market trends in business plan example

What are market trends in a business plan?

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What are market trends?

Why do i need market trends in my business plan, how to keep up with market trends, what market trends to monitor frequently, customer behaviours, technological advances, industry regulations, how to write the market trends in your business plan, using countingup to streamline your business.

Market trends in a business plan are key pieces of information that share where your company sits in the wider picture of your industry. Your business plan should prove why your business is viable, show where you fit in the market and what customers you serve. Examining what the market looks like is a smart business move when starting out.

This article on market trends in a business plan will cover:

• What are market trends
• Why market trends are necessary in my business plan

Market trends are the direction changes of a specific industry and can be influenced by customer behaviours or developing technology. 

Take the mobile phone industry for example, as technology has improved over the last twenty years consumers have moved from bulky handsets to slimmer smartphones, that can do everything a computer can and more. Consumers have even gone back to the fashion of flip phones now that technology has allowed a bigger screen that can be folded to save space. This is a good example where both technology and customer demand has influenced the direction of the industry,

Acknowledging these trends when running a business ensures that you stay on the same path as the industry itself, moving with customer needs and adapting your business as the sector and technology evolve. Ignoring market trends in the long term could mean you are left behind by customers, as they may move to businesses that meet their needs more. 

Your market trend research should be part of wider market analysis in your business plan. Understanding where you fit in a sector and what separates your company from competitors will help you shape everything from your product to pricing and marketing plans.

It’s important to focus on trends in this process so you can understand what appeals to your target audience. By analysing the market landscape and trends, you will be able to serve your customers better. It will also feed into your marketing messaging and content creation strategy later on.

A market and trend analysis should be both quantitative (using numbers and statistics such as projections and financial forecasts) and qualitative (based on experience or observation). Trends will fit into both categories of research and you should be able to find data and non-numerical information to support your examination of trends when writing your business plan. 

It’s important to remember that a business plan is not set in stone. It can be a document that you regularly update to reflect changes in your industry and company.

Keeping pace in a fast-changing market is not easy – after all, you’ve got a business to run. Using social media and subscribing to relevant industry emails make it simpler to get the information you need. Doing this will allow you to stay on top of market trends to include in your initial business plan and for more long-term future planning. 

Follow influencers in your industry to see what they talk about and how they create content for the audience that you serve. This will give you an idea of what resonates with your target customers when it comes to content and the form of content the influencer tends to use (video, written blogs, imagery etc.).

Read relevant publications in your sector to find out what is making headlines. Magazines or online blogs that share up-to-date opinions and thought leadership (influential content) will help you stay on the pulse of what is currently important to the industry.

Reading detailed reports and research can be time-consuming but will give you a good overview of the industry’s current state and any new developments. You can then update your business plan to follow the trends that arise from any data you’ve seen. 

Some common areas will affect the running of your business, the trends in your business plan and the whole market landscape. Keeping on top of the following aspects and regularly checking in on them will ensure your business develops as the market does.

Your customer can make or break your business. If you don’t cater to their needs and wants, your business will not be on the radar of your target audience. 

Let’s take an example – if your target customer is under 45, and you primarily do business online, you will need to ensure your website is optimised for mobile. This is because consumer behaviours have changed in recent years, and most searches are now conducted via mobile . If you don’t pick up on this development, your business risks being left behind when competitors optimise for mobile and you don’t.

Like our previous example, customer behaviour often changes with advances in technology. As mobile phones, and then smartphones, have become more able to operate as a computer, consumers have moved to using their phones out of convenience. 

Keep on top of developments that are relevant to your business and make sure you can move with, and not against, the technology changes.

Every now and again, there will be a law change or new regulation that rocks many industries – such as GDPR in 2018. Staying up to date with regulations that could affect the way you run and market your business will save you weighty fines (especially in the case of data protection).

There may be more frequent regulation updates if you operate in an industry that requires you to follow safety guidelines or best practices, such as those that an electrician or builder will have to follow. 

Ensuring that you are up to date on precautions and rules, as well as renewing any professional certifications you need to operate, will ensure your business plan reflects the changing face of your industry.

Using your research on your target customers and the sector,  use the following steps to write up the market trends section of your business plan:

• Current market overview, including which company has the biggest share or most influence
• Where you fit in that market, what gives your business a competitive edge.
• Current trends that impact your business operation
• Any upcoming trends that may impact your business or the products/services you offer
• Outline any plans on how you will keep up with trends
• Upcoming regulatory changes

You can then follow this with your competitor research in your business plan, to give a full picture of your industry and where you fit in.

Now that you have the answers to questions like ‘what are market trends in a business plan’, you will be able to prepare a thorough market analysis to set up your new venture for success. 

Countingup can help your new business by making your business accounting simple, too. Countingup is the business account with built-in accounting software. The app is helping thousands of business owners across the UK save time and money by automating the time consuming parts of accounting. Find out more here and get started today.

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How to Analyze Market Trends for a Business Plan

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

Analyzing market trends is a crucial step in creating a comprehensive business plan. It involves understanding the movements and changes in your industry that can impact your business strategy and decision-making process.

This analysis helps entrepreneurs and business owners identify opportunities for growth, potential threats, and the overall direction of the market. Whether you’re starting a new venture or looking to expand your existing business, a deep dive into market trends can provide you with a competitive edge.

Define the Scope of Your Analysis

Begin by defining the scope of your market trend analysis. Determine which geographic areas you will consider and which product or service categories are relevant to your business.

Identifying the key factors that influence your industry, such as technological advancements, consumer behavior changes, and economic conditions, is also essential. This step ensures your analysis is focused and relevant.

• Example for a Coffee Shop : If you’re planning to open a coffee shop, your analysis might focus on trends in the coffee industry within your city or region, including consumer preferences for coffee types (e.g., organic, fair trade), the popularity of coffee shop formats (e.g., drive-thru, co-working spaces), and the impact of mobile ordering technology.

Collect Data from Reliable Sources

The next step is to gather data from a variety of reliable sources. This can include industry reports, market research studies, government publications, and academic papers.

Online databases and business news websites are valuable resources for finding up-to-date information. Social media and forums can also provide insights into consumer opinions and behaviors.

• Example for a Coffee Shop : Collect data on coffee consumption patterns, industry growth rates, and competitor analysis in your targeted area. Sources might include market research firms like Statista or Mintel, as well as local business news outlets and coffee industry blogs.

Identify Key Market Trends

With your data in hand, start identifying key trends that are shaping your industry. Look for patterns in consumer behavior, emerging technologies, regulatory changes, and competitive strategies.

It’s important to distinguish between short-term fads and long-term trends that will have a lasting impact on the market.

• Example for a Coffee Shop : Key trends might include the growing demand for specialty coffee, the rise of plant-based milk options, and the increasing importance of sustainability in the supply chain.

Analyze the Impact of Market Trends

Once you’ve identified key trends, analyze their potential impact on your business. Consider how these trends could affect your product or service offerings, marketing strategies , and operational processes.

This analysis should also include considering potential threats and opportunities that these trends might present.

• Example for a Coffee Shop : The demand for specialty coffee may create an opportunity to offer a unique selection of beans and brewing methods, differentiating your shop from competitors. However, the popularity of plant-based milk options may require adjustments to your supply chain and menu offerings.

Incorporate Market Trends into Your Business Plan

Integrate your findings into your business plan, using the insights gained from your market trend analysis to inform your business strategy.

This should include product or service development, marketing and sales strategies , and financial planning. Be sure to clearly articulate how you plan to capitalize on opportunities and mitigate potential threats.

• Example for a Coffee Shop : Your business plan could highlight the introduction of a specialty coffee menu and sustainable sourcing practices as key differentiators. It might also detail marketing strategies targeting health-conscious consumers and environmentally aware individuals.

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How to Write a Market Analysis for a Business Plan

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A lot of preparation goes into starting a business before you can open your doors to the public or launch your online store. One of your first steps should be to write a business plan . A business plan will serve as your roadmap when building your business.

Within your business plan, there’s an important section you should pay careful attention to: your market analysis. Your market analysis helps you understand your target market and how you can thrive within it.

Simply put, your market analysis shows that you’ve done your research. It also contributes to your marketing strategy by defining your target customer and researching their buying habits. Overall, a market analysis will yield invaluable data if you have limited knowledge about your market, the market has fierce competition, and if you require a business loan. In this guide, we'll explore how to conduct your own market analysis.

How to conduct a market analysis: A step-by-step guide

In your market analysis, you can expect to cover the following:

Industry outlook

Target market

Market value

Competition

Barriers to entry

Let’s dive into an in-depth look into each section:

Step 1: Define your objective

Before you begin your market analysis, it’s important to define your objective for writing a market analysis. Are you writing it for internal purposes or for external purposes?

If you were doing a market analysis for internal purposes, you might be brainstorming new products to launch or adjusting your marketing tactics. An example of an external purpose might be that you need a market analysis to get approved for a business loan .

The comprehensiveness of your market analysis will depend on your objective. If you’re preparing for a new product launch, you might focus more heavily on researching the competition. A market analysis for a loan approval would require heavy data and research into market size and growth, share potential, and pricing.

Step 2: Provide an industry outlook

An industry outlook is a general direction of where your industry is heading. Lenders want to know whether you’re targeting a growing industry or declining industry. For example, if you’re looking to sell VCRs in 2020, it’s unlikely that your business will succeed.

Starting your market analysis with an industry outlook offers a preliminary view of the market and what to expect in your market analysis. When writing this section, you'll want to include:

Market size

Are you chasing big markets or are you targeting very niche markets? If you’re targeting a niche market, are there enough customers to support your business and buy your product?

Product life cycle

If you develop a product, what will its life cycle look like? Lenders want an overview of how your product will come into fruition after it’s developed and launched. In this section, you can discuss your product’s:

Research and development

Projected growth

How do you see your company performing over time? Calculating your year-over-year growth will help you and lenders see how your business has grown thus far. Calculating your projected growth shows how your business will fare in future projected market conditions.

Step 3: Determine your target market

This section of your market analysis is dedicated to your potential customer. Who is your ideal target customer? How can you cater your product to serve them specifically?

Don’t make the mistake of wanting to sell your product to everybody. Your target customer should be specific. For example, if you’re selling mittens, you wouldn’t want to market to warmer climates like Hawaii. You should target customers who live in colder regions. The more nuanced your target market is, the more information you’ll have to inform your business and marketing strategy.

With that in mind, your target market section should include the following points:

Demographics

This is where you leave nothing to mystery about your ideal customer. You want to know every aspect of your customer so you can best serve them. Dedicate time to researching the following demographics:

Income level

Create a customer persona

Creating a customer persona can help you better understand your customer. It can be easier to market to a person than data on paper. You can give this persona a name, background, and job. Mold this persona into your target customer.

What are your customer’s pain points? How do these pain points influence how they buy products? What matters most to them? Why do they choose one brand over another?

Research and supporting material

Information without data are just claims. To add credibility to your market analysis, you need to include data. Some methods for collecting data include:

Target group surveys

Focus groups

Reading reviews

Feedback surveys

You can also consult resources online. For example, the U.S. Census Bureau can help you find demographics in calculating your market share. The U.S. Department of Commerce and the U.S. Small Business Administration also offer general data that can help you research your target industry.

Step 4: Calculate market value

You can use either top-down analysis or bottom-up analysis to calculate an estimate of your market value.

A top-down analysis tends to be the easier option of the two. It requires for you to calculate the entire market and then estimate how much of a share you expect your business to get. For example, let’s assume your target market consists of 100,000 people. If you’re optimistic and manage to get 1% of that market, you can expect to make 1,000 sales.

A bottom-up analysis is more data-driven and requires more research. You calculate the individual factors of your business and then estimate how high you can scale them to arrive at a projected market share. Some factors to consider when doing a bottom-up analysis include:

Where products are sold

Who your competition is

The price per unit

How many consumers you expect to reach

The average amount a customer would buy over time

While a bottom-up analysis requires more data than a top-down analysis, you can usually arrive at a more accurate calculation.

Step 5: Get to know your competition

Before you start a business, you need to research the level of competition within your market. Are there certain companies getting the lion’s share of the market? How can you position yourself to stand out from the competition?

There are two types of competitors that you should be aware of: direct competitors and indirect competitors.

Direct competitors are other businesses who sell the same product as you. If you and the company across town both sell apples, you are direct competitors.

An indirect competitor sells a different but similar product to yours. If that company across town sells oranges instead, they are an indirect competitor. Apples and oranges are different but they still target a similar market: people who eat fruits.

Also, here are some questions you want to answer when writing this section of your market analysis:

What are your competitor’s strengths?

What are your competitor’s weaknesses?

How can you cover your competitor’s weaknesses in your own business?

How can you solve the same problems better or differently than your competitors?

How can you leverage technology to better serve your customers?

How big of a threat are your competitors if you open your business?

Step 6: Identify your barriers

Writing a market analysis can help you identify some glaring barriers to starting your business. Researching these barriers will help you avoid any costly legal or business mistakes down the line. Some entry barriers to address in your marketing analysis include:

Technology: How rapid is technology advancing and can it render your product obsolete within the next five years?

Branding: You need to establish your brand identity to stand out in a saturated market.

Cost of entry: Startup costs, like renting a space and hiring employees, are expensive. Also, specialty equipment often comes with hefty price tags. (Consider researching equipment financing to help finance these purchases.)

Location: You need to secure a prime location if you’re opening a physical store.

Competition: A market with fierce competition can be a steep uphill battle (like attempting to go toe-to-toe with Apple or Amazon).

Step 7: Know the regulations

When starting a business, it’s your responsibility to research governmental and state business regulations within your market. Some regulations to keep in mind include (but aren’t limited to):

Employment and labor laws

Advertising

Environmental regulations

If you’re a newer entrepreneur and this is your first business, this part can be daunting so you might want to consult with a business attorney. A legal professional will help you identify the legal requirements specific to your business. You can also check online legal help sites like LegalZoom or Rocket Lawyer.

Tips when writing your market analysis

We wouldn’t be surprised if you feel overwhelmed by the sheer volume of information needed in a market analysis. Keep in mind, though, this research is key to launching a successful business. You don’t want to cut corners, but here are a few tips to help you out when writing your market analysis:

Use visual aids

Nobody likes 30 pages of nothing but text. Using visual aids can break up those text blocks, making your market analysis more visually appealing. When discussing statistics and metrics, charts and graphs will help you better communicate your data.

Include a summary

If you’ve ever read an article from an academic journal, you’ll notice that writers include an abstract that offers the reader a preview.

Use this same tactic when writing your market analysis. It will prime the reader of your market highlights before they dive into the hard data.

Get to the point

It’s better to keep your market analysis concise than to stuff it with fluff and repetition. You’ll want to present your data, analyze it, and then tie it back into how your business can thrive within your target market.

Revisit your market analysis regularly

Markets are always changing and it's important that your business changes with your target market. Revisiting your market analysis ensures that your business operations align with changing market conditions. The best businesses are the ones that can adapt.

Why should you write a market analysis?

Your market analysis helps you look at factors within your market to determine if it’s a good fit for your business model. A market analysis will help you:

1. Learn how to analyze the market need

Markets are always shifting and it’s a good idea to identify current and projected market conditions. These trends will help you understand the size of your market and whether there are paying customers waiting for you. Doing a market analysis helps you confirm that your target market is a lucrative market.

2. Learn about your customers

The best way to serve your customer is to understand them. A market analysis will examine your customer’s buying habits, pain points, and desires. This information will aid you in developing a business that addresses those points.

3. Get approved for a business loan

Starting a business, especially if it’s your first one, requires startup funding. A good first step is to apply for a business loan with your bank or other financial institution.

A thorough market analysis shows that you’re professional, prepared, and worth the investment from lenders. This preparation inspires confidence within the lender that you can build a business and repay the loan.

4. Beat the competition

Your research will offer valuable insight and certain advantages that the competition might not have. For example, thoroughly understanding your customer’s pain points and desires will help you develop a superior product or service than your competitors. If your business is already up and running, an updated market analysis can upgrade your marketing strategy or help you launch a new product.

Final thoughts

There is a saying that the first step to cutting down a tree is to sharpen an axe. In other words, preparation is the key to success. In business, preparation increases the chances that your business will succeed, even in a competitive market.

The market analysis section of your business plan separates the entrepreneurs who have done their homework from those who haven’t. Now that you’ve learned how to write a market analysis, it’s time for you to sharpen your axe and grow a successful business. And keep in mind, if you need help crafting your business plan, you can always turn to business plan software or a free template to help you stay organized.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

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How to Identify Market Trends in Your Business Plan Where is your industry now, and where's it going? Here's the best way to track industry movements.

By Eric Butow Oct 27, 2023

Opinions expressed by Entrepreneur contributors are their own.

This is part 5 / 9 of Write Your Business Plan: Section 4: Marketing Your Business Plan series.

Timing in business is everything.

And the best time to address a trend is before it is even beginning and certainly before it is widely recognized. If you can prepare a business that satisfies a soon-to-be popular need, you can generate growth that is practically off the scale. (This is, by the way, the combination that venture capitalists favor most.) The problem, of course, is spotting the trends first and acting quickly before others jump in line ahead of you.

Marc Andreessen, founder of Netscape Communications, had the good fortune to develop software for browsing the web just as the internet, which had been around for twenty years, was coming to widespread popular attention. The timing of his move made him hundreds of millions of dollars, but some browser developers who came later fell by the wayside.

Related: Your Guide to Gaining a Competitive Edge and Succeeding as an Entrepreneur Over the Next 5 Years

How to Identify Trends

What is a trend ? Loosely defined, it is a series of occurrences that indicates a pattern. You can use a couple of techniques to identify trends and present your identifications in your plan. Some trend analysts look at past events (usually trends themselves) and project them forward. For example, trend analysts in recent years have looked at the huge numbers of baby boomers, people born in the years between 1946 and 1964. They then projected forward to see that these baby boomers would be retiring in the near future and saw a defined market for that segment of the population.

Another good way to forecast trends is by test marketing. You try to sell something in a single store and see how it does before you roll it out in your whole chain. The key to this technique is trying it in a well-selected test market that closely resembles the market you'll try to sell to later.

Related: Profit From Current Fads

Focus groups and surveys try to catch hold of trends by asking people what's hot. You can ask open-ended questions: What type of apps or new mobile phone features would you like to see? Or show them product samples and see how they react. This is also tricky because you are dealing with a small group of, you hope, representative people and extrapolating to a larger group. If your group isn't representative, your results may be misleading.

Related: 5 Must-Haves for Entrepreneurs and Their Startups to be Successful

Some other ways you can try to nail a trend in advance: Talk to salespeople who are in touch with customer needs, quiz executives whose jobs are to watch the big picture, read a wide variety of periodicals and try to spot connections, or hire think tanks of experts to brainstorm over what the future might hold.

In most of these trend-forecasting techniques, statistics play a big role. Mathematicians assign numerical values to variables such as loyalty to existing brands, then build a model that can indicate invisible trends to intuitive analysis. Providing some statistics in the trends section of your plan can make it more convincing.

Related: How to Identify and Research Your Competition

More in Write Your Business Plan

Section 1: the foundation of a business plan, section 2: putting your business plan to work, section 3: selling your product and team, section 4: marketing your business plan, section 5: organizing operations and finances, section 6: getting your business plan to investors.

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How to Write and Conduct a Market Analysis

3 min. read

Updated January 3, 2024

A market is the total sum of prospective buyers, individuals, or organizations that are willing and able to purchase a business’s potential offering. A market analysis is a detailed assessment of the market you intend to enter. It provides insight into the size and value of the market, potential customer segments, and their buying patterns.

In this section, we’ll be covering what information to include in your business plan after completing your research. If you’re struggling with the research itself, you should check out our market research resources for step-by-step guidance.

• How to write your market analysis

The information featured in your market analysis should focus on firmly defining who your customers are. Here are the two steps you need to take:

Define your target market

Finding your target market requires segmentation based on demographic and psychographic information until you reach the ideal customer. You need to address who they are and how you identified them.

Target market examples

A target market analysis is a key part of any business plan. Let’s walk you through some examples.

Determine your market size

Identifying your potential customers isn’t enough. You also need to prove that the size of the market can support your business. To do this, it’s helpful to define what’s available, serviceable, and can be obtained.

Optional information to include

The main purpose of the market analysis is to show who your customers are. While defining your target market may be enough, it can be helpful to include some of the following supporting details.

Show that you know your industry

Before starting a business, you should know the state of your industry and where it’s headed. This includes industry metrics you’ve collected, any barriers to entry, emerging trends, or common success factors.

Write a customer analysis

Conducting a customer analysis provides additional depth to your target audience. You’ll know them better and go beyond just segmentation.

Use a customer persona to describe your customers

It can be difficult for you, your employees, and potential investors to visualize who your customers are based solely on data. Creating a customer persona can bring them to life and support your target market choice.

• Why conduct a market analysis?

Conducting any sort of in-depth research can be a time-intensive process. However, the benefits far outweigh the investment—so much so that it’s recommended that you revisit your market analysis at least once a year in order to stay on top of emerging trends or changes in the market.

As part of your business plan, it demonstrates that you have a firm understanding of your customers. Here are the other benefits gained by completing a market analysis:

Reduce risk

If you really understand your potential customers and market conditions, you’ll have a better chance of developing a viable product or service. It also helps you explore if your idea will work or not. If you determine that the market size can’t sustain your business, there are too many barriers, high starting costs, intense competition, or some other factor that would lead to a higher chance of failure—you can pivot and avoid wasting your hard-earned time and money.

Better position your business

Researching the market landscape will help you strategically position your business. This may be done through pricing, specific features, production/distribution, or any other method to differentiate your business and make it more attractive to your target audience.

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Verify product/market fit

Part of positioning your business is determining if there is a sustainable market for your business. This starts with segmenting and identifying your ideal customers. It then involves a process of gathering feedback, gauging interest, and finding any sort of demonstrable traction. To learn more about finding product market fit, check out the market research section of our Starting a Business Guide.

Inform investors

Research is not only valuable for informing you as a business owner but in convincing investors and lenders that your idea is worth funding. In many ways, the fact that you spent time pulling together viable information is just as important as the information itself. It shows that you care about finding success as a business owner and are willing to put in the work, even at this early stage.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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Market Sizing & Trends Analysis

Written by Dave Lavinsky

In this article you’ll learn about market sizing and trends and how to identify them for your business.

Why You Need to Know Your Market Sizing & Trends

When you’re developing a simple business plan template to start or grow your company, you need to understand the size of your market and trends affecting it.

The market size confirms the market is big enough to warrant an investment of your time, and potentially investor/lender funding, into pursuing the opportunity. If the market is too small, you nor investors will not be able to get a reasonable return on your investment (which will dissuade angel investors and/or VC funding ).

Likewise trends tell you if the market is increasing or decreasing, and how the market is changing. This can help you improve your strategy. For example, if you were starting a fitness center and you learned that there was a trend towards personal training services, it would be important for your strategy and plan to offer such options.

Market Sizing & Trend Analysis Questions to Answer

The following questions should be answered in the industry analysis component of your business plan :

• How big is the business (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key manufacturers and/or suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your company. The relevant market size equals a company’s sales if it were to capture 100% of its specific niche of the market. It is calculated by multiplying the number of prospective customers by the amount they could realistically spend on your product/service each year.

Need Help with Market Research?

With Growthink’s Expert Market Research service, you will get solid market research to give lenders and investors confidence in your market opportunity, your competitive advantage, and your financial projections.

Click here to have our team craft your market research to help ensure your success.

How to Conduct Market Sizing & Trend Analysis

We like to determine market sizes using both a top-down (what percent of the market can we reasonably expect to penetrate) and bottom-up (e.g., how many units can we expect to sell at what price) methodology.

As many assumptions are required when sizing a new or emerging market, we tend to rely heavily on case studies of thousands of other companies and clients who have penetrated new markets. We also access paid industry reports from other companies who have done deep dive research into the relevant industries.

In assessing markets, looks at the current market size and what the market size might be in the short, mid and long-term. Specifically, answer the folowing key questions such as the following:

• How has the relevant market size changed over the past one to five years?
• What is the projected growth of the relevant market?
• What factors will affect this growth? Economic factors? Changing regulatory conditions? Changing consumer needs? 

Need Help Understanding Your Market Size & Trends?

Would you like Growthink to provide an assessment of your market size and for you? If so, please contact us below.

What Our Clients Say

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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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

If you need help creating an industry analysis and trends business plan, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

Content Approved by UpCounsel

• Business Plan Outline: Everything You Need To Know
• How to Make a Business Plan Format
• Parts of Business Plan and Definition
• Business Description Outline
• Market Analysis: Everything You Need To Know
• Service Business Plan
• IT Company Business Plan
• Clothing Boutique Business Plan Outline
• Business Plan for Existing Company

Business Plan Section 5: Market Analysis

Find out the 9 components to include in the market analysis portion of your business plan, plus 6 sources for market analysis information.

This is the part of your business plan where you really get to shine and show off that awesome idea you have. Of course, your product or service is the best! Now, let’s talk about how you know it’s a hit. Be prepared to show you know your market AND that it’s big enough for you to build a sustainable, successful business .

In writing up your market analysis, you’ll get to demonstrate the knowledge you’ve gained about the industry, the target market you’re planning to sell to, your competition, and how you plan to make yourself stand out.

A market analysis is just that: a look at what the relevant business environment is and where you fit in. It should give a potential lender, investor, or employee no doubt that there is a solid niche for what you’re offering, and you are definitely the person to fill it. It’s both quantitative, spelling out sales projections and other pertinent figures, and qualitative, giving a thoughtful overview of how you fit in with the competition. It needs to look into the potential size of the market, the possible customers you’ll target, and what kind of difficulties you might face as you try to become successful. Let’s break down how to do that.

What Goes Into A Business Plan Market Analysis?

Industry description and outlook.

Describe the industry with enough background so that someone who isn’t familiar with it can understand what it’s like, what the challenges are, and what the outlook is. Talk about its size, how it’s growing, and what the outlook is for the future.

Target Market

Who have you identified as your ideal client or customer ? Include demographic information on the group you’re targeting, including age, gender and income level. This is the place to talk about the size of your potential market, how much it might spend, and how you’ll reach potential customers. For example, if women aged 18 to 54 are your target market, you need to know how many of them there are in your market. Are there 500 or 500,000? It’s imperative to know. Similarly, if your product or service is geared toward a high-end clientele, you need to make sure you’re located in an area that can support it.

Market Need

What factors influence the need for your product or service? Did the need exist before or are you trying to create it? Why will customers want to do business with you, possibly choosing you over someone else? This is where you can briefly introduce the competitive edge you have, although you’ll get into that in more depth in following sections. Focus on how the product or service you’re offering satisfies what’s needed in the market.

Market Growth

While no one can predict the future, it’s important to get a possible idea of what business may be like down the road and make sales projections. Have the number of people in your target market been increasing or decreasing over the last several years? By how much per year? To make an intelligent forecast, you have to start with current conditions, then project changes over the next three to five years.

Market Trends

You need to take a look at trends the same way you look at population and demographics. Is there a shift to more natural or organic ingredients that might impact your business? How might energy prices figure in? The easy availability of the internet and smartphone technology? The questions will be different for every type of business, but it’s important to think about the types of changes that could affect your specific market. In this section, you can cite experts from the research you’ve done-a market expert, market research firm, trade association, or credible journalist.

Market Research Testing

Talk about what kind of testing and information gathering you’ve done to figure out where you stand in the market. Who have you spoken to about the viability of your product? Why are you confident of its success? Again, if you can, cite experts to back up your information.

Competitive Analysis

There’s no way to succeed unless you’ve examined your competition. It might be helpful to try analyzing your position in the market by performing a SWOT analysis. You need to figure out their strengths and the weaknesses you can exploit as you work to build your own business. You do need to be brutally honest here, and also look at what the potential roadblocks are-anything that might potentially stand in your way as you try to meet your goals and grow your business.

Barriers to Entry

Lenders and investors need to have a reasonable assurance they’ll be paid back, so they’ll want to know what would stop someone else from swooping in, doing what you do, and grabbing half the available business. Do you have technical knowledge that’s difficult to get? A specialized product no one else can manufacture? A service that takes years to perfect? It’s possible your industry has strict regulations and licensing requirements. All of these help protect you from new competition, and they’re all selling points for you.

Regulations

As we touched on above, you should cover regulations as a barrier to entry. If your field is covered by regulations, you do need to talk about how they apply to your business and how you’ll comply with them.

Six Sources for Market Analysis Information

The Market Analysis section of your business plan is far more than a theoretical exercise. Doing an analysis of the market really gives YOU the information you need to figure out whether your plans are viable, and tweak them in the early stages before you go wrong.

So, where do you start? Research is the key here, and there are several sources available.

1. The Internet

Some of the first information you need is about population and demographics: who your potential customers are, how many there are, and where they live or work. The U.S. Census Bureau has an impressive amount of these statistics available. USA.gov’s small business site is another good source for links to the U.S. Departments of Labor and Commerce, among others.

2. Local Chamber of Commerce

A lot of local information can be gotten from the chamber of commerce in the area where you plan to operate. Often, they can provide details into what the general business climate is like, and get even more specific about how many and what type of businesses are operating in their jurisdiction.

3. Other Resources

When actual statistical information isn’t available, you’ll often be able to put together a good picture of the market from a variety of other sources. Real estate agents can be a source of information on demographics and population trends in an area. Catalogs and marketing materials from your competition are useful. Many industry associations have a great amount of relevant information to use in putting your analysis together. Trade publications and annual reports from public corporations in your industry also contain a wealth of relevant information.

4. Customer Mindset

Take yourself out of the equation as the owner and stand in your customer’s shoes when you look at the business. As a customer, what problems do you have that need to be solved? What would you like to be able to do better, faster, or cheaper that you can’t do now? How does the competition work to solve those issues? How could this business solve them better?

5. the Competition

If you have a clothing store, visit others in your area. If you’d like to open a pizzeria, try pies from surrounding restaurants. If you’re a salon owner, park across the street and see what the store traffic is like and how customers look when they come out. Check out websites for pricing and other marketing information. Follow their Facebook pages. If you can’t be a customer of the competition, ask your customers and suppliers about them. Always be aware of what’s going on in the market.

6. Traditional Market Research

While you can gather a lot of data online, your best information will come from potential customers themselves. Send out surveys, ask for input and feedback, and conduct focus groups. You can do this yourself or hire a market research firm to do it for you.

What to Do With All That Data

Now that you’ve gathered the statistics and information and you’ve done the math to know there’s a need and customer base for your product or service, you have to show it off to your best advantage. You can start the market analysis section with a simple summary that describes your target customers and explains why you have chosen this as your market. You can also summarize how you see the market growing, and highlight one or two projections for the future.

If your information is dense with numbers and statistics, someone who reads your business plan will probably find it easier to understand if you present it as a chart or graph. You can generate them fairly easily with tools built into Google docs and free infographic apps and software .

Don’t assume that your readers have an understanding of your market, but don’t belabor simple points, either. You want to include pertinent, important information, but you don’t want to drown the reader in facts. Be concise and compelling with the market analysis, and remember that a good graphic can cover a lot of text, and help you make your point. It’s great to say you project sales to increase by 250% over the next five years, but it makes an even bigger wow when you show it in a graphic.

Always relate the data back to your business. Statistics about the market don’t mean much unless you describe how and where you fit in. As you talk about the needs of your target market, remember to focus on how you are uniquely positioned to fill them.

Don’t hesitate to break down your target market into smaller segments, especially if each is likely to respond to a different message about your product or service. You may have one market that consists of homes and another of small businesses. Perhaps you sell to both wholesale and retail customers. Talk about this in the market analysis, and describe briefly how you’ll approach each. (You will have more of an opportunity to do this in detail later in the plan.) Segmentation can help you target specific messages to specific areas, focusing in on the existing needs and how you fill them.

Remember to tailor your information to the purpose at hand. If your business plan is for internal use, you may not have to go into as much detail about the market since you and your team may already know it well. Remember, however, that the very act of doing the research may help you learn things you didn’t know, so don’t skimp on doing the work. This is a great opportunity to get information from outside that might affect your business.

It’s not about your ability to do professional-level market research; a plan intended for a bank or other lender needs to show your understanding of where your business fits into the grand scheme of things. Yes, you need to detail the information, but your main goal is to show how you’ve incorporated that knowledge into making solid decisions about the direction of your company. Use this section of your business plan to explain your understanding of your industry, your market and your individual business so that lenders and investors feel comfortable with your possibility for success.

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Home > Business Plan > Market Size in a Business Plan

Market Size in a Business Plan

… the market size looks like this …

What is Market Size?

To the investor, the solution in itself has no value unless it can be realized in the market place. Ultimately, it will be the industry market size that decides the value of your business to an investor and, as a rule of thumb, the bigger the available market, the better.

How to Calculate Market Sizes

TAM (Total Available Market) is the total market size (people, revenues, units etc.) who have the problem you are seeking to solve today.

SAM (Served Available Market) is the part of the TAM who are able to use your solution to the problem. This is your target market .

Available Market Size Estimation

The total available market or TAM is based on the number of properties in the region which use lawn care treatments. Using a top down approach, Government statistics might show that there are six million properties with gardens and industry analysis reveals that 3% of properties use lawn care treatments, and spend an average of 150 per year. The TAM is calculated as follows:

TAM = 6 million x 3% x 150 = 27 million per year

This means that if your business operated throughout the entire region with no competition its revenues would be 27 million per year. TAM defines the maximum size for the market the business operates in.

However, at the moment not all of the TAM are able to use your lawn care service as you only have one lawn care outlet in one town in the region. The market which is able to use your solution is limited to the town, so the serviceable available market or SAM is based on the number of properties with gardens within the town. Again, Government statistics might show that there are one million properties with gardens in the region, so the SAM is given as follows:

SAM = 1 million x 3% x 150 = 4.5 million (16.7% of TAM)

If there was no competition within the town and you had the resources to provide the service , then the revenue from the business would be 4.5 million per year. The SAM represents 16.7% of the TAM.

Market Size and Growth

The investor will also want to know whether this is a growing or declining market. The market size section of the business plan should also give an indication of the potential for growth over the next five years. We might be able to find additional market size data which shows that the number of properties with gardens will grow to 20.5 million, and the number using lawn care treatments is expected to increase to 4%, with an average spend of 165. the TAM is calculated as follows:

TAM = 6.5 million x 4% x 165 = 42.9 million per year in five years time

Like wise for the town the number of properties with gardens might be expected to increase to 1.15 million, and the SAM is given as follows:

SAM = 1.15 million x 4% x 165 = 7.59 million (17.7% of TAM)

Market Estimate Presentation in the Business Plan

The business plan market size section can be presented in a number of formats, but a simple column format setting out the TAM and SAM now and in five years time, will allow the investor to quickly ascertain how big the market for the product could be and it prospects for growth over the duration of the business plan.

Market sizing is an important part of the business plan process. But this is planning not accounting. The market size section is an educated guess at how big the available market for the product is and aims to show that a successful launch and continued growth for the product is possible. It is based on available statistics and trade association data.

A few key points should be remembered when trying to determine market size

• Start from verifiable and accurate base data. In the above example, the starting point was a government statistic based on the number of properties with gardens.
• Double check any information with an alternative source if possible.
• Check the results make sense.
• Check the results using a bottom up calculation. For example, if you know a lawn care business in the region has revenue of 500,000 and estimated 2% of the market, then the TAM should be in the order of 500,000 / 2% = 25 million compared to the 27 million calculated above.
• Keep the industry definition narrow, in this case lawn care treatments.
• Be specific, don’t try and say for example, there are millions of properties in the world with gardens and if we can take a very small percentage of that our plan will work.
• The analysis will differ depending on whether you are dealing with an existing market or a completely new market. For an existing product there will be market and industry data available, for a new product you may need to carry out market size research with potential customers and work upwards from there.

This is part of the financial projections and Contents of a Business Plan Guide , a series of posts on what each section of a simple business plan should include. The next post in this series is about the analysis of the target market for the business plan product.

About the Author

Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.

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How to conduct a market trend analysis (and stay 3 steps ahead of the competition)

Why should you conduct a market trend analysis, how to perform a market trend analysis, market trend analysis examples, use tools to make your next trend analysis easy.

You can’t have a competitive advantage if you don’t know what the competition is doing. One effective way to gain a competitive edge is by conducting a market trend analysis. This type of analysis involves examining data to identify patterns and consumer trends in a particular market, allowing businesses to make informed decisions about their strategies and offerings.

By keeping a finger on the pulse of the market, your business can position itself for long-term success. Here we’ll explore the key steps involved in conducting a market trend analysis and provide tips for staying ahead of the curve in your industry.

Get ahead of the trends with our market analysis survey template

Send insightful questions straight to your target audience and get results quickly with our intuitive data dashboard.

Some businesses are so focused on optimizing their organization that they forget to look outside. The only time they feel the need to change something is when they see their competitors doing it. They adjust, and follow—riding the waves their competition created.

But following your competitors blindly can result in you missing out on key opportunities to differentiate yourself and carve out a unique position in the market. That’s why it’s crucial to conduct your own market trend analysis , proactively and regularly.

By analyzing industry trends, you can identify opportunities that your competitors may have missed and find unique ways to meet the changing needs of your customers.

Tracking trends over time will also help you get a clearer picture of what to enter into, and what to avoid. Not every hype should is destined to be a long-term success, and if you get enough market trend analysis data over several months or even years, you can start predicting trends and preparing for them.

It also makes perfect sense to conduct market trend analysis research when times aren’t looking so good. When economies and markets slow down, you need to be prepared for possible changes in consumer spending and habits. That’s where your market analysis becomes invaluable to you, your business and your customers.

A trend analysis is also great fuel for your marketing strategy. You can gain a deeper understanding of what motivates your target market to make certain purchases and tailor your marketing strategy accordingly.

You can look for trends in interests, or trends in the channels they use, like the fall of Google among Gen Z. They don’t google where to go on holiday, what skincare to buy or where to find an interior designer. They use platforms like Instagram and TikTok for that. So if you’re hoping to reach this target group, you might want to move some of your search budget to social media.

When conducting a trend analysis, you can get answers to some of the most pressing questions that are keeping you up at night.

Wondering why your sales have been slowing down lately? A trend analysis can help you identify the latest market trends and find out whether your products or services are still relevant in the current climate.

Curious about what your customers really want? A trend analysis can give you insights into the latest customer preferences and buying behaviors, so you can tailor your offerings to meet their specific needs.

Want to know what your competitors are up to? A trend analysis can help you keep an eye on your competitors and identify any emerging threats or opportunities.

Types of trend analysis

Not sure what trends to look for? These types of trend analyses will help you narrow it down.

• Consumer trends: This type target market analysis focuses on understanding changes in consumer behavior, preferences, and purchasing patterns. It can help you identify new opportunities for growth and develop targeted marketing campaigns to reach your target market.
• Historical trends: By analyzing historical data, you can identify patterns and trends that have emerged over time. These can be all types of patterns and market trends. This data can help you make more informed decisions and predict future trends to prepare for them.
• Seasonal trends: Some industries experience seasonal fluctuations in demand, and analyzing seasonal trends can help you adjust inventory levels, pricing, and marketing strategies to maximize sales during peak seasons.
• Geographic trends: Analyzing trends across different regions can help you understand how consumer behavior and preferences vary across different regions. This can help you tailor your marketing strategies and product offerings to meet the unique needs of each region.
• Technological trends: With new technologies emerging all the time, businesses need to keep up with the latest trends to stay relevant and competitive. Analyzing technological trends can help you identify new opportunities for innovation and show you ways to automate processes or save time and money. It can also help you adapt to technological changes, such as the death of the third-party cookie .
• Demographic trends: Analyzing demographic trends, such as age, gender, income and education level can help you understand your target audience and develop marketing strategies that resonate with different demographics.
• Social media trends: Social media has become an integral part of many people’s lives, and your business can benefit from analyzing trends on social media platforms. By monitoring social media conversations and tracking hashtags and trends, you can identify new opportunities to engage with your target audience and build brand awareness.
• Economic trends: We all know that economic trends can have a significant impact on businesses. Analyzing economic indicators, such as GDP, inflation and interest rates can help you make informed decisions about pricing, inventory, and expansion plans. Don’t just wait until it gets explained in the newspapers to jump on this data.
• Competitive trends: A market trend analysis that focuses on the strategies and performance of your competitors, can help you identify new opportunities for growth and stay ahead of the competition. Competitive trend analysis can also help you identify emerging threats and adjust your strategy in an agile way.
• Environmental trends: With increasing concern about environmental issues, you can certainly benefit from analyzing trends related to sustainability and eco-friendliness. By incorporating eco-friendly practices and products into your business strategy, you can appeal to environmentally conscious consumers and reduce their environmental impact.

Find our your market’s upcoming changes

Get fast, reliable insights on changes in your market—and make sure you make smart decisions based on good data!

Let’s look at the steps you need to take to perform a market trend analysis .

1. Define an actionable goal for your market trend analysis

Don’t start looking for trends without having a goal in mind.

This is important because it will help you focus on the right aspects of the market trends. While it is good to be aware of all the trends, you should focus on what you can act on.

2. Make a plan to conduct market trend analysis regularly

You can’t spot trends by just looking at one moment in time. Ideally, you will regularly conduct market research to uncover trends, and find patterns in the data you collect.

Planning monthly, quarterly or yearly surveys on the same topic helps you do that, while getting data straight from the most valuable source: your customers and target market.

3. Choose the right tools for your research

The right tools can help you identify trends, analyze consumer behavior, and understand the current market. They come with an easy-to-use dashboard that reveals patterns and makes trends easy to communicate.

4. Ask the right questions to the right people

Your research is only as good as your respondent targeting. Make sure you get in front of a large enough and—more importantly—relevant audience.

Asking them the right questions is essential when it comes to uncovering trends in your market research.

5. Analyze the data

Once you’ve gathered the data, it’s time to analyze it. This is where you can identify trends, analyze consumer behavior, and understand the current market.

When analyzing the data, you should look for patterns and correlations. Play around with different parameters and filters to uncover these. This will help you identify emerging trends and understand the current market behavior. You should also look for any inconsistencies in the data that might suggest a trend reversal.

6. Act on your findings

Once you’ve analyzed the data, it’s time to implement it! This is where you can use the data to make informed business decisions.

You should also consider how the data might affect the future of your business. This will help you stay ahead of the competition and make sure your business is always ahead of the curve.

7. Regularly check back in to spot trends

The final step is to regularly check back in to spot trends over time. This will help you identify any shifts in the market and make sure your business is always ahead of the competition. Remember account for external factors and recent changes in the market.

To give you an example of what powerful data you can uncover by looking at certain trends, we’ll show you three examples of our own market trend analysis we’ve done recently.

On-demand grocery

To find out if on-demand grocery brands are actually playing into the demand the right way we used Attest to question consumers in the UK and US. Here’s what we learned.

Even though the media talks a lot about the sustainable aspects of on-demand delivery services and also about the working conditions of drivers, one of the dominant patterns we found was that users of these services prioritize convenience and speed.

Rough, yes, but good to know if you’re trying to market your delivery service. Keep an eye on this though: the sentiment might change. That’s why regularly conducting market research and keeping an eye on current trends is key.

We also learned how price movements in delivery costs affect this industry. Read our full on-demand groceries trend report .

Brits are shopping online more regularly than six months ago

Another one of our dives into market trends revealed a quick boost in online shopping frequency and spending among UK consumers.

Here’s why we emphasize boost : if a business would use this data to inform its future business decisions, it might be a recipe for disaster. If this was only a short-lived increase in spending and orders, you might not want to focus too much on your e-commerce sales. Another reason why we urge brands to track trends over time.

How inflation affects consumers—and how that should affect businesses

From our own economic trend analysis (here’s the US report and the UK report ) we also found that the oldest generation feels the least affected by inflation, and Gen X most. If that is your target market, you need to play into this.

This research also revealed that people are cutting back on takeouts by 53 percent. Bad news for companies who deliver meals, but good news for those who can provide services or products for all those people who are staying at home and cooking at home more.

Cutting back on energy is also a big one, which shows interesting opportunities for companies producing electrical devices to either inform consumers more about the energy consumption of their products, or to even adjust their new products to this behavior.

Another trend we uncovered is that people are switching to cheaper brands, and are more open to buying new things. Get creative with this: ASOS is already selling pre-loved items, and other fashion retailers do too. Furniture, electronic devices, books and entertainment: many businesses can still do more to jump on these trends.

If you regularly conduct market trend analysis , you’ll have powerful information to stay ahead of your competitors, and know what to expect from the market.

Our market analysis tools help you get there, with a survey tool that has everything you need to do one-off or recurring trend analysis.

Get started with the right market trend analysis tool

Want to find trends quickly and easily? We’ve compiled a list of tools to keep your brand ahead of the curve.

Customer Research Lead 

Nick joined Attest in 2021, with more than 10 years' experience in market research and consumer insights on both agency and brand sides. As part of the Customer Research Team team, Nick takes a hands-on role supporting customers uncover insights and opportunities for growth.

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• Business Plans

How to Write a Business Plan: Target Market Analysis

The Business Plan and the Importance of Defining Your Target Market

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.

Conducting a Market Analysis

Polling your target market, writing the market analysis, online tools for market research, u.s. online market research sources, canadian online market research, local sources of market research, doing your own market research.

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The market analysis is basically the target market section of your business plan . It is a thorough examination of the ideal people to whom you intend to sell your products or services.  

Even if you intend on selling a product or service only in your community, you won't be selling that service to everyone who lives there. Knowing exactly what type(s) of people might be interested in buying your product or service and how many of them reside in your projected area or region is fundamental in creating your market analysis.

Once target market data has been established, you'll also work on sales projections within specific time frames, as well as how prospective sales might be affected by trends and policies.

Research is key and cornerstone of any solid  business plan .

Don't Skip This Step!

Don't skip market research; otherwise, you could end up starting a business that doesn't have a paying market.

Use these general terms as linchpins in research data for the market analysis section of your business plan, and to identify your target market:

But don't stop here. To succinctly define your target market, poll or survey members of your prospective clients or customers to ask specific questions directly related to your products or services. For instance, if you plan to sell computer-related services, ask questions relating to the number of computing devices your prospective customers own and how often they require servicing. If you plan on selling garden furniture and accessories, ask what kinds of garden furniture or accessories your potential customers have bought in the past, how often, and what they expect to buy within the next one, three, and five years.

Answers to these and other questions related to your market are to help you understand your market potential.

The goal of the information you collect is to help you project how much of your product or service you'll be able to sell. Review these important questions you need to try to answer using the data you collect:

• What proportion of your target market has used a product similar to yours before?
• How much of your product or service might your target market buy? (Estimate this in gross sales and/or in units of product/service sold.)
• What proportion of your target market might be repeat customers?
• How might your target market be affected by demographic shifts?
• How might your target market be affected by economic events (e.g. a local mill closing or a big-box retailer opening locally)?
• How might your target market be affected by larger socio-economic trends?
• How might your target market be affected by government policies (e.g. new bylaws or changes in taxes)?

One purpose of the market analysis is to ensure you have a viable business idea.

Find Your Buying Market

Use your market research to make sure people don't just like your business idea, but they're also willing to pay for it.

If you have information suggesting that you have a large enough market to sustain your business goals, write the market analysis in the form of several short paragraphs using appropriate headings for each. If you have several target markets, you may want to number each. 

Sections of your market analysis should include:

• Industry Description and Outlook
• Target Market
• Market Research Results
• Competitive Analysis

Remember to properly cite your sources of information within the body of your market analysis as you write it. You and other readers of your business plan, such as potential investors, will need to know the sources of the statistics or opinions that you've gathered.

There are several online resources to learn if your business idea is something worth pursing, including:

• Keyword searches can give you an overall sense of potential demand for your product or service based on the number of searches.
• Google Trends analysis can tell you how the number of searches has changed over time.
• Social media campaigns can give you an indication of the potential customer interest in your business idea.

The U.S. Small Business Administration (SBA) has information on doing your market research and analysis , as well as a list of free small business data and trends resources you can use to conduct your research. Consider these sources for data collection:

• SBA  Business Data and Statistics  
• The U.S. Census Bureau maintains a huge database of demographic information that is searchable by state, county, city/town, or zip code using its census data tool . Community, housing, economic, and population surveys are also available.
• The U.S. Department of Commerce Bureau of Economic Analysis (BEA) has extensive statistics on the economy including consumer income/spending/consumption, business activity, GDP, and more, all of which are searchable by location.

The Government of Canada offers a guide on doing market research and tips for understanding the data you collect. Canadian data resources include:

• Statistics Canada  offers demographic and economic data.
• The  Business Development Bank of Canada (BDC)  offers market research and consulting with industry experts.
• The Canada Business Network provides business information to entrepreneurs by province/territory, including market research data.

There are also a great many local resources for building target market information to explore, including:

• Local library
• Local Chamber of Commerce
• Board of Trade
• Economic Development Centre
• Local government agent's office
• Provincial business ministry
• Local phone book

All of these will have information helpful in defining your target market and providing insights into trends.

The above resources are secondary sources of information, in which others have collected and compiled the data. To get specific information about your business, consider conducting your own market research . For instance, you might want to design a questionnaire and survey your target market to learn more about their habits and preferences relating to your product or service.

Market research is time-consuming but is an important step in affording your business plan validity. If you don't have the time or the research skills to thoroughly define your target market yourself, hiring a person or firm to do the research for you can be a wise investment.​

Small Business Administration. " Market Research and Competitive Analysis. " Accessed Jan. 13, 2020.

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AI and Small Business: Transformations and Trends in 2024

In 2024, artificial intelligence (AI) continues to revolutionize the small business landscape, offering innovative solutions that were once only accessible to large corporations with substantial budgets. From automating mundane tasks to providing deep insights into customer behaviors, AI technologies are empowering small businesses to operate more efficiently and compete in increasingly crowded markets. Here’s a look at how AI is being utilized by small businesses in various sectors this year.

Enhanced Customer Interactions

AI-driven chatbots and virtual assistants are now commonplace for small businesses, providing 24/7 customer service without the need for human intervention. These tools can handle a wide range of customer service tasks, from answering frequently asked questions to processing orders and handling returns. This not only improves customer satisfaction by offering instant support but also reduces the workload on human employees, allowing them to focus on more complex customer service issues.

Predictive Analytics

AI's ability to analyze large datasets is particularly beneficial for small businesses when it comes to understanding market trends and customer preferences. Predictive analytics can forecast future trends based on historical data, helping businesses to make informed decisions about inventory management, marketing strategies, and more. For example, a small online retailer could use AI to predict which products are likely to be popular in the coming season and adjust their stock levels accordingly.

Automated Marketing Campaigns

AI tools are increasingly used to automate and optimize marketing efforts. By analyzing data on customer behavior and preferences, AI can help small businesses personalize their marketing messages and target the right audience with the right content at the right time. This leads to higher conversion rates and a better return on investment for marketing campaigns.

Streamlined Operations

AI is also making operations more efficient through automation of routine tasks such as scheduling, accounting, and human resources management. AI-driven software can help with everything from drafting shift schedules that optimize staff availability and preferences, to managing payroll and even ensuring compliance with labor laws. This frees up small business owners' time so they can focus on strategic growth.

Enhanced Security

Cybersecurity is a major concern for small businesses, especially as they become increasingly digital. AI technologies are being used to enhance security systems through real-time threat detection and response. AI systems can monitor network traffic for unusual activity and take automatic action to prevent or mitigate potential threats, thus protecting sensitive data more effectively.

Real-World Examples

Retail Sector : Many small retail businesses are utilizing AI to create personalized shopping experiences for customers. By analyzing purchasing history and browsing behavior, AI can suggest products that a customer might like, increasing the chances of a sale.

Healthcare Providers : Small clinics and healthcare providers are using AI to streamline appointment scheduling and patient communications, as well as for diagnostic assistance and personalized treatment plans.

Manufacturing : Small manufacturing firms are integrating AI into their production lines to optimize processes and reduce downtime. AI systems can predict when machines are likely to fail and schedule maintenance before breakdowns occur.

AI in Business Planning

Small businesses are increasingly turning to AI-powered tools for strategic business planning . These platforms, like Plannit AI, leverage artificial intelligence to simplify the creation of detailed business plans, offering customized guidance tailored to the specific needs of a business.

Automated Financial Projections: AI algorithms can analyze past performance and market data to predict future financial outcomes with higher accuracy. This is crucial for small businesses that need to plan their financial strategy meticulously.

Market Analysis: AI tools provide in-depth market analysis by scanning vast amounts of data to identify trends, potential opportunities, and threats. This allows small business owners to position their businesses more strategically in competitive markets.

Streamlined Document Preparation: Preparing a business plan can be daunting. AI simplifies this process by automatically generating professional-looking documents that are ready to be presented to investors, banks, and other stakeholders.

Real-World Application:

Consider a small online boutique that uses an AI business plan generator to refine its strategy. The AI tool helps the boutique owner understand the competitive landscape by providing insights into the latest fashion trends and consumer behavior. Additionally, it helps simulate different business scenarios to forecast future sales, helping the owner make informed purchasing and marketing decisions.

As we continue to navigate through 2024, the impact of artificial intelligence on small businesses becomes increasingly apparent and transformative. AI is no longer a futuristic concept but a practical tool that small businesses are leveraging to enhance operational efficiency, customer engagement, marketing, security, and strategic planning. The integration of AI into various business processes is not just about keeping up with technology trends; it's about making smarter decisions, anticipating market changes, and delivering exceptional value to customers. For small business owners, embracing AI means stepping into a realm of possibilities where business operations are streamlined, insights are deeper, and planning is more robust. As AI technologies evolve, they promise to further level the playing field, allowing small businesses to compete more effectively in the global market. The future of small business looks not only promising but also incredibly intelligent.

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More From Forbes

Global expansion strategies: how to take your business to new markets successfully.

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Jason Miller helps influential brands and celebrities create generational wealth with their businesses | CEO, Strategic Advisor Board .

If you’re an entrepreneur who’s ready to take your business ventures from domestic to global, read on to learn about how to research, create financial and strategic plans, and use marketing to get to global success. These are some of the steps I used when breaking into markets with my company, Strategic Advisor Board.

The obvious reason to go global is with access to more people, you will most likely experience revenue growth. But one of the biggest reasons I recommend doing this is due to risk diversification by not relying solely on one market for your business revenue; this is important because of ongoing changes to the economy. According to research, "shareholders do, in fact, reward companies who grow faster outside of the U.S ."

Expanding to new markets can lead to economies of scale and lower production costs due to bulk purchasing and more streamlined production. Your business could also have access to new talent and resources which could lead to more innovation and creativity as well as tapping into local raw materials. Here is how to do it:

Research & Adaptation

I would argue that this is the most important part of the process and maybe the most in-depth of expanding globally because so much of what you find out determines if it’s a smart company decision to make the move. Research your new market to determine whether your product/service will perform well there but also find out tax and regulatory info. You may be exempt from certain taxes if you open your business to new borders.

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Find out if you have a target market in the new area you’re looking at, and if they’d be receptive to your products/services. Make sure you take into account the different cultural aspects that could affect the marketability of your product. Do research on any competitors in the area and figure out what your unique selling proposition is. All this information you’ve gathered will help with making your decision.

Financial Planning

Before you can decide to expand, you need to see if you can afford it. Before creating any sort of budget, find out all the costs associated with expanding. Start with looking at the operational expenses such as infrastructure for office or warehouse spaces and supply chain costs. Supply chain costs can include storage of inventory, or transportation costs of your products to and from manufacturing centers to stores or directly to clients.

Find out if any tariffs or customs fees would affect the profitability of your product. You may want to insure your goods, so look into the costs of doing that as well as how much you should put aside for contingency funds to have on hand for any unforeseen expansion costs.

Strategic Planning

In this part of the process, you will create a roadmap starting with defining clear objectives for your expansion. Then developing a strategy that consists of how to enter the market, including looking into joint ventures, mergers, franchising or partnerships.

Your strategic plan also needs to include adaptive planning. This means you’re flexible in your plan so you can accommodate any unforeseen changes, difficulties or challenges that may occur in the marketplace. Since markets are dynamic and continuously shift, it’s important your strategies adjust as well to include any changing political, economic or cultural conditions. Include these factors in the risk management portion of the plan. Also, include a timeline with realistic expectations of short-term and long-term goals.

Marketing & Talent Management

The marketing strategy you’ve been using domestically may not work globally. It’s a skill to be able to build a consistent brand image while making sure you’re connecting with and being respectful of local market preferences.

One of the best things about having a business operating on a global scale is access to top talent. Hiring the correct talent that goes with your brand’s values and mission is important across all your business locations. That being said, HR policies may be different from domestic HR laws in the workplace. Look into getting work visa support if you need employees to work on international projects.

Global expansion isn’t easy and there’s a lot to consider, but if you’re willing to accept the challenge, there are certain strategies to help you achieve success. Extensive research is the most important to start with. Understand what the new market potential will be like, and find out what the taxes and culture look like. Evaluate how receptive your product will be to locals and what makes it unique. Financial planning is crucial in the early stages and you should assess everything from operational and supply chain costs to insuring your goods. Strategic planning is the roadmap to follow and should include clear objectives, a comprehensive entry strategy, timelines, and adaptive planning. The last steps include using marketing that sits well with locals and hiring top talent to help with the transition. Expanding your company isn’t easy, but if you do your research and plan accordingly, you’ll be on the right track to global success.

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