Start-ups Article 3.2: Writing a business plan – Part 2
The market analysis presents market research showing the current state of your start-up’s industry segment, as well as the target market for your product or service. At a minimum, the market analysis should contain:
- A specific description of the target market
- The revenues and growth rates of the market, including a five-year projection
- A demonstration of a strong market need for your product or service
- A competitive analysis
- The results of marketplace interviews or other primary market research
Investors want to know that you have carefully considered and fully understand the market your start-up will target. Further, the market analysis must honestly address the competitive environment. Unfortunately, there is no market that is void of competition, and investors are keenly aware of this. Even new products in so-called “uncontested markets” face indirect competition from substitute offerings. The analysis should acknowledge this reality.
Additionally, most investors want to see independent evidence of market validation. Examples of this include the results of your market research, customer surveys, and interviews.
There are many factors that go into the marketing process. For the business plan, it is important to show how your product or service will be positioned in the minds of customers versus the competition. Elements deserving consideration are:
- Key factors in the customer selection process
- Customer perception of competitor performance in the key factors
- How your start-up’s offering will perform in the key factors