'll be able to find more economic, social, and demographic statistics relating to your industry and the business environment.

The Canada Business Service Centres located in each province also offer excellent collections of resources online, and telephone and email information services. You'll find a list of links to the Canada Business Service Centre in each province in my Provincial Programs and Services Resources.

The business sections of national newspapers and business magazines will also be helpful; these often carry features on the past and future business trends.

And don't forget your local sources of business information when you're researching your business plans, such as your Economic Development Centre, Chamber of Commerce, or Women's Enterprise Centre, or the business section of the local library.

Doing Business Plan Research

If your business is related to manufacturing when you're writing a business plan begin by determining the NAICS of your particular industry, and the sector and sub-sector if applicable. It will make it easier for you to find statistical information relating to your industry. If your business is a service, begin with Industry Canada's service industry profiles.

Refer to the list of questions earlier in this article on how to write a business plan as a research guide. Whenever you find a piece of information that you want:

• Check its date and determine whether or not the information is current enough to be valid;
• Write down the date and source of the information, as you'll need to cite your information sources in the business plan.

When you're writing a business plan, you want your research information to be as up-to-date as possible. After all, there's no point in starting a business if you don't want it to succeed.

Analyze your market like a pro with this step-by-step guide + insider tips

Don’t fall into the trap of assuming that you already know enough about your market.

No matter how fantastic your product or service is, your business cannot succeed without sufficient market demand .

You need a clear understanding of who will buy your product or service and why .

You want to know if there is a clear market gap and a market large enough to support the survival and growth of your business.

Industry research and market analysis will help make sure that you are on the right track .

It takes time , but it is time well spent . Thank me later.

WHAT is Market Analysis?

The Market Analysis section of a business plan is also sometimes called:

• Market Demand, Market Trends, Target Market, The Market
• Industry Analysis & Trends, Industry & Market Analysis, Industry and Market Research

WHY Should You Do Market Analysis?

First and foremost, you need to demonstrate beyond any reasonable doubt that there is real need and sufficient demand for your product or service in the market, now and going forward.

• What makes you think that people will buy your products or services?
• Can you prove it?

Your due diligence on the market opportunity and validating the problem and solution described in the Product and Service section of your business plan are crucial for the success of your venture.

Also, no company operates in a vacuum. Every business is part of a larger overall industry, the forces that affect your industry as a whole will inevitably affect your business as well.

Evaluating your industry and market increases your own knowledge of the factors that contribute to your company’s success and shows the readers of your business plan that you understand the external business conditions.

External Support

In fact, if you are seeking outside financing, potential backers will most definitely be interested in industry and market conditions and trends.

You will make a positive impression and have a better chance of getting their support if you show market analysis that strengthens your business case, combining relevant and reliable data with sound judgement.

Let’s break down how to do exactly that, step by step:

HOW To Do Market Analysis: Step-by-Step

So, let’s break up how market analysis is done into three steps:

• Industry:  the total market
• Target Market: specific segments of the industry that you will target
• Target Customer: characteristics of the customers that you will focus on

Step 1: Industry Analysis

How do you define an industry.

For example, the fashion industry includes fabric suppliers, designers, companies making finished clothing, distributors, sales representatives, trade publications, retail outlets online and on the high street.

How Do You Analyze an Industry?

Briefly describe your industry, including the following considerations:

1.1. Economic Conditions

Outline the current and projected economic conditions that influence the industry your business operates in, such as:

• Official economic indicators like GDP or inflation
• Labour market statistics
• Foreign trade (e.g., import and export statistics)

1.2. Industry Description

Highlight the distinct characteristic of your industry, including:

• Market leaders , major customer groups and customer loyalty
• Supply chain and distribution channels
• Profitability (e.g., pricing, cost structure, margins), financials
• Key success factors
• Barriers to entry preventing new companies from competing in the industry

1.3. Industry Size and Growth

Estimate the size of your industry and analyze how industry growth affects your company’s prospects:

• Current size (e.g., revenues, units sold, employment)
• Historic and projected industry growth rate (low/medium/high)
• Life-cycle stage /maturity (emerging/expanding/ mature/declining)

1.4. Industry Trends

• Industry Trends: Describe the key industry trends and evaluate the potential impact of PESTEL (political / economic / social / technological / environmental / legal) changes on the industry, including the level of sensitivity to:
• Seasonality
• Economic cycles
• Government regulation (e.g. environment, health and safety, international trade, performance standards, licensing/certification/fair trade/deregulation, product claims) Technological change
• Global Trends: Outline global trends affecting your industry
• Identify global industry concerns and opportunities
• International markets that could help to grow your business
• Strategic Opportunity: Highlight the strategic opportunities that exist in your industry

Step 2: Target Customer Identification

Who is a target customer.

One business can have–and often does have–more than one target customer group.

The success of your business depends on your ability to meet the needs and wants of your customers. So, in a business plan, your aim is to assure readers that:

• Your customers actually exist
• You know exactly who they are and what they want
• They are ready for what you have to offer and are likely to actually buy

How Do You Identify an Ideal Target Customer?

2.1. target customer.

• Identify the customer, remembering that the decision-maker who makes the purchase can be a different person or entity than the end-user.

2.2. Demographics

• For consumers ( demographics ): Age, gender, income, occupation, education, family status, home ownership, lifestyle (e.g., work and leisure activities)
• For businesses ( firmographic ): Industry, sector, years in business, ownership, size (e.g., sales, revenues, budget, employees, branches, sq footage)

2.3. Geographic Location

• Where are your customers based, where do they buy their products/services and where do they actually use them

2.4 Purchasing Patterns

• Identify customer behaviors, i.e., what actions they take
• how frequently
• and how quickly they buy

2.5. Psychographics

• Identify customer attitudes, i.e., how they think or feel
• Urgency, price, quality, reputation, image, convenience, availability, features, brand, customer service, return policy, sustainability, eco-friendliness, supporting local business
• Necessity/luxury, high involvement bit ticket item / low involvement consumable

Step 3: Target Market Analysis

What is a target market.

Target market, or 'target audience', is a group of people that a business has identified as the most likely to purchase its offering, defined by demographic, psychographic, geographic and other characteristics. Target market may be broken down to target customers to customize marketing efforts.

How Do You Analyze a Target Market?

So, how many people are likely to become your customers?

To get an answer to this questions, narrow the industry into your target market with a manageable size, and identify its key characteristics, size and trends:

3.1. Target Market Description

Define your target market by:

• Type: B2C, B2B, government, non-profits
• Geographic reach: Specify the geographic location and reach of your target market

3.2. Market Size and Share

Estimate how large is the market for your product or service (e.g., number of customers, annual purchases in sales units and $ revenues). Explain the logic behind your calculation:

• TAM (Total Available/Addressable/Attainable Market) is the total maximum demand for a product or service that could theoretically be generated by selling to everyone in the world who could possibly buy from you, regardless of competition and any other considerations and restrictions.
• SAM (Serviceable Available Market) is the portion of the TAM that you could potentially address in a specific market. For example, if your product/service is only available in one country or language.
• SOM (Service Obtainable Market / Share of Market) is the share of the SAM that you can realistically carve out for your product or service. This the target market that you will be going after and can reasonably expect to convert into a customer base.

3.3. Market Trends

Illustrate the most important themes, changes and developments happening in your market. Explain the reasons behind these trends and how they will favor your business.

3.4. Demand Growth Opportunity

Estimate future demand for your offering by translating past, current and future market demand trends and drivers into forecasts:

• Historic growth: Check how your target market has grown in the past.
• Drivers past: Identify what has been driving that growth in the past.
• Drivers future: Assess whether there will be any change in influence of these and other drivers in the future.

How Big Should My Target Market Be?

Well, if the market opportunity is small, it will limit how big and successful your business can become. In fact, it may even be too small to support a successful business at all.

On the other hand, many businesses make the mistake of trying to appeal to too many target markets, which also limits their success by distracting their focus.

What If My Stats Look Bad?

Large and growing market suggests promising demand for your offering now and into the future. Nevertheless, your business can still thrive in a smaller or contracting market.

Instead of hiding from unfavorable stats, acknowledge that you are swimming against the tide and devise strategies to cope with whatever lies ahead.

Step 4: Industry and Market Analysis Research

The market analysis section of your business plan should illustrate your own industry and market knowledge as well as the key findings and conclusions from your research.

Back up your findings with external research sources (= secondary research) and results of internal market research and testing (= primary research).

What is Primary and Secondary Market Research?

Yes, there are two main types of market research – primary and secondary – and you should do both to adequately cover the market analysis section of your business plan:

• Primary market research is original data you gather yourself, for example in the form of active fieldwork collecting specific information in your market.
• Secondary market research involves collating information from existing data, which has been researched and shared by reliable outside sources . This is essentially passive desk research of information already published .

Unless you are working for a corporation, this exercise is not about your ability to do professional-level market research.

Instead, you just need to demonstrate fundamental understanding of your business environment and where you fit in within the market and broader industry.

Why Do You Need To Do Primary & Secondary Market Research?

There are countless ways you could go collecting industry and market research data, depending on the type of your business, what your business plan is for, and what your needs, resources and circumstances are.

For tried and tested tips on how to properly conduct your market research, read the next section of this guide that is dedicated to primary and secondary market research methods.

In any case, tell the reader how you carried out your market research. Prove what the facts are and where you got your data. Be as specific as possible. Provide statistics, numbers, and sources.

When doing secondary research, always make sure that all stats, facts and figures are from reputable sources and properly referenced in both the main text and the Appendix of your business plan. This gives more credibility to your business case as the reader has more confidence in the information provided.

Go to the Primary and Secondary Market Research post for my best tips on industry, market and competitor research.

7 TOP TIPS For Writing Market Analysis

1. realistic projections.

Above all, make sure that you are realistic in your projections about how your product or service is going to be accepted in the market, otherwise you are going to seriously undermine the credibility of your entire business case.

2. Laser Focus

Discuss only characteristic of your target market and customers that are observable, factual and meaningful, i.e. directly relate to your customers’ decision to purchase.

Always relate the data back to your business. Market statistics are meaningless until you explain where and how your company fits in.

For example, as you write about the market gap and the needs of your target customers, highlight how you are uniquely positioned to fill them.

In other words, your goal is to:

• Present your data
• Analyze the data
• Tie the data back to how your business can thrive within your target market

3. Target Audience

On a similar note, tailor the market analysis to your target audience and the specific purpose at hand.

For example, if your business plan is for internal use, you may not have to go into as much detail about the market as you would have for external financiers, since your team is likely already very familiar with the business environment your company operates in.

4. Story Time

Make sure that there is a compelling storyline and logical flow to the market information presented.

The saying “a picture is worth a thousand words” certainly applies here. Industry and market statistics are easier to understand and more impactful if presented as a chart or graph.

6. Information Overload

Keep your market analysis concise by only including pertinent information. No fluff, no repetition, no drowning the reader in a sea of redundant facts.

While you should not assume that the reader knows anything about your market, do not elaborate on unnecessary basic facts either.

Do not overload the reader in the main body of the business plan. Move everything that is not essential to telling the story into the Appendix. For example, summarize the results of market testing survey in the main body of the business plan document, but move the list of the actual survey questions into the appendix.

7. Marketing Plan

Note that market analysis and marketing plan are two different things, with two distinct chapters in a business plan.

As the name suggests, market analysis examines where you fit in within your desired industry and market. As you work thorugh this section, jot down your ideas for the marketing and strategy section of your business plan.

Final Thoughts

Remember that the very act of doing the research and analysis is a great opportunity to learn things that affect your business that you did not know before, so take your time doing the work.

Related Questions

What is the purpose of industry & market research and analysis.

The purpose of industry and market research and analysis is to qualitatively and quantitatively assess the environment of a business and to confirm that the market opportunity is sufficient for sustainable success of that business.

Why are Industry & Market Research and Analysis IMPORTANT?

Industry and market research and analysis are important because they allow you to gain knowledge of the industry, the target market you are planning to sell to, and your competition, so you can make informed strategic decisions on how to make your business succeed.

How Can Industry & Market Research and Analysis BENEFIT a Business?

Industry and market research and analysis benefit a business by uncovering opportunities and threats within its environment, including attainable market size, ideal target customers, competition and any potential difficulties on the company’s journey to success.

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How to Write the Market Analysis Section of a Business Plan

Written by Dave Lavinsky

What is the Market Analysis in a Business Plan?

The market analysis section of your business plan is where you discuss the size of the market in which you’re competing and market trends that might affect your future potential such as economic, political, social and/or technological shifts.

This helps you and readers understand if your market is big enough to support your business’ growth, and whether future conditions will help or hurt your business. For example, stating that your market size is $56 billion, has been growing by 10% for the last 10 years, and that trends are expected to further increase the market size bodes well for your company’s success.

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What Should a Market Analysis Include?

You’ll want to address these issues in your market analysis:

• Size of Industry – How big is the overall industry?
• Projected Growth Rate of Industry – Is the industry growing or shrinking? How fast?
• Target Market – Who are you targeting with this product or service?
• Competition – How many businesses are currently in the same industry?

Learn how to write the full market analysis below.

How to Write a Market Analysis

Here’s how to write the market analysis section of a business plan.

• Describe each industry that you are competing in or will be targeting.
• Identify direct competition, but don’t forget about indirect competition – this may include companies selling different products to the same potential customer segments.
• Highlight strengths and weaknesses for both direct and indirect competitors, along with how your company stacks up against them based on what makes your company uniquely positioned to succeed.
• Include specific data, statistics, graphs, or charts if possible to make the market analysis more convincing to investors or lenders.

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Industry overview.

In your industry overview, you will define the market in which you are competing (e.g., restaurant, medical devices, etc.).

You will then detail the sub-segment or niche of that market if applicable (e.g., within restaurants there are fast food restaurants, fine dining, etc.).

Next, you will describe the key characteristics of your industry. For example, discuss how big the market is in terms of units and revenues. Let the reader know if the market is growing or declining (and at what rate), and what key industry trends are facing your market.

Use third-party market research as much as possible to validate the discussion of your industry.

Here is a list of additional items you may analyze for a complete industry overview:

• An overview of the current state of the industry . How big is it, how much does it produce or sell? What are its key differentiators from competitors? What is its target customer base like – demographic information and psychographics? How has the industry performed over time (global, domestic)?
• Analyze the macro-economic factors impacting your industry . This includes items such as economic growth opportunities, inflation, exchange rates, interest rates, labor market trends, and technological improvements. You want to make sure that all of these are trending in a positive direction for you while also being realistic about them. For example, if the economy is in shambles you might want to wait before entering the particular market.
• Analyze the political factors impacting your industry . This is an often-overlooked section of any business plan, but it can be important depending on what type of company you are starting. If you’re in a highly regulated industry (such as medical devices), this is something that you’ll want to include.
• Analyze the social factors impacting your industry . This includes analyzing society’s interest in your product or service, historical trends in buying patterns in your industry, and any effects on the industry due to changes in culture. For example, if there is a growing counter-culture trend against big oil companies you might want to position yourself differently than a company in this industry.
• Analyze the technological factors impacting your industry . This includes analyzing new technologies being developed in software, hardware, or applications that can be used to improve your product or service. It also includes emerging consumer trends and will be highly dependent on your business type. In a technology-related venture, you would analyze how these changes are impacting consumers. For an educational-related venture, you would analyze how these changes are impacting students, teachers, and/or administrators.

For each of these items, you want to provide some detail about them including their current state as well as what external factors have played a role in the recent past. You can also include many other important factors if they apply to your business including demographic trends, legal issues, environmental concerns, and sustainability issues.

When you are done analyzing all of these factors, wrap it up by summing them up in a statement that includes your view on the future of the industry. This should be positive to attract investors, potential customers, and partners.

If you’re having trouble thinking about all of these factors then it might be helpful to first develop a SWOT analysis for your business.

Once you have an understanding of the market, you’ll need to think about how you will position yourself within that potential market.

Picking Your Niche

You want to think about how large your market is for this venture. You also want to consider whether you’d like to pick a niche within the overall industry or launch yourself into the mainstream.

If you have an innovative product it can be easier to enter the mainstream market – but at the same time, you might face some additional competition if there are similar products available.

You can choose to specialize in a niche market where you’ll face less competition – but might be able to sell your services at a higher price point (this could make it easier for you to get potential customers).

Of course, if your product or service is unique then there should be no competition. But, what happens if it isn’t unique? Will you be able to differentiate yourself enough to create a competitive advantage or edge?

If you are planning on entering the mainstream market, think about whether there are different sub-niches within your specific market. For example, within the technology industry, you can choose to specialize in laptops or smartphones or tablets, or other categories. While it will be more difficult to be unique in a mainstream market, you will still be able to focus on one type or category of products.

How Will You Stand Out?

Many companies are able to stand out – whether by offering a product that is unique or by marketing their products in a way that consumers notice. For example, Steve Jobs was able to take a business idea like the iPhone and make it into something that people talked about (while competitors struggled to play catch up).

You want your venture to stand out – whether with an innovative product or service or through marketing strategies. This might include a unique brand, name, or logo. It might also include packaging that stands out from competitors.

Write down how you will achieve this goal of standing out in the marketplace. If it’s a product, then what features do you have that other products don’t? If it’s a service, then what is it about this service that will make people want to use your company rather than your competition?

You also need to think about marketing. How are you going to promote yourself or sell your product or service? You’ll need a marketing plan for this – which might include writing copy, creating an advertisement, setting up a website, and several other activities. This should include a description of each of these strategies.

If you’re struggling with the details of any of these sections, it might be helpful to research what other companies in your market are doing and how they’ve been successful. You can use this business information to inform your own strategies and plans.

Relevant Market Size & Competition

In the second stage of your analysis, you must determine the size and competition in your specific market.

Target Market Section

Your company’s relevant market size is the amount of money it could make each year if it owned a complete market share.

It’s simple.

To begin, estimate how many consumers you expect to be interested in purchasing your products or services each year.

To generate a more precise estimate, enter the monetary amount these potential customers may be ready to spend on your goods or services each year.

The size of your market is the product of these two figures. Calculate this market value here so that your readers can see how big your market opportunity is (particularly if you are seeking debt or equity funding).

You’ll also want to include an analysis of your market conditions. Is this a growing or declining market? How fast is it growing (or declining)? What are the general trends in the market? How has your market shifted over time?

Include all of this information in your own business plan to give your readers a clear understanding of the market landscape you’re competing in.

The Competition

Next, you’ll need to create a comprehensive list of the competitors in your market. This competitive analysis includes:

• Direct Competitors – Companies that offer a similar product or service
• Indirect Competitors – Companies that sell products or services that are complementary to yours but not directly related

To show how large each competitor is, you can use metrics such as revenue, employees, number of locations, etc. If you have limited information about the company on hand then you may want to do some additional research or contact them directly for more information. You should also include their website so readers can learn more if they desire (along with social media profiles).

Once you complete this list, take a step back and try to determine how much market share each competitor has. You can use different methods to do this such as market research, surveys, or conduct focus groups or interviews with target customers.

You should also take into account the barriers to entry that exist in your market. What would it take for a new company to enter the market and start competing with you? This could be anything from capital requirements to licensing and permits.

When you have all of this information, you’ll want to create a table like the one below:

Once you have this data, you can start developing strategies to compete with the other companies which will be used again later to help you develop your marketing strategy and plan. 

Writing a Market Analysis Tips

• Include an explanation of how you determined the size of the market and how much share competitors have.
• Include tables like the one above that show competitor size, barriers to entry, etc.
• Decide where you’re going to place this section in your business plan – before or after your SWOT analysis. You can use other sections as well such as your company summary or product/service description. Make sure you consider which information should come first for the reader to make the most sense.
• Brainstorm how you’re going to stand out in this competitive market.

Formatting the Market Analysis Section of Your Business Plan

Now that you understand the different components of the market analysis, let’s take a look at how you should structure this section in your business plan.

Your market analysis should be divided into two sections: the industry overview and market size & competition.

Each section should include detailed information about the topic and supporting evidence to back up your claims.

You’ll also want to make sure that all of your data is up-to-date. Be sure to include the date of the analysis in your business plan so readers know when it was conducted and if there have been any major changes since then.

In addition, you should also provide a short summary of what this section covers at the beginning of each paragraph or page. You can do this by using a title such as “Industry Overview” or another descriptive phrase that is easy to follow.

As with all sections in a business plan, make sure your market analysis is concise and includes only the most relevant information to keep your audience engaged until they reach your conclusion.

A strong market analysis can give your company a competitive edge over other businesses in its industry, which is why it’s essential to include this section in your business plan. By providing detailed information about the market you’re competing in, you can show your readers that you understand the industry and know how to capitalize on current and future trends.

Business Plan Market Analysis Examples

The following are examples of how to write the market analysis section of a business plan:

Business Plan Market Analysis Example #1 – Hosmer Sunglasses, a sunglasses manufacturer based in California

According to the Sunglass Association of America, the retail sales volume of Plano (non-prescription) sunglasses, clip-on sunglasses, and children’s sunglasses (hereinafter collectively referred to as “Sunwear”) totaled $2.9 billion last year. Premium-priced sunglasses are driving the Plano Sunwear market. Plano sunglasses priced at $100 or more accounted for more than 49% of all Sunwear sales among independent retail locations last year. 

The Sunglass Association of America has projected that the dollar volume for retail sales of Plano Sunwear will grow 1.7% next year. Plano sunglass vendors are also bullish about sales in this year and beyond as a result of the growth of technology, particularly the growth of laser surgery and e-commerce.

Business Plan Market Analysis Example #2 – Nailed It!, a family-owned restaurant in Omaha, NE

According to the Nebraska Restaurant Association, last year total restaurant sales in Nebraska grew by 4.3%, reaching a record high of $2.8 billion. Sales at full-service restaurants were particularly strong, growing 7% over 2012 figures. This steady increase is being driven by population growth throughout the state. The Average Annual Growth Rate (AGR) since 2009 is 2.89%.

This fast growth has also encouraged the opening of new restaurants, with 3,035 operating statewide as of this year. The restaurant industry employs more than 41,000 workers in Nebraska and contributes nearly $3 billion to the state economy every year.

Nebraska’s population continues to increase – reaching 1.9 million in 2012, a 1.5% growth rate. In addition to population, the state has experienced record low unemployment every year since 2009 – with an average of 4.7% in 2013 and 2014.

Business Plan Market Analysis Example #3 – American Insurance Company (AIC), a chain of insurance agencies in Maine

American Insurance Company (AIC) offers high-quality insurance at low prices through its chain of retail outlets in the state of Maine. Since its inception, AIC has created an extensive network of agents and brokers across the country with expanding online, call center and retail business operations.

AIC is entering a market that will more than double in size over the next 50 years according to some industry forecasts. The insurance industry is enjoying low inflation rates, steady income growth, and improving standards of living for most Americans during what has been a difficult period for much of American business. This makes this a good time to enter the insurance industry as it enjoys higher margins because customers are purchasing more coverage due to increased costs from medical care and higher liability claims.

American Insurance Company provides affordable homeowners, auto, and business insurance through high-quality fulfillment centers across America that have earned a reputation for top-notch customer service.

AIC will face significant competition from both direct and indirect competitors. The indirect competition will come from a variety of businesses, including banks, other insurance companies, and online retailers. The direct competition will come from other well-funded start-ups as well as incumbents in the industry. AIC’s competitive advantages include its low prices, high quality, and excellent customer service.

AIC plans to grow at a rate that is above average for the industry as a whole. The company has identified a market that is expected to grow by more than 100% in the next decade. This growth is due to several factors: the increase in the number of two-income households, the aging population, and the impending retirement of many baby boomers will lead to an increase in the number of people who are purchasing insurance.

AIC projects revenues of $20M in year one, which is equivalent to 100% growth over the previous year. AIC forecasts revenue growth of 40%-60% each year on average for 10 years. After that, revenue growth is expected to slow down significantly due to market saturation.

The following table illustrates these projections:

Competitive Landscape

Direct Competition: P&C Insurance Market Leaders

Indirect Competition: Banks, Other Insurance Companies, Retailers

Market Analysis Conclusion

When writing the market analysis section, it is important to provide specific data and forecasts about the industry that your company operates in. This information can help make your business plan more convincing to potential investors.

If it’s helpful, you should also discuss how your company stacks up against its competitors based on what makes it unique. In addition, you can identify any strengths or weaknesses that your company has compared to its competitors.

Based on this data, provide projections for how much revenue your company expects to generate over the next few years. Providing this information early on in the business plan will help convince investors that you know what you are talking about and your company is well-positioned to succeed.  

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Other Resources for Writing Your Business Plan

How to Write a Great Business Plan Executive Summary How to Expertly Write the Company Description in Your Business Plan The Customer Analysis Section of Your Business Plan Completing the Competitive Analysis Section of Your Business Plan The Management Team Section of Your Business Plan Financial Assumptions and Your Business Plan How to Create Financial Projections for Your Business Plan Everything You Need to Know about the Business Plan Appendix Best Business Plan Software Business Plan Conclusion: Summary & Recap  

Other Helpful Business Planning Articles & Templates

How to Write & Present an Industry Analysis

Insights generated by an industry analysis are game-changing for your business plans.

Studying the competition level and market trends is vital for every business. It helps to lay the solid future foundations of a business. If you are divulging the thought of starting a new business venture, preliminary research is a must before starting it. Comprehensive industry analysis helps you to assess the market waters and form your business plan accordingly.

Industry analysis reports shed light on the overall health of a company. It assists your investors and stakeholders in scrutinizing the potential of your venture. Additionally, it enables you to gather intel regarding the barriers to market entry. Well-crafted industry analysis also ideates corrective measures to be taken in case of any unforeseen developments. 

PowerPoint presentations remain at the forefront to construct and showcase an enlightening industry analysis. Their visual appeal and ease of grasp hold the potential to impress your clients beyond measure. You can check out an Industry Analysis PowerPoint template from SlideModel to render your presentation a top-notch look. 

Before we see how to present an industry analysis, let us find out more about it. 

What is an Industry Analysis?

Industry analysis refers to a tool showcasing a firm’s position concerning other firms producing similar services and products. It is used by business analysts to analyze the market competition in the same niche. It helps companies to understand the demand-supply curve, opportunities, threats, etc. 

What will come out of conducting and presenting an industry analysis? It helps business owners to devise strategies and formulate a business plan best suited according to the industry analysis. Here are a few merits of creating an industry analysis presentation for every new business:

• Helps to analyze and reduce business risks
• Recognize industry trends and opportunities
• Identify potential threats in the market
• Project capitalization demands for industry setup
• Identify trends of products, services

  Why is Industry Analysis Critical for Your Business?

What is common amongst the likes of Facebook, Tesla, Uber, or Google? These unicorns have achieved incredible business success by establishing a massive competitive edge in their niche. For instance, Kodak used to rule the camera industry until digital cameras arrived! Thus, the advent of advanced technology made an array of businesses obsolete around the world.

It is 2021, and the industry today is more dynamic than it ever was. Now, it doesn't matter if you're a budding entrepreneur or a full-fledged business owner, if you want to stay relevant in the industry, you ought to perform industrial analysis from time to time. The analysis helps businesses to keep up with innovation & the ever-changing dynamics of the industry. 

Now that we have explored what industry analysis is and the value it brings to the table! Let's move ahead and understand how we can do industry analysis.

How to Create an Industry Analysis Presentation?

PowerPoint slide decks are the top choice among professionals when it comes down to design an industry analysis. Vibrant PowerPoint Backgrounds combined with other features will mark your industry analysis appealing. 

Before diving into the steps of industry analysis, let us first acquaint you with some basics of an industry analysis presentation.

• Templates- The entrepreneurs looking to present an unforgettable slideshow ditch stock templates for avant-garde professional templates. Professionally tailored templates give your slideshow a unique quality while saving your precious time.
• Compact and Concise- Ensure to design your presentation with conciseness. Bulks of slides with no end will make your stakeholders sleep within ten minutes. Also, remember to integrate one topic per slide to avoid an overload of information.
• Multimedia- A presentation without any multimedia will fail to leave an impressionable mark on your investors. Leverage HD images, videos, GIFs, and infographics to complement your slide topics. It will enhance your slideshow by manifold. In an industry analysis example of an IT firm, you can use IT-related graphics.
• Data Visualization- Chuck out the option of presenting statistics and figures in plain bullets. Opt for data visualization for a powerful impact on your clients, rendering the data more digestible. SlideModel offers various industry-ready templates with eye-catching data visualizations. 
• Typographical Skills- Pick a functional and readable font like Helvetica over fancy fonts with low readability. Place your text in a slide with a big enough font size that makes it easier to read for your clients at one glance. Avoid typing hefty paragraphs. Present your information in points or bullets.

Formulate one-of-a-kind industry analysis presentations with these golden tips to stay a step ahead of your competition. Let’s move ahead and understand how you can write and present an Industry Analysis!

1.  Porter’s 5 Forces or Competitive Forces Model

Introduced by Michael Porter, this competitive forces model is one of the best ways to conduct an industry analysis. It focuses on five industry forces that help to form an accurate impression of an industry. These forces depict the ultimate profit that your company can receive long-term with invested capital. 

Here are five forces that Porter constituted to explain the industry analysis:

• The threat of new entrants-It deals with new firms entering the market with a similar product.
• The rivalry among existing competitors- It highlights the direct rivalry among industry competitors.
• Bargaining power of buyers- What is industry analysis according to this point? It refers to the position enjoyed by the buyers in the market.
• Bargaining power of suppliers- It refers to the position enjoyed by the suppliers in the market.
• The threat of substitutes- It concerns another company’s product with lesser price or better quality.

Pick this Flat Porter’s Five Forces PowerPoint Template from SlideModel to create a splendid industry analysis. 

2.  SWOT Analysis

SWOT analysis is probably one of the most widely used techniques for industry analysis. It is a great tool to determine the industry forces and present an industry analysis presentation. 

• S - It stands for the strengths of your business that gives you an advantage over your competitors. 
• W - W indicates the characteristics of a company that highlights its weaknesses relative to its competitors.
• O - It analyzes the market opportunities that can benefit your company while establishing and expanding your business.
• T - Threats are the components in the external market environment that can endanger your business profitability. 

Conducting a SWOT industry analysis will keep you abreast of all the industry changes and prepare you for the future as well. A business can only succeed if it acknowledges the backlog and makes amends to address the needed advancements. You can use the amazing SWOT PowerPoint Template to woo your clients with an elaborate industry analysis presentation. 

3. Broad Factor Analysis or PESTEL Analysis

PESTEL Analysis or Broad Factor analysis constitutes six micro-environmental elements. They include political, social, economic, technological, environmental, and legal factors. It is an exemplary framework for evaluating the external market conditions. Let us look into these components in detail.

• Political- Trade policies, taxes, government regulations, tariffs
• Economic- Revenue, import-export, GDP, interest rate, growth rate
• Social- Demography, trends, psychographic segmentation
• Technological- Creativity, R&D, innovation, tech trends
• Legal- Labor laws, government rules, employment contracts, minimum wage

Environmental- Pollution, deforestation, carbon emissionYou can choose to present your PESTLE evaluation with this best-in-class Industry Analysis PowerPoint Template . Another excellent template to check out from SlideModel is Pestel Analysis Template for diving deep into all industry factors. They serve perfectly to enhance every detail of your analysis with a professional look. 

Steps to Include in your Industry Analysis

Here are a few steps to take a note of while forming your industry analysis presentation for your investors:

•   Documentation- Review available documents that are relevant to your industry.
•   Business Category- Carefully pick a relevant business category like chemical industry might have sub-categories like organics and pesticides.
•   Demand and Supply- Market research on the demand and supply of your industry’s product/service.
•   Competitors- Analyze your competitors well and form an evaluative presentation. 
•   Industry Trends- Keep track of the latest industry trends to stay aligned with the customer's needs.
•   Customer Analysis- Perform a detailed psychographic segmentation to assess the customer needs, buying behavior, demographics, etc.
• Forecast future trends- Successful business owners always forecast future industry trends to stay ahead in time. 

The End Line

Every budding business must perform an industry analysis. Comprehensive market research will help you to prepare a customized business plan. It doesn't matter if you're a startup or a small business, a thorough industry analysis can help you gather valuable insights about your competition and the market as a whole. 

The generated insights are game-changing for your business plans. Thus, today brands can discover their weaknesses, reform, and further capitalize on the same. Get creative and demonstrate this industry analysis report in the form of a fabulous slide deck. Create stellar industry analysis presentations with the help of the above information and start your successful business journey.

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Industry Analysis In A Business Plan

Industry Analysis In A Business Plan –

Some decisions require a lot of thinking. You cannot just adopt “Rocks, Scissors, and Paper” to decide in such cases. Many reviews, analyses, and debates are behind such vital decisions. The same is the situation of Luke and his wife, Daisy. They have made this big decision to buy a new home. They have analyzed various areas and bungalows and buildings, and flats. Finally, they have shortlisted a small house and are about to do the paperwork. Luke has analyzed all the positives of that area and nearby amenities. Daisy, on the other hand, is having a hard time. Since it is the most significant decision for her after her marriage, she has been going nuts. She is having nightmares of all the possible things that can go wrong with the house and the new place.

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But nothing went wrong in their case, and they lived happily in the new home. As an intelligent person, Luke had done some proper analysis and predictions. He made calculations of the possibilities and prospects of that area and came up with a positive outlook. Impressive right? But do you want to know a little secret?

Luke has some fantastic analytical skills . So the question is, from where did he get such skills? Is it hereditary? Or has he developed it over time?

How do you think Luke was able to buy such a magnificent new home? The answer is that Luke is a big fan of Warren Buffet. He has been investing in the stock market for a long time and doing well. Before investing in any company, Luke analyzed that sector and industry well. He came up with his industry analysis report and decided whether to invest in that sector or the company. So let’s use Luke’s analytical skills and get insights into what industry analysis is in a business plan and how to perform the same. So let’s learn the basics of Industry analysis.

What is Industry Analysis In A Business Plan?

Before starting with the actual meaning of the industry analysis in a business plan, first, let’s understand what an Industry is.

The industry is a collection of Competitors producing a similar product or offering similar services to their customers.

So the next question is, why are we studying that industry?

To ensure it is the best or worst industry to enter or invest in.

Industry analysis in a business plan is a tool that enables a company to understand its position relative to other companies that produce similar products or services like it. While considering the strategic planning process, a company must understand the overall industry’s forces. Thus, industry analysis techniques in a business plan enable businesses to identify threats and opportunities. It helps them focus their resources on developing unique capabilities to gain a competitive advantage .

Understanding the industry and forecasting its trends and directions, they need to react and control their portion in the industry.

Major elements

1. Understanding the underlying forces at work

• Competition intensifying
• Changing customers’ needs and taste
• Technological innovation
• Globalization
• Entry of major competitors
• Sudden regulation or deregulation

2. Understanding the attractiveness of the industry

• Whether it is feasible to enter or invest in that industry.

3. Understanding the critical industry analysis factors that determine success within the industry.

Importance 

• It is an important element of any investment  that one wants to make.
• To succeed, business owners need to analyze that industry.
• Important for positioning the company in the niche market
• It aids the companies in identifying potential opportunities.
• It helps in analyzing the threats.
• Assists in analyzing the fit between internal management preferences and the business environment.
• Facilitates mitigating the risk of entering an extremely competitive business.

Ways to perform

• One way to perform the industry analysis in a business plan is to do the ratio analysis and comparisons. Ratios are ascertained by dividing one business variable by another. By comparing the company ratio with that of the industry, a business owner can understand where his business stands concerning the industry average.

Michael E. Porter developed another model for analyzing the industry in his classic book Competitive Strategy: Techniques for Analyzing Industries and Competitors (1980). His model shows that rivalry among the firms in an industry depends upon the following five forces:

The Threat of New Entry

The threat of new entrants refers to the entry of new competitors in the industry. Naturally, a profitable industry will attract more competitors looking to achieve profits. If the entry barriers in the industry are low, it may pose a significant threat to the firms already competing in that market.

Bargaining power of the Supplier

Supplier power refers to the pressure suppliers can exert on businesses by raising prices, lowering quality, or reducing product availability to intimidate buyers. All of these things directly cost the buyer.

Bargaining power of the Buyer

It refers to the pressure the buyers can exert on businesses to ensure higher quality products, better customer service, and lower prices. Strong buyers can make the industry more competitive, thus decreasing the profit for the seller.

Competitive Rivalry

It is the extent to which the competitive firms within an industry can bully each other, thus decreasing profits. Fierce competition may lead to stealing profits and market share amongst competitors.

Threat of Substitution

It is the availability of a substitute product that the buyers can find instead of a core selling product.

Industry Analysis 3 Steps

# Gathering the Data

• The Scope of the Research

Define the industry where you would like to perform industry analysis research activities. It can be a broad industry or a niche industry.

• Research your industry

Information sources that will help you conduct your industry analysis in a business plan are different for every business. For example, you might need local information, which you can get from your local chamber of commerce. Or you can find your industry analysis information on government websites. You can also find out government statistics or other commercial statistics. You may have to conduct some internet searches to track down the information.

If the information is difficult to obtain at one particular site, you’ll have to extrapolate information from different sources to get the information you’re seeking. Start finding the data from the government or other websites where accurate data is available. Check academic databases for any published information on your area of interest.

• Compile relevant data using the sources above.

Make notes of annual revenues, the number of companies involved, and workforce statistics of the desired industry. Find statistics about the size of the customer base and buying trends.

• Description of the Industry

Start your industry analysis report with a general description of the industry. Include one or two paragraphs about the industry’s size, products, and geographic concentration.

• Describe the company

Include information about the company that you may want to research. Fill in all the general and relevant information about the company.

• Competitor Analysis

Understand the competitors and mention relevant statistical information about their revenues, profit, etc. Describe their product range if possible. Mention their strategies and forth-coming products.

GDP and Inflation effects

Mention how much the sector has been contributing to the GDP and how it has been affected by the rising inflation. Give an outlook on the same.

Try to understand the answers to the following industry analysis questions.

What are the industry’s foremost economic characteristics?

To answer this question, you can acquire data about the industry from governmental census data or sites such as Yahoo.com or other data-intensive web locations.

What kinds of competitive forces are industry members facing?

Understand the interrelationships among companies in the industry and their suppliers and buyers. Also, understand the ease of entry and exit from the industry.

What is the Change driving factors and their impacts?

Understand the industry analysis characteristics of the industry, unlike changing social trends, demographics, regulatory issues, etc.

What do market positions rivals occupy?

Analyze whether a firm is smartly positioned or not. Many industry analysis websites list the company’s key competitors and information about them.

Finally, you should get a positive response to the following question.

Points to Stress in Industry Analysis in a Business Plan

1.  Industry attractiveness and industry success factors

• Industry attractiveness is the presence or absence of threats exhibited by industry forces. Thus a more significant threat posed by any of the industry forces lessens the attractiveness of the industry.
• Success factors are the elements that play a significant role in determining whether a company will succeed or fail in a given industry. Some industry analysis examples of success factors are- quick response to market changes, product line, reasonable and fair prices, product quality, sales support, a good record for deliveries, financial position and a management team.

2.  Analyzing the future

• One of the crucial factors in industry analysis in a business plan is analyzing the sector’s future. Here one can see how the industry has performed historically. Explore how the sector will perform by looking at historical trends.
• However, the sector’s future is also affected by the significant changes or regulations related to that industry. Hence it is necessary to analyze these factors for the same.

3.  Demand and Supply Analysis

Demand and Supply Analysis also plays a major role here. The following factors of demand and supply may affect the industry-

• If demand increases and supply remains unchanged, it leads to a shortage of goods, and the prices increase.
• If demand decreases and supply remains intact, it leads to surplus goods and a decrease in the price.

4.  Effect of Inflation on the Industry

• Inflation has affected some major economies of the world over the past years. Hence analyzing the effect of inflation on a particular sector becomes extremely important in the industry analysis of a business plan process.
• Savings, as well as investments, are affected by the high rate of inflation . Hence most companies are affected adversely due to lesser demand for their products and services.

5.  Other important factors that can be considered for Industry Analysis in a business plan are

• Size of the industry
• What sectors does it include?
• Major players in this industry
• Markets and customers
• Estimated sales for the industry (This year? Last year? The year before?)
• National/economic trends affecting the industry?
• National/economic trends that might affect it in the future
• Long-term outlook
• Competitor analysis
• The competitive advantage of the business
• Target Market analysis
• Market growth rate
• Market profitability
• Industry cost structure
• Distribution channels
• Success factors
• Success Details

Considerations for Industry Analysis in a business plan

• While carrying out an industry analysis in a business plan, one should consider which forces pose the greatest threat to the business.
• Companies may then undertake careful strategic planning to mitigate these threats.
• Managers should also consider their own preferences and internal capabilities before undertaking a strategy developed from an industry analysis.

Business Cycle Analysis

Try to classify the industries according to their growth cycle.

• Growth industries 

The earnings in such industries are significantly above the average of all sectors. Growth stocks suffer less during a recession.

• Defensive industries

Such industries are least affected by recessions and economic adversity.

• Cyclical industries

Such industries are most affected by recessions and economic adversity.

Benefits of Industry Analysis in a Business Plan

• The benefits of completing an industry analysis in a business plan help company managers to gain a better understanding of their business in the industry.
• Allows companies to position themselves carefully in their industry.
• It helps companies to respond better to any changes in the industry.

Example of Industry Analysis In A Business Plan (FMCG Sector)

So having known the importance and ways to carry out an industry analysis in a business plan, let us now analyze the Indian FMCG sector.

Industry Overview

• Currently, the FMCG sector is the fourth largest sector in India, with a market size of USD 12000 Billion.
• It is to grow to a USD 18000 Billion industry by 2031.

Major Segments in the FMCG Sector

Major Players

SWOT Analysis of the FMCG Sector

1. Low operational costs 2. Established distribution networks in both urban and rural areas 3. Presence of well-known brands in the FMCG sector

1. Lower scope of investing in technology and achieving economies of scale, especially in small sectors 2. Low exports levels 3. Copy products narrow the scope of FMCG products in the rural and semi-urban markets.

Opportunities

1. Rural market is mostly untapped 2. The increased purchasing power of consumers 3. Large domestic market- population of over one billion. 4. Export potential

1. Removal of import restrictions resulting in replacing of domestic brands 2. Tax and regulatory structure.

Porters five forces model for FMCG Sector

Key Challenges

• Consolidation
• Product innovation
• Lifestyle products
• Backward integration
• Third-party manufacturing
•  Increased hiring from Tier 1 & 2 cities
• Reducing carbon footprint
• The government approved an investment of up to 100 % foreign equity for NRI & overseas corporate bodies.
• India has allowed 51 % FDI in multi-brand retail
• Relaxation of license rules

The above industry analysis of the Indian FMCG sector is brief to give a gist of what industry analysis in a business plan should include. The actual industry analysis report may be exhaustive detailing all the essential factors.

Hope that the above article has added some value to your learning. Share this with your friends who might find this article interesting.

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How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated May 7, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

Free business plan templates and examples

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How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan
• Templates and examples

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BUS101: Introduction to Business

The Business Plan

Read this section to see why business plans are essential and what sections should be included.

Industry Analysis

This section provides a brief introduction to the industry in which you propose to operate. It describes both the current situation and the future possibilities, and it addresses such questions as the following:

• How large is the industry? What are total sales for the industry, in volume and dollars?
• Is the industry mature or are new companies successfully entering it?
• What opportunities exist in the industry? What threats exist?
• What factors will influence future expansion or contraction of the industry?
• What is the overall outlook for the industry?
• Who are your major competitors in the industry?
• How does your product differ from those of your competitors?

Business Plan Example and Template

Learn how to create a business plan

What is a Business Plan?

A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing .

A business plan should follow a standard format and contain all the important business plan elements. Typically, it should present whatever information an investor or financial institution expects to see before providing financing to a business.

Contents of a Business Plan

A business plan should be structured in a way that it contains all the important information that investors are looking for. Here are the main sections of a business plan:

1. Title Page

The title page captures the legal information of the business, which includes the registered business name, physical address, phone number, email address, date, and the company logo.

2. Executive Summary

The executive summary is the most important section because it is the first section that investors and bankers see when they open the business plan. It provides a summary of the entire business plan. It should be written last to ensure that you don’t leave any details out. It must be short and to the point, and it should capture the reader’s attention. The executive summary should not exceed two pages.

3. Industry Overview

The industry overview section provides information about the specific industry that the business operates in. Some of the information provided in this section includes major competitors, industry trends, and estimated revenues. It also shows the company’s position in the industry and how it will compete in the market against other major players.

4. Market Analysis and Competition

The market analysis section details the target market for the company’s product offerings. This section confirms that the company understands the market and that it has already analyzed the existing market to determine that there is adequate demand to support its proposed business model.

Market analysis includes information about the target market’s demographics , geographical location, consumer behavior, and market needs. The company can present numbers and sources to give an overview of the target market size.

A business can choose to consolidate the market analysis and competition analysis into one section or present them as two separate sections.

5. Sales and Marketing Plan

The sales and marketing plan details how the company plans to sell its products to the target market. It attempts to present the business’s unique selling proposition and the channels it will use to sell its goods and services. It details the company’s advertising and promotion activities, pricing strategy, sales and distribution methods, and after-sales support.

6. Management Plan

The management plan provides an outline of the company’s legal structure, its management team, and internal and external human resource requirements. It should list the number of employees that will be needed and the remuneration to be paid to each of the employees.

Any external professionals, such as lawyers, valuers, architects, and consultants, that the company will need should also be included. If the company intends to use the business plan to source funding from investors, it should list the members of the executive team, as well as the members of the advisory board.

7. Operating Plan

The operating plan provides an overview of the company’s physical requirements, such as office space, machinery, labor, supplies, and inventory . For a business that requires custom warehouses and specialized equipment, the operating plan will be more detailed, as compared to, say, a home-based consulting business. If the business plan is for a manufacturing company, it will include information on raw material requirements and the supply chain.

8. Financial Plan

The financial plan is an important section that will often determine whether the business will obtain required financing from financial institutions, investors, or venture capitalists. It should demonstrate that the proposed business is viable and will return enough revenues to be able to meet its financial obligations. Some of the information contained in the financial plan includes a projected income statement , balance sheet, and cash flow.

9. Appendices and Exhibits

The appendices and exhibits part is the last section of a business plan. It includes any additional information that banks and investors may be interested in or that adds credibility to the business. Some of the information that may be included in the appendices section includes office/building plans, detailed market research , products/services offering information, marketing brochures, and credit histories of the promoters.

Business Plan Template

Here is a basic template that any business can use when developing its business plan:

Section 1: Executive Summary

• Present the company’s mission.
• Describe the company’s product and/or service offerings.
• Give a summary of the target market and its demographics.
• Summarize the industry competition and how the company will capture a share of the available market.
• Give a summary of the operational plan, such as inventory, office and labor, and equipment requirements.

Section 2: Industry Overview

• Describe the company’s position in the industry.
• Describe the existing competition and the major players in the industry.
• Provide information about the industry that the business will operate in, estimated revenues, industry trends, government influences, as well as the demographics of the target market.

Section 3: Market Analysis and Competition

• Define your target market, their needs, and their geographical location.
• Describe the size of the market, the units of the company’s products that potential customers may buy, and the market changes that may occur due to overall economic changes.
• Give an overview of the estimated sales volume vis-à-vis what competitors sell.
• Give a plan on how the company plans to combat the existing competition to gain and retain market share.

Section 4: Sales and Marketing Plan

• Describe the products that the company will offer for sale and its unique selling proposition.
• List the different advertising platforms that the business will use to get its message to customers.
• Describe how the business plans to price its products in a way that allows it to make a profit.
• Give details on how the company’s products will be distributed to the target market and the shipping method.

Section 5: Management Plan

• Describe the organizational structure of the company.
• List the owners of the company and their ownership percentages.
• List the key executives, their roles, and remuneration.
• List any internal and external professionals that the company plans to hire, and how they will be compensated.
• Include a list of the members of the advisory board, if available.

Section 6: Operating Plan

• Describe the location of the business, including office and warehouse requirements.
• Describe the labor requirement of the company. Outline the number of staff that the company needs, their roles, skills training needed, and employee tenures (full-time or part-time).
• Describe the manufacturing process, and the time it will take to produce one unit of a product.
• Describe the equipment and machinery requirements, and if the company will lease or purchase equipment and machinery, and the related costs that the company estimates it will incur.
• Provide a list of raw material requirements, how they will be sourced, and the main suppliers that will supply the required inputs.

Section 7: Financial Plan

• Describe the financial projections of the company, by including the projected income statement, projected cash flow statement, and the balance sheet projection.

Section 8: Appendices and Exhibits

• Quotes of building and machinery leases
• Proposed office and warehouse plan
• Market research and a summary of the target market
• Credit information of the owners
• List of product and/or services

Related Readings

Thank you for reading CFI’s guide to Business Plans. To keep learning and advancing your career, the following CFI resources will be helpful:

• Corporate Structure
• Three Financial Statements
• Business Model Canvas Examples
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How to Write a SWOT Analysis for a Business Plan

• March 21, 2024
• Business Plan , How to Write

Navigating the complexities of business requires a clear understanding of your strategic position, and a SWOT analysis is an essential tool to help you achieve this clarity. It’s a straightforward method that breaks down into Strengths, Weaknesses, Opportunities, and Threats, providing a snapshot of where your business stands and guiding your future strategic moves.

With this guide, you’ll learn how to leverage your advantages, address challenges, seize new opportunities, and guard against potential threats. Let’s dive into the process together and set a strong foundation for your business’s strategic planning. Let’s dive in!

What is a SWOT Analysis?

A SWOT analysis is a strategic planning tool used to identify and understand the Strengths, Weaknesses, Opportunities, and Threats related to business competition or project planning. This method helps organizations in assessing both internal and external factors that could impact their objectives.

• Strengths : Positive attributes internal to the organization and within its control. Strengths are resources and capabilities that can be used as a basis for developing a competitive advantage.
• Weaknesses : Factors that are within an organization’s control but detract from its ability to attain the desired goal. These are areas the business needs to improve to remain competitive.
• Opportunities : External chances to improve performance in the environment. Opportunities reflect the potential you can leverage to grow your business or project.
• Threats : External challenges to the business’s performance or project’s success. Threats might stem from various sources, such as economic downturns, increased competition, or changes in regulatory landscapes.

Why Use a SWOT Analysis?

We use a SWOT analysis for several important reasons in business and strategic planning:

• Strategic Overview : It provides a concise and comprehensive overview of the current strategic position of the business or project. By examining internal and external factors, stakeholders can get a clear picture of their situation.
• Decision Making : SWOT analysis aids in decision-making by highlighting the strengths to leverage, weaknesses to address, opportunities to pursue, and threats to mitigate. It helps in prioritizing actions based on the analysis.
• Opportunity Identification : SWOT analysis is instrumental in identifying new opportunities for growth and expansion. Opportunities might come from market trends , economic shifts, or changes in technology.
• Risk Management : By identifying threats, organizations can develop strategies to address or mitigate these risks before they become significant issues. It’s a proactive approach to managing potential external challenges.
• Resource Allocation : Understanding the organization’s strengths and weaknesses helps in the effective allocation of resources. Resources can be directed to areas where they are needed most or where they will have the highest impact.
• Competitive Advantage : It helps businesses identify unique features and capabilities that give them a competitive edge in the market. Recognizing these strengths can guide marketing strategies and business development.

How to Write a SWOT Analysis

Writing a strength in a SWOT analysis involves identifying and articulating the internal attributes and resources of a business or project that contribute to its success and competitive advantage. Here’s how to effectively write a strength in a SWOT analysis:

• Identify Internal Positive Attributes : Focus on internal factors that are within the control of the business. These can include resources, skills, or other advantages relative to competitors. Consider areas like strong brand reputation, proprietary technology, skilled workforce, financial resources, strategic location, and efficient processes.
• Be Specific and Relevant : General statements like “we have a good team” are less helpful than specific ones like “our team includes industry-recognized experts in X field.” The more precise you are, the more actionable your analysis will be. Ensure that the strengths are directly relevant to achieving the business’s goals and objectives.
• Use Quantifiable Data When Possible : Whenever you can, back up your strengths with quantifiable data. For example, “a customer satisfaction rate of 95%” or “a 20% lower production cost than industry average” provides concrete evidence of your strengths.
• Compare to Competitors : Strengths are often relative to the competition. Identify areas where your business outperforms competitors or fills a gap in the market. This might involve superior product quality, a unique service model, or a more extensive distribution network.

Example: Instead of simply stating “Experienced management team” as a strength, you could write: “Our management team has over 50 years of combined experience in the tech industry, including a track record of successful product launches and market expansions. This depth of experience provides us with strategic insights and operational expertise that have consistently resulted in market share growth and above-industry-average profitability.”

Writing a weakness in a SWOT analysis involves acknowledging and detailing the internal factors that limit or challenge your business or project’s ability to achieve its goals. Here’s a structured approach to effectively articulate weaknesses in a SWOT analysis:

• Identify Internal Limitations : Focus on internal attributes that are within the control of the organization but currently act as disadvantages. Weaknesses might include insufficient resources, lack of expertise, outdated technology, poor location, limited product range, or inefficiencies in processes.
• Be Specific and Honest : It’s important to be honest and specific about your organization’s weaknesses. Vague statements won’t help in addressing these issues. For instance, rather than saying “we need to improve our marketing,” specify “our current marketing strategy does not effectively reach our target demographic of 18-25-year-olds on digital platforms.”
• Use Internal Comparisons and Feedback : Compare your performance, processes, and resources against your own past performance or industry benchmarks. Utilize customer feedback, employee insights, and performance data to identify areas of weakness.
• Keep it Constructive : While it’s crucial to be honest about weaknesses, frame them in a way that focuses on potential for improvement. Consider each weakness as an area for development and growth.

Example: Instead of a broad statement like “Inadequate online presence,” a more effective description would be: “Our business currently lacks a robust online presence, reflected in our outdated website and minimal engagement on key social media platforms. This limits our ability to attract younger demographics who predominantly discover and interact with brands online. Improving our online visibility and engagement could enhance brand awareness and customer acquisition.”

Opportunities

Writing opportunities in a SWOT analysis involves identifying and articulating external factors that your business or project could exploit to its advantage. Opportunities are elements in the environment that, if leveraged effectively, could provide a pathway for growth, improvement, or competitive advantage. Here’s how to systematically approach writing opportunities in your SWOT analysis:

• Spot External Trends : Focus on the trends and changes outside your organization that could be beneficial. These might include technological advancements, shifts in consumer behavior, market gaps, regulatory changes, or economic trends.
• Be Relevant and Actionable : Ensure that the opportunities you identify are relevant to your business and actionable. They should align with your business’s strengths and capabilities, allowing you to take practical steps toward capitalizing on them.
• Use Market Research : Base your identification of opportunities on solid market research. Understand your target market , industry trends, and the competitive landscape to pinpoint where the real opportunities lie.
• Detail Potential Benefits : Clearly articulate how each opportunity could benefit your business. Whether it’s entering a new market, launching a new product line, or adopting new technology, explain the potential impact on your business growth and success.

Example: Rather than vaguely stating “New market segments,” a more strategic description of an opportunity could be: “With increasing consumer interest in sustainable living, there’s a growing market segment for eco-friendly products. Our business’s strong commitment to sustainability and existing lineup of environmentally friendly products positions us well to capture this emerging market. Expanding our product range to include more items that cater to eco-conscious consumers can tap into this trend, potentially opening up new revenue streams and enhancing our brand’s reputation as a leader in sustainability.”

Writing threats in a SWOT analysis involves identifying external challenges that could pose risks to your business or project’s success. These are factors outside your control that have the potential to harm your operations, financial performance, or strategic positioning. Addressing threats effectively in a SWOT analysis requires a focused approach:

• Identify External Challenges : Start by pinpointing the external factors that could negatively impact your business. This can include new competitors entering the market, changes in consumer preferences, technological advancements that render your product less desirable, regulatory changes, or economic downturns.
• Be Precise and Realistic : Clearly define each threat in specific terms, avoiding vague descriptions. Being realistic about the level of risk each threat poses is crucial; not every external challenge is a dire threat, but understanding the potential impact is key for strategic planning.
• Assess the Impact : For each threat identified, evaluate how it could impact your business. Consider the worst-case scenario and more likely outcomes to gauge the potential severity of the threat. This helps in prioritizing which threats need immediate attention and strategic response.
• Use Reliable Sources : Base your identification of threats on solid, reliable information. This might include industry reports, economic forecasts, and news sources that provide insights into market dynamics and external conditions.
• Consider Your Weaknesses : Link potential threats to your identified weaknesses. Understanding how external threats could exploit your vulnerabilities offers valuable insights for fortifying your business against these challenges.

Example: Instead of broadly stating “Economic uncertainty,” a more actionable description of a threat would be: “The looming economic downturn poses a significant threat to discretionary consumer spending. Given our business’s reliance on non-essential luxury products, a reduction in consumer spending could directly impact sales. This economic uncertainty requires us to diversify our product offerings and identify more value-oriented options to maintain customer engagement and spending during tighter economic conditions.”

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Student Loan Bills Are Dropping Next Month for Many, but There’s a Hiccup

The Education Department has not finished recalculating payments for millions of borrowers enrolled in SAVE, forcing loan servicers to put many loans into forbearance.

By Stacy Cowley

On July 1, millions of federal student loan borrowers will see their monthly bills drop — some by as much as half — as the Biden administration’s new income-driven payment plan , known as SAVE, takes full effect.

But first, the government and its four loan servicers have to resolve a major hiccup.

Starting next month, borrowers enrolled in the SAVE plan with only undergraduate loans will have their monthly payments capped at 5 percent of their discretionary income, down from the current 10 percent limit. (Graduate school loan payments will remain at a maximum of 10 percent, while people with a mix of undergrad and graduate loans will have a weighted payment.)

The loan servicers are relying on the Education Department to send them the new loan amounts for every borrower. But the department has not yet finished making calculations, according to three people familiar with the process, who asked for anonymity because they are not authorized to speak about the issue publicly.

To buy time, the department instructed its servicers to place borrowers with payments due in early July into an administrative forbearance for the month, which means no payment from them will be required.

More than eight million borrowers have enrolled in the SAVE plan. Many received notices this month saying that their account had been placed into forbearance, sparking widespread surprise and confusion.

“I was freaking out a little bit,” said Iván Barragán, who got a letter from his servicer, MOHELA, last week. “I thought I had done something wrong. Then I quickly went on Twitter and saw that a bunch of people were also getting the notices.”

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Biden administration old-growth forest proposal doesn’t ban logging, but still angers industry

FILE - Climbing assistant Lawrence Schultz ascends the Three Sisters sequoia tree during an Archangel Ancient Tree Archive expedition to plant sequoia seedlings on Oct. 26, 2021, in Sequoia Crest, Calif. The Biden administration on Thursday, June 20, 2024 advanced its proposal to protect old growth trees that are increasingly threatened by insects, disease and wildfires as climate change worsens. (AP Photo/Noah Berger, File)[ASSOCIATED PRESS/Noah Berger]

BILLINGS, Mont. (AP) — The Biden administration is advancing its plan to restrict logging within old-growth forests that are increasingly threatened by climate change, with exceptions that include cutting trees to make forests less susceptible to wildfires , according to a U.S. government analysis obtained by The Associated Press.

The analysis, which is expected to be published Friday, shows that officials intend to reject a blanket prohibition on old-growth logging that’s long been sought by some environmentalists. Officials concluded that such a sweeping ban would make it harder to thin forests to better protect communities against wildfires that have grown more severe as the planet has warmed.

“To ensure the longevity of old-growth forests, we’re going to have to take proactive management to protect against wildfire and insects and disease,” Forest Service Deputy Chief Chris French told the AP. Without some thinning allowed on these forests, he said there is a risk of losing more trees.

The exceptions under which logging would be allowed are unlikely to placate the timber industry and Republicans in Congress, who have pushed back against any new restrictions. French asserted that the impacts on timber companies would be minimal.

“There’s so little timber sales that occur right now in old-growth … that the overall effects are very small,” French said.

FILE - In this Aug. 24, 2020 photo, fire burns in the hollow of an old-growth redwood tree in Big Basin Redwoods State Park, Calif. The Biden administration is advancing its plan to restrict logging within old growth forests that are increasingly threatened by climate change, with an environmental review of the proposal expected to be publicized Friday. (AP Photo/Marcio Jose Sanchez, File)

Photo: ASSOCIATED PRESS/Marcio Jose Sanchez

The U.S. timber industry employs about 860,000 people, which is about 30% fewer than in 2001, according to government data. Much of their work shifted in recent years to timber from private and state lands, after harvests from national forests dropped sharply beginning in the 1990s due to new policies, changing lumber markets and other factors.

The proposed changes on old-growth mark a shift for an agency that has historically promoted logging. They’re expected to be finalized before Democratic President Joe Biden’s term ends in January, and they come after he issued a 2022 executive order that directed the U.S. Department of Agriculture to identify old-growth forests across the nation and devise ways to conserve them.

That order touched off a flurry of disagreement over what fits under the definition of old-growth and how those trees should be managed.

Old-growth forests, such as the storied giant sequoia stands of Northern California, have layer upon layer of undisturbed trees and vegetation. There’s wide consensus on the importance of preserving them — both symbolically as marvels of nature, and more practically because their trunks and branches store large amounts of carbon that can be released when forests burn, adding to climate change.

Underlining the urgency of the issue are wildfires that killed thousands of giant sequoias in recent years.

Most old-growth forests across the U.S. were lost to logging as the nation developed over the past few centuries. Yet pockets of ancient trees remain, scattered across the U.S. including in California, the Pacific Northwest and areas of the Rocky Mountains. Larger expanses of old growth survive in Alaska, such as within the Tongass National Forest.

Old-growth timber harvests in the Tongass were limited in 2021 to small commercial sales. Those would no longer occur under the administration’s proposal.

The new analysis follows a separate report on threats to old-growth forests that was finalized last week. It concluded that wildfires, insects and disease have been the main killers of old-growth trees since 2000, accounting for almost 1,400 square miles (3,600 square kilometers) of losses.

By contrast, logging on federal lands cut down about 14 square miles (36 square kilometers) of old-growth forests. That figure has been seized on by timber industry representatives who argue that further restrictions aren’t needed.

“A binding restriction on timber harvest is not where their priority ought to be,” said Bill Imbergamo, of the Federal Forest Resource Coalition, an industry group. He added that exceptions by federal officials to allow some logging could be challenged in court, which could tie up even small logging projects that are focused on reducing wildfire risks.

Environmentalists have urged the administration to go even further as they seek to stop logging projects on federal lands in Oregon, South Dakota, Montana, Idaho and other states.

Jamie Williams, president of The Wilderness Society, said the proposal was “a step in the right direction.”

“But it must go further to protect and restore resilient old-growth forests in a way that meets the challenges of the changing climate,” he added.

Government inventories have identified about 50,000 square miles (130,000 square kilometers) of old-growth forests in federal lands across the U.S. and 125,000 square miles (320,000 square kilometers) of mature forests that haven’t yet reached old-growth status. That includes land overseen by the Forest Service and the Bureau of Land Management, which in April adopted a rule intended to put conservation on equal footing with extractive industries such as logging and energy development.

Environmentalists lobbied unsuccessfully for the Forest Service to extend its old-growth logging restrictions to mature forests. That means those forests remain exposed to potential commercial logging, said Blaine Miller McFeeley, of the environmental group EarthJustice.

“If you don’t have protections for mature trees, there will never be a new cohort of old-growth,” he said.

Under former President Donald Trump, federal officials sought to open up huge areas of West Coast forests to potential logging. Federal wildlife officials reversed the move in 2021 after determining that political appointees under Trump relied on faulty science to justify drastically shrinking areas of forest that are considered crucial habitats for the imperiled northern spotted owl.

Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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The world now invests almost twice as much in clean energy as it does in fossil fuels…, global investment in clean energy and fossil fuels, 2015-2024, …but there are major imbalances in investment, and emerging market and developing economies (emde) outside china account for only around 15% of global clean energy spending, annual investment in clean energy by selected country and region, 2019 and 2024, investment in solar pv now surpasses all other generation technologies combined, global annual investment in solar pv and other generation technologies, 2021-2024, the integration of renewables and upgrades to existing infrastructure have sparked a recovery in spending on grids and storage, investment in power grids and storage by region 2017-2024, rising investments in clean energy push overall energy investment above usd 3 trillion for the first time.

Global energy investment is set to exceed USD 3 trillion for the first time in 2024, with USD 2 trillion going to clean energy technologies and infrastructure. Investment in clean energy has accelerated since 2020, and spending on renewable power, grids and storage is now higher than total spending on oil, gas, and coal.

As the era of cheap borrowing comes to an end, certain kinds of investment are being held back by higher financing costs. However, the impact on project economics has been partially offset by easing supply chain pressures and falling prices. Solar panel costs have decreased by 30% over the last two years, and prices for minerals and metals crucial for energy transitions have also sharply dropped, especially the metals required for batteries.

The annual World Energy Investment report has consistently warned of energy investment flow imbalances, particularly insufficient clean energy investments in EMDE outside China. There are tentative signs of a pick-up in these investments: in our assessment, clean energy investments are set to approach USD 320 billion in 2024, up by more 50% since 2020. This is similar to the growth seen in advanced economies (+50%), although trailing China (+75%). The gains primarily come from higher investments in renewable power, now representing half of all power sector investments in these economies. Progress in India, Brazil, parts of Southeast Asia and Africa reflects new policy initiatives, well-managed public tenders, and improved grid infrastructure. Africa’s clean energy investments in 2024, at over USD 40 billion, are nearly double those in 2020.

Yet much more needs to be done. In most cases, this growth comes from a very low base and many of the least-developed economies are being left behind (several face acute problems servicing high levels of debt). In 2024, the share of global clean energy investment in EMDE outside China is expected to remain around 15% of the total. Both in terms of volume and share, this is far below the amounts that are required to ensure full access to modern energy and to meet rising energy demand in a sustainable way.

Power sector investment in solar photovoltaic (PV) technology is projected to exceed USD 500 billion in 2024, surpassing all other generation sources combined. Though growth may moderate slightly in 2024 due to falling PV module prices, solar remains central to the power sector’s transformation. In 2023, each dollar invested in wind and solar PV yielded 2.5 times more energy output than a dollar spent on the same technologies a decade prior.

In 2015, the ratio of clean power to unabated fossil fuel power investments was roughly 2:1. In 2024, this ratio is set to reach 10:1. The rise in solar and wind deployment has driven wholesale prices down in some countries, occasionally below zero, particularly during peak periods of wind and solar generation. This lowers the potential for spot market earnings for producers and highlights the need for complementary investments in flexibility and storage capacity.

Investments in nuclear power are expected to pick up in 2024, with its share (9%) in clean power investments rising after two consecutive years of decline. Total investment in nuclear is projected to reach USD 80 billion in 2024, nearly double the 2018 level, which was the lowest point in a decade.

Grids have become a bottleneck for energy transitions, but investment is rising. After stagnating around USD 300 billion per year since 2015, spending is expected to hit USD 400 billion in 2024, driven by new policies and funding in Europe, the United States, China, and parts of Latin America. Advanced economies and China account for 80% of global grid spending. Investment in Latin America has almost doubled since 2021, notably in Colombia, Chile, and Brazil, where spending doubled in 2023 alone. However, investment remains worryingly low elsewhere.

Investments in battery storage are ramping up and are set to exceed USD 50 billion in 2024. But spending is highly concentrated. In 2023, for every dollar invested in battery storage in advanced economies and China, only one cent was invested in other EMDE.

Investment in energy efficiency and electrification in buildings and industry has been quite resilient, despite the economic headwinds. But most of the dynamism in the end-use sectors is coming from transport, where investment is set to reach new highs in 2024 (+8% compared to 2023), driven by strong electric vehicle (EV) sales.

The rise in clean energy spending is underpinned by emissions reduction goals, technological gains, energy security imperatives (particularly in the European Union), and an additional strategic element: major economies are deploying new industrial strategies to spur clean energy manufacturing and establish stronger market positions. Such policies can bring local benefits, although gaining a cost-competitive foothold in sectors with ample global capacity like solar PV can be challenging. Policy makers need to balance the costs and benefits of these programmes so that they increase the resilience of clean energy supply chains while maintaining gains from trade.

In the United States, investment in clean energy increases to an estimated more than USD 300 billion in 2024, 1.6 times the 2020 level and well ahead of the amount invested in fossil fuels. The European Union spends USD 370 billion on clean energy today, while China is set to spend almost USD 680 billion in 2024, supported by its large domestic market and rapid growth in the so-called “new three” industries: solar cells, lithium battery production and EV manufacturing.

Overall upstream oil and gas investment in 2024 is set to return to 2017 levels, but companies in the Middle East and Asia now account for a much larger share of the total

Change in upstream oil and gas investment by company type, 2017-2024, newly approved lng projects, led by the united states and qatar, bring a new wave of investment that could boost global lng export capacity by 50%, investment and cumulative capacity in lng liquefaction, 2015-2028, investment in fuel supply remains largely dominated by fossil fuels, although interest in low-emissions fuels is growing fast from a low base.

Upstream oil and gas investment is expected to increase by 7% in 2024 to reach USD 570 billion, following a 9% rise in 2023. This is being led by Middle East and Asian NOCs, which have increased their investments in oil and gas by over 50% since 2017, and which account for almost the entire rise in spending for 2023-2024.

Lower cost inflation means that the headline rise in spending results in an even larger rise in activity, by approximately 25% compared with 2022. Existing fields account for around 40% total oil and gas upstream investment, while another 33% goes to new fields and exploration. The remainder goes to tight oil and shale gas.

Most of the huge influx of cashflows to the oil and gas industry in 2022-2023 was either returned to shareholders, used to buy back shares or to pay down debt; these uses exceeded capital expenditure again in 2023. A surge in profits has also spurred a wave of mergers and acquisitions (M&A), especially among US shale companies, which represented 75% of M&A activity in 2023. Clean energy spending by oil and gas companies grew to around USD 30 billion in 2023 (of which just USD 1.5 billion was by NOCs), but this represents less than 4% of global capital investment on clean energy.

A significant wave of new investment is expected in LNG in the coming years as new liquefaction plants are built, primarily in the United States and Qatar. The concentration of projects looking to start operation in the second half of this decade could increase competition and raise costs for the limited number of specialised contractors in this area. For the moment, the prospect of ample gas supplies has not triggered a major reaction further down the value chain. The amount of new gas-fired power capacity being approved and coming online remains stable at around 50-60 GW per year.

Investment in coal has been rising steadily in recent years, and more than 50 GW of unabated coal-fired power generation was approved in 2023, the most since 2015, and almost all of this was in China.

Investment in low-emissions fuels is only 1.4% of the amount spent on fossil fuels (compared to about 0.5% a decade ago). There are some fast-growing areas. Investments in hydrogen electrolysers have risen to around USD 3 billion per year, although they remain constrained by uncertainty about demand and a lack of reliable offtakers. Investments in sustainable aviation fuels have reached USD 1 billion, while USD 800 million is going to direct air capture projects (a 140% increase from 2023). Some 20 commercial-scale carbon capture utilisation and storage (CCUS) projects in seven countries reached final investment decision (FID) in 2023; according to company announcements, another 110 capture facilities, transport and storage projects could do the same in 2024.

Energy investment decisions are primarily driven and financed by the private sector, but governments have essential direct and indirect roles in shaping capital flows

Sources of investment in the energy sector, average 2018-2023, sources of finance in the energy sector, average 2018-2023, households are emerging as important actors for consumer-facing clean energy investments, highlighting the importance of affordability and access to capital, change in energy investment volume by region and fuel category, 2016 versus 2023, market sentiment around sustainable finance is down from the high point in 2021, with lower levels of sustainable debt issuances and inflows into sustainable funds, sustainable debt issuances, 2020-2023, sustainable fund launches, 2020-2023, energy transitions are reshaping how energy investment decisions are made, and by whom.

This year’s World Energy Investment report contains new analysis on sources of investments and sources of finance, making a clear distinction between those making investment decisions (governments, often via state-owned enterprises (SOEs), private firms and households) and the institutions providing the capital (the public sector, commercial lenders, and development finance institutions) to finance these investments.

Overall, most investments in the energy sector are made by corporates, with firms accounting for the largest share of investments in both the fossil fuel and clean energy sectors. However, there are significant country-by-country variations: half of all energy investments in EMDE are made by governments or SOEs, compared with just 15% in advanced economies. Investments by state-owned enterprises come mainly from national oil companies, notably in the Middle East and Asia where they have risen substantially in recent years, and among some state-owned utilities. The financial sustainability, investment strategies and the ability for SOEs to attract private capital therefore become a central issue for secure and affordable transitions.

The share of total energy investments made or decided by private households (if not necessarily financed by them directly) has doubled from 9% in 2015 to 18% today, thanks to the combined growth in rooftop solar installations, investments in buildings efficiency and electric vehicle purchases. For the moment, these investments are mainly made by wealthier households – and well-designed policies are essential to making clean energy technologies more accessible to all . A comparison shows that households have contributed to more than 40% of the increase in investment in clean energy spending since 2016 – by far the largest share. It was particularly pronounced in advanced economies, where, because of strong policy support, households accounted for nearly 60% of the growth in energy investments.

Three quarters of global energy investments today are funded from private and commercial sources, and around 25% from public finance, and just 1% from national and international development finance institutions (DFIs).

Other financing options for energy transition have faced challenges and are focused on advanced economies. In 2023, sustainable debt issuances exceeded USD 1 trillion for the third consecutive year, but were still 25% below their 2021 peak, as rising coupon rates dampened issuers’ borrowing appetite. Market sentiment for sustainable finance is wavering, with flows to ESG funds decreasing in 2023, due to potential higher returns elsewhere and credibility concerns. Transition finance is emerging to mobilise capital for high-emitting sectors, but greater harmonisation and credible standards are required for these instruments to reach scale.

A secure and affordable transitioning away from fossil fuels requires a major rebalancing of investments

Investment change in 2023-2024, and additional average annual change in investment in the net zero scenario, 2023-2030, a doubling of investments to triple renewables capacity and a tripling of spending to double efficiency: a steep hill needs climbing to keep 1.5°c within reach, investments in renewables, grids and battery storage in the net zero emissions by 2050 scenario, historical versus 2030, investments in end-use sectors in the net zero emissions by 2050 scenario, historical versus 2030, meeting cop28 goals requires a doubling of clean energy investment by 2030 worldwide, and a quadrupling in emde outside china, investments in renewables, grids, batteries and end use in the net zero emissions by 2050 scenario, 2024 and 2030, mobilising additional, affordable financing is the key to a safer and more sustainable future, breakdown of dfi financing by instrument, currency, technology and region, average 2019-2022, much greater efforts are needed to get on track to meet energy & climate goals, including those agreed at cop28.

Today’s investment trends are not aligned with the levels necessary for the world to have a chance of limiting global warming to 1.5°C above pre-industrial levels and to achieve the interim goals agreed at COP28. The current momentum behind renewable power is impressive, and if the current spending trend continues, it would cover approximately two-thirds of the total investment needed to triple renewable capacity by 2030. But an extra USD 500 billion per year is required in the IEA’s Net Zero Emissions by 2050 Scenario (NZE Scenario) to fill the gap completely (including spending for grids and battery storage). This equates to a doubling of current annual spending on renewable power generation, grids, and storage in 2030, in order to triple renewable capacity.

The goal of doubling the pace of energy efficiency improvement requires an even greater additional effort. While investment in the electrification of transport is relatively strong and brings important efficiency gains, investment in other efficiency measures – notably building retrofits – is well below where it needs to be: efficiency investments in buildings fell in 2023 and are expected to decline further in 2024. A tripling in the current annual rate of spending on efficiency and electrification – to about USD 1.9 trillion in 2030 – is needed to double the rate of energy efficiency improvements.

Anticipated oil and gas investment in 2024 is broadly in line with the level of investment required in 2030 in the Stated Policies Scenario, a scenario which sees oil and natural gas demand levelling off before 2030. However, global spare oil production capacity is already close to 6 million barrels per day (excluding Iran and Russia) and there is a shift expected in the coming years towards a buyers’ market for LNG. Against this backdrop, the risk of over-investment would be strong if the world moves swiftly to meet the net zero pledges and climate goals in the Announced Pledges Scenario (APS) and the NZE Scenario.

The NZE Scenario sees a major rebalancing of investments in fuel supply, away from fossil fuels and towards low-emissions fuels, such as bioenergy and low-emissions hydrogen, as well as CCUS. Achieving net zero emissions globally by 2050 would mean annual investment in oil, gas, and coal falls by more than half, from just over USD 1 trillion in 2024 to below USD 450 billion per year in 2030, while spending on low-emissions fuels increases tenfold, to about USD 200 billion in 2030 from just under USD 20 billion today.

The required increase in clean energy investments in the NZE Scenario is particularly steep in many emerging and developing economies. The cost of capital remains one of the largest barriers to investment in clean energy projects and infrastructure in many EMDE, with financing costs at least twice as high as in advanced economies as well as China. Macroeconomic and country-specific factors are the major contributors to the high cost of capital for clean energy projects, but so, too, are risks specific to the energy sector. Alongside actions by national policy makers, enhanced support from DFIs can play a major role in lowering financing costs and bringing in much larger volumes of private capital.

Targeted concessional support is particularly important for the least-developed countries that will otherwise struggle to access adequate capital. Our analysis shows cumulative financing for energy projects by DFIs was USD 470 billion between 2013 and 2021, with China-based DFIs accounting for slightly over half of the total. There was a significant reduction in financing for fossil fuel projects over this period, largely because of reduced Chinese support. However, this was not accompanied by a surge in support for clean energy projects. DFI support was provided almost exclusively (more than 90%) as debt (not all concessional) with only about 3% reported as equity financing and about 6% as grants. This debt was provided in hard currency or in the currency of donors, with almost no local-currency financing being reported.

The lack of local-currency lending pushes up borrowing costs and in many cases is the primary reason behind the much higher cost of capital in EMDE compared to advanced economies. High hedging costs often make this financing unaffordable to many of the least-developed countries and raises questions of debt sustainability. More attention is needed from DFIs to focus interventions on project de-risking that can mobilise much higher multiples of private capital.

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