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How to Write The Industry Section of a Business Plan
Writing a Business Plan: Section 2
Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.
Geber86 / Getty Images
When writing a business plan, the Industry section is best organized as two parts: an overview of the industry and a summary of your business's position within the overall industry.
Before writing this section of the business plan, use these questions to focus your research:
- What is the size of your industry?
- What sectors does this industry include?
- Who are the major players in this industry?
- What are the markets and customers for this industry?
- What are the industry's estimated sales this year? Last year? The year before?
- What national and economic trends have affected this industry and how?
- What national and economic trends might affect it in the future and how?
- What is the long-term outlook for this industry?
- What products or services will your business be selling?
- What is your Unique Selling Proposition? (What is it about your business that makes it unique and sets it apart from competitors?)
- What are the barriers to entry in your industry?
- How will you overcome these barriers?
- Who are your competitors?
- What is the market share of your competitors?
- What is your business's competitive advantage (i.e., your market niche or estimated market share)?
- What is your target market?
- How are you protecting your product or process (i.e., patents, copyrights, trademarks, franchise rights that you either hold or plan to acquire)?
Once you have all this information, you'll write this section of the business plan in the form of several short paragraphs. (Remember, each of these paragraphs is a summary, not a detailed point-by-point explanation.) Use appropriate headings for each paragraph.
Finding Information on Your Industry
But where do you find the information that you need for writing the Industry Overview section of your business plan?
United States Research
In the United States, you may want to start your research by reviewing information from the U.S. Census Bureau, Industry Statistics Portal. This site provides data for selected industries separated into categories using the North American Industry Classification System (NAICS). The Bureau of Labor Statistics also offers a large selection of information grouped by NAICS industry.
There are also other sources of information—some free and some paid sources—including IBIS World, Select USA, and the U.S. the Department of Commerce Bureau of Economic Analysis.
When you're writing a business plan and looking for information on Canadian industries, Industry Canada is your logical first stop. Their Find Statistics by Industry page lets you see key economic indicators for different sectors of the Canadian economy, access industry profiles, and analysis and research small businesses in Canada generally.
Another primary source for industry and economic information that you can easily access online when you're writing a business plan is Statistics Canada. From this homepage you can find a wealth of free statistical information; use this page, to search for Statistics Canada publications back to 1980.
There are also provincial statistics websites where you'll be able to find more economic, social, and demographic statistics relating to your industry and the business environment.
The Canada Business Service Centres located in each province also offer excellent collections of resources online, and telephone and email information services. You'll find a list of links to the Canada Business Service Centre in each province in my Provincial Programs and Services Resources.
The business sections of national newspapers and business magazines will also be helpful; these often carry features on the past and future business trends.
And don't forget your local sources of business information when you're researching your business plans, such as your Economic Development Centre, Chamber of Commerce, or Women's Enterprise Centre, or the business section of the local library.
Doing Business Plan Research
If your business is related to manufacturing when you're writing a business plan begin by determining the NAICS of your particular industry, and the sector and sub-sector if applicable. It will make it easier for you to find statistical information relating to your industry. If your business is a service, begin with Industry Canada's service industry profiles.
Refer to the list of questions earlier in this article on how to write a business plan as a research guide. Whenever you find a piece of information that you want:
- Check its date and determine whether or not the information is current enough to be valid;
- Write down the date and source of the information, as you'll need to cite your information sources in the business plan.
When you're writing a business plan, you want your research information to be as up-to-date as possible. After all, there's no point in starting a business if you don't want it to succeed.
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How to Conduct an Industry Analysis
8 min. read
Updated October 27, 2023
I bet you agree: You need to know the industry you want to start a business in, and the kind of business you want to start, before you can start it.
Industry analysis is part of good management. That’s not just for the business planning, but rather for business survival, beginning to end. Most of the people who successfully start their own business have already had relevant business experience before they start, most often as employees.
But in this article, I focus on how to consolidate and formalize that industry knowledge into a formal business plan .
Although all business owners need to know their industry, the documented details and explanations are mainly for when you’re writing a business plan you need to show to outsiders, like bank lenders or investors . You’ll need to do some industry analysis so you’re able to explain the general state of your industry, its growth potential, and how your business model fits into the landscape.
And if your business plan is more of an internal strategic roadmap, you should still be very sure—whether you have to prove it to others or not—that you know your market, even if you don’t do a formal industry analysis. Whether you’re a service business, manufacturer, retailer, or something else, you want to know your industry inside and out.
- What to cover in your industry analysis
Whether you write it all out in a formal business plan or not, when you’re doing your industry analysis, you’re looking at the following:
- Industry participants
- Distribution patterns
- Competition and buying patterns
Everything in your industry that happens outside of your business will affect your company. The more you know about your industry, the more advantage and protection you will have.
A complete business plan discusses:
- General industry economics
- Factors in the competition
- And whatever else describes the nature of your business to outsiders
A note on finding industry information
The internet has had an enormous impact on the state of business information. Finding information isn’t really the problem anymore, after the information explosion and the huge growth in the internet beginning in the 1990s and continuing in the 21st century.
What’s your biggest business challenge right now?
Even 10 or 15 years ago, dealing with information was more a problem of sorting through it all than of finding raw data. That generality is truer every day. There are websites for business analysis, financial statistics, demographics, trade associations, and just about everything you’ll need for a complete business plan.
You should know who else sells in your market. You can’t easily describe a type of business without describing the nature of the participants. There is a huge difference, for example, between an industry like broadband television services, in which there are only a few huge companies in any one country, and one like dry cleaning, in which there are tens of thousands of smaller participants.
This can make a big difference to a business and a business plan. The restaurant industry, for example, is what we call “pulverized,” meaning that it, like the dry cleaning industry, is made up of many small participants. The fast-food business, on the other hand, is composed of a few national brands participating in thousands of branded outlets, many of them franchised .
Economists talk of consolidation in an industry as a time when many small participants tend to disappear and a few large players emerge. In accounting, for example, there are a few large international firms whose names are well-known, and tens of thousands of smaller firms. The automobile business is composed of a few national brands participating in thousands of branded dealerships, and in computer manufacturing, for example, there are a few large international firms whose names are well-known, and thousands of smaller firms.
Products and services can follow many paths between suppliers and users.
Explain how distribution works in your industry:
- Is this an industry in which retailers are supported by regional distributors, as is the case for computer products, magazines, or auto parts?
- Does your industry depend on direct sales to large industrial customers?
- Do manufacturers support their own direct sales forces, or do they work with product representatives?
Some products are almost always sold through retail stores to consumers, and sometimes these are distributed by distribution companies that buy from manufacturers. In other cases, the products are sold directly from manufacturers to stores. Some products are sold directly from the manufacturer to the final consumer through mail campaigns, national advertising, or other promotional means.
In many product categories, there are several alternatives, and distribution choices are strategic.
Amazon made direct delivery a huge competitive advantage, especially in its earlier years. Doordash and competitors chose to be intermediaries between restaurants and customers, and several businesses offer prepackaged meal ingredients delivered with instructions for finishing the preparations in the consumers’ kitchens. Now major grocery chains offer grocery delivery. Red Box made a strategy of DVDs in kiosks. An entire industry of food delivery options gives consumers choices like restaurant meals or fresh meals ingredients being delivered. Many products are distributed through direct business-to-business (B2B) sales and in long-term contracts such as the ones between car manufacturers and their suppliers of parts, materials, and components. In some industries, companies use representatives, agents, or commissioned salespeople.
Technology can change the patterns of distribution in an industry or product category. The internet, for example, changed options for software distribution, books, music, and other products. Cable communication first, and more recently streaming, changed the options for distributing video products and video games. Some kinds of specialty items sell best with late-night infomercials on television, but others end up working on the web instead of television.
Distribution patterns may not be as critical to most service companies, because distribution is normally about physical distribution of specific physical products such as a restaurant, graphic artist, professional services practice, or architect.
For a few services, the distribution may still be relevant. A phone service, cable provider, or an internet provider might describe distribution related to physical infrastructure. Some publishers may prefer to treat their business as a service, rather than a manufacturing company, and in that case distribution may also be relevant.
It is essential to understand the nature of competition in your market. This is still in the general area of describing the industry or type of business.
Explain the general nature of competition in this business, and how the customers seem to choose one provider over another:
- What are the keys to success?
- What buying factors make the most difference—is it price? Product features? Service? Support? Training? Software? Delivery dates?
- Are brand names important?
In the computer business, for example, competition might depend on reputation and trends in one part of the market, and on channels of distribution and advertising in another. In many business-to-business industries, the nature of competition depends on direct selling, because channels are impractical.
Price is vital in products competing with each other on retail shelves, but delivery and reliability might be much more important for materials used by manufacturers in volume, for which a shortage can affect an entire production line.
In the restaurant business, for example, competition might depend on reputation and trends in one part of the market, and on location and parking in another.
In many professional service practices, the nature of competition depends on word of mouth, because advertising is not completely accepted. Is there price competition between accountants, doctors, and lawyers? How powerful are the insurance decisions in medicine, like in or out of network? How do people choose travel agencies or florists for weddings? Why does someone hire one landscape architect over another? Why choose Starbucks, a national brand, over the local coffee house? All of this is the nature of competition.
The key to your specific industry analysis is a collection of decisions and educated guesses you’ll probably have to make for yourself. There are few pat answers. Maybe it’s easy parking, a great location, great reviews on Amazon or Yelp, or recommendations on social media. You can’t necessarily look this up. It’s the kind of educated guessing that makes some businesses more successful than others.
- Main competitors
Do a very complete analysis of your main competitors. Make a list, determining who your main competitors are. What are the strengths and weaknesses of each?
Consider your competitors’:
- Financial position
- Channels of distribution
- Brand awareness
- Business development
- Technology, or other factors that you feel are important
- In what segments of the market do they operate? What seems to be their strategy? How much do they impact your products, and what threats and opportunities do they represent?
Finding competitive information
Competitive research starts with a good web search. Look up competitors’ websites and social media, then search for mentions, reviews, announcements, and even vacancies and job search information. An amazing array of competitive information is posted in plain sight, where anybody can find it.
From, there, for a good review of additional sources of information, I suggest Practical Market Research Resources for Entrepreneurs , also here on Bplans.
A lot of businesses organize competitive analysis into a competitive matrix. The standard competitive matrix shows how different competitors stack up according to significant factors.
Some people also use a SWOT analysis to think about competition in terms of opportunities and threats, the “OT” of SWOT. Opportunities and threats are generally taken as externals, which would include competition, so it’s valuable to run a SWOT analysis on your business to help figure this out.
See why 1.2 million entrepreneurs have written their business plans with LivePlan
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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How to Write the Market Analysis Section of a Business Plan
Written by Dave Lavinsky
What is a Market Analysis?
Sometimes referred to as the industry analysis, this section of your business plan outlines the economic environment, political, social, and technological factors in your particular industry. A market analysis, which includes insights on how to write a business plan effectively, is an important part of your business plan. It answers the crucial question, “Is there a good reason for someone to invest in this business?”
It provides an industry overview of historical performance, both globally and domestically. The industry information provided will be used to help determine if you are entering a growing or shrinking market or one that is simply not growing as fast as other industries.
This section must convince investors that not only can you run a profitable company, but that it will be easy to do so because there are plenty of customers in your target market.
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What Should a Market Analysis Include?
You’ll want to address these issues in your market analysis:
- Size of Industry – How big is the overall industry?
- Projected Growth Rate of Industry – Is the industry growing or shrinking? How fast?
- Target Market – Who are you targeting with this product or service?
- Competition – How many businesses are currently in the same industry?
Learn how to write the full market analysis below.
How to Write a Market Analysis
Here’s how to write the market analysis section of a business plan.
- Describe each industry that you are competing in or will be targeting.
- Identify direct competition, but don’t forget about indirect competition – this may include companies selling different products to the same potential customer segments.
- Highlight strengths and weaknesses for both direct and indirect competitors, along with how your company stacks up against them based on what makes your company uniquely positioned to succeed.
- Include specific data, statistics, graphs, or charts if possible to make the market analysis more convincing to investors or lenders.
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In your industry overview, you will define the market in which you are competing (e.g., restaurant, medical devices, etc.).
You will then detail the sub-segment or niche of that market if applicable (e.g., within restaurants there are fast food restaurants, fine dining, etc.).
Next, you will describe the key characteristics of your industry. For example, discuss how big the market is in terms of units and revenues. Let the reader know if the market is growing or declining (and at what rate), and what key industry trends are facing your market.
Use third-party market research as much as possible to validate the discussion of your industry.
Here is a list of additional items you may analyze for a complete industry overview:
- An overview of the current state of the industry . How big is it, how much does it produce or sell? What are its key differentiators from competitors? What is its target customer base like – demographic information and psychographics? How has the industry performed over time (global, domestic)?
- Analyze the macro-economic factors impacting your industry . This includes items such as economic growth opportunities, inflation, exchange rates, interest rates, labor market trends, and technological improvements. You want to make sure that all of these are trending in a positive direction for you while also being realistic about them. For example, if the economy is in shambles you might want to wait before entering the particular market.
- Analyze the political factors impacting your industry . This is an often-overlooked section of any business plan, but it can be important depending on what type of company you are starting. If you’re in a highly regulated industry (such as medical devices), this is something that you’ll want to include.
- Analyze the social factors impacting your industry . This includes analyzing society’s interest in your product or service, historical trends in buying patterns in your industry, and any effects on the industry due to changes in culture. For example, if there is a growing counter-culture trend against big oil companies you might want to position yourself differently than a company in this industry.
- Analyze the technological factors impacting your industry . This includes analyzing new technologies being developed in software, hardware, or applications that can be used to improve your product or service. It also includes emerging consumer trends and will be highly dependent on your business type. In a technology-related venture, you would analyze how these changes are impacting consumers. For an educational-related venture, you would analyze how these changes are impacting students, teachers, and/or administrators.
For each of these items, you want to provide some detail about them including their current state as well as what external factors have played a role in the recent past. You can also include many other important factors if they apply to your business including demographic trends, legal issues, environmental concerns, and sustainability issues.
When you are done analyzing all of these factors, wrap it up by summing them up in a statement that includes your view on the future of the industry. This should be positive to attract investors, potential customers, and partners.
If you’re having trouble thinking about all of these factors then it might be helpful to first develop a SWOT analysis for your business.
Once you have an understanding of the market, you’ll need to think about how you will position yourself within that potential market.
Picking Your Niche
You want to think about how large your market is for this venture. You also want to consider whether you’d like to pick a niche within the overall industry or launch yourself into the mainstream.
If you have an innovative product it can be easier to enter the mainstream market – but at the same time, you might face some additional competition if there are similar products available.
You can choose to specialize in a niche market where you’ll face less competition – but might be able to sell your services at a higher price point (this could make it easier for you to get potential customers).
Of course, if your product or service is unique then there should be no competition. But, what happens if it isn’t unique? Will you be able to differentiate yourself enough to create a competitive advantage or edge?
If you are planning on entering the mainstream market, think about whether there are different sub-niches within your specific market. For example, within the technology industry, you can choose to specialize in laptops or smartphones or tablets, or other categories. While it will be more difficult to be unique in a mainstream market, you will still be able to focus on one type or category of products.
How Will You Stand Out?
Many companies are able to stand out – whether by offering a product that is unique or by marketing their products in a way that consumers notice. For example, Steve Jobs was able to take a business idea like the iPhone and make it into something that people talked about (while competitors struggled to play catch up).
You want your venture to stand out – whether with an innovative product or service or through marketing strategies. This might include a unique brand, name, or logo. It might also include packaging that stands out from competitors.
Write down how you will achieve this goal of standing out in the marketplace. If it’s a product, then what features do you have that other products don’t? If it’s a service, then what is it about this service that will make people want to use your company rather than your competition?
You also need to think about marketing. How are you going to promote yourself or sell your product or service? You’ll need a marketing plan for this – which might include writing copy, creating an advertisement, setting up a website, and several other activities. This should include a description of each of these strategies.
If you’re struggling with the details of any of these sections, it might be helpful to research what other companies in your market are doing and how they’ve been successful. You can use this business information to inform your own strategies and plans.
Relevant Market Size & Competition
In the second stage of your analysis, you must determine the size and competition in your specific market.
Target Market Section
Your company’s relevant market size is the amount of money it could make each year if it owned a complete market share.
To begin, estimate how many consumers you expect to be interested in purchasing your products or services each year.
To generate a more precise estimate, enter the monetary amount these potential customers may be ready to spend on your goods or services each year.
The size of your market is the product of these two figures. Calculate this market value here so that your readers can see how big your market opportunity is (particularly if you are seeking debt or equity funding).
You’ll also want to include an analysis of your market conditions. Is this a growing or declining market? How fast is it growing (or declining)? What are the general trends in the market? How has your market shifted over time?
Include all of this information in your own business plan to give your readers a clear understanding of the market landscape you’re competing in.
Next, you’ll need to create a comprehensive list of the competitors in your market. This competitive analysis includes:
- Direct Competitors – Companies that offer a similar product or service
- Indirect Competitors – Companies that sell products or services that are complementary to yours but not directly related
To show how large each competitor is, you can use metrics such as revenue, employees, number of locations, etc. If you have limited information about the company on hand then you may want to do some additional research or contact them directly for more information. You should also include their website so readers can learn more if they desire (along with social media profiles).
Once you complete this list, take a step back and try to determine how much market share each competitor has. You can use different methods to do this such as market research, surveys, or conduct focus groups or interviews with target customers.
You should also take into account the barriers to entry that exist in your market. What would it take for a new company to enter the market and start competing with you? This could be anything from capital requirements to licensing and permits.
When you have all of this information, you’ll want to create a table like the one below:
Once you have this data, you can start developing strategies to compete with the other companies which will be used again later to help you develop your marketing strategy and plan.
Writing a Market Analysis Tips
- Include an explanation of how you determined the size of the market and how much share competitors have.
- Include tables like the one above that show competitor size, barriers to entry, etc.
- Decide where you’re going to place this section in your business plan – before or after your SWOT analysis. You can use other sections as well such as your company summary or product/service description. Make sure you consider which information should come first for the reader to make the most sense.
- Brainstorm how you’re going to stand out in this competitive market.
Formatting the Market Analysis Section of Your Business Plan
Now that you understand the different components of the market analysis, let’s take a look at how you should structure this section in your business plan.
Your market analysis should be divided into two sections: the industry overview and market size & competition.
Each section should include detailed information about the topic and supporting evidence to back up your claims.
You’ll also want to make sure that all of your data is up-to-date. Be sure to include the date of the analysis in your business plan so readers know when it was conducted and if there have been any major changes since then.
In addition, you should also provide a short summary of what this section covers at the beginning of each paragraph or page. You can do this by using a title such as “Industry Overview” or another descriptive phrase that is easy to follow.
As with all sections in a business plan, make sure your market analysis is concise and includes only the most relevant information to keep your audience engaged until they reach your conclusion.
A strong market analysis can give your company a competitive edge over other businesses in its industry, which is why it’s essential to include this section in your business plan. By providing detailed information about the market you’re competing in, you can show your readers that you understand the industry and know how to capitalize on current and future trends.
Business Plan Market Analysis Examples
The following are examples of how to write the market analysis section of a business plan:
Business Plan Market Analysis Example #1 – Hosmer Sunglasses, a sunglasses manufacturer based in California
According to the Sunglass Association of America, the retail sales volume of Plano (non-prescription) sunglasses, clip-on sunglasses, and children’s sunglasses (hereinafter collectively referred to as “Sunwear”) totaled $2.9 billion last year. Premium-priced sunglasses are driving the Plano Sunwear market. Plano sunglasses priced at $100 or more accounted for more than 49% of all Sunwear sales among independent retail locations last year.
The Sunglass Association of America has projected that the dollar volume for retail sales of Plano Sunwear will grow 1.7% next year. Plano sunglass vendors are also bullish about sales in this year and beyond as a result of the growth of technology, particularly the growth of laser surgery and e-commerce.
Business Plan Market Analysis Example #2 – Nailed It!, a family-owned restaurant in Omaha, NE
According to the Nebraska Restaurant Association, last year total restaurant sales in Nebraska grew by 4.3%, reaching a record high of $2.8 billion. Sales at full-service restaurants were particularly strong, growing 7% over 2012 figures. This steady increase is being driven by population growth throughout the state. The Average Annual Growth Rate (AGR) since 2009 is 2.89%.
This fast growth has also encouraged the opening of new restaurants, with 3,035 operating statewide as of this year. The restaurant industry employs more than 41,000 workers in Nebraska and contributes nearly $3 billion to the state economy every year.
Nebraska’s population continues to increase – reaching 1.9 million in 2012, a 1.5% growth rate. In addition to population, the state has experienced record low unemployment every year since 2009 – with an average of 4.7% in 2013 and 2014.
Business Plan Market Analysis Example #3 – American Insurance Company (AIC), a chain of insurance agencies in Maine
American Insurance Company (AIC) offers high-quality insurance at low prices through its chain of retail outlets in the state of Maine. Since its inception, AIC has created an extensive network of agents and brokers across the country with expanding online, call center and retail business operations.
AIC is entering a market that will more than double in size over the next 50 years according to some industry forecasts. The insurance industry is enjoying low inflation rates, steady income growth, and improving standards of living for most Americans during what has been a difficult period for much of American business. This makes this a good time to enter the insurance industry as it enjoys higher margins because customers are purchasing more coverage due to increased costs from medical care and higher liability claims.
American Insurance Company provides affordable homeowners, auto, and business insurance through high-quality fulfillment centers across America that have earned a reputation for top-notch customer service.
AIC will face significant competition from both direct and indirect competitors. The indirect competition will come from a variety of businesses, including banks, other insurance companies, and online retailers. The direct competition will come from other well-funded start-ups as well as incumbents in the industry. AIC’s competitive advantages include its low prices, high quality, and excellent customer service.
AIC plans to grow at a rate that is above average for the industry as a whole. The company has identified a market that is expected to grow by more than 100% in the next decade. This growth is due to several factors: the increase in the number of two-income households, the aging population, and the impending retirement of many baby boomers will lead to an increase in the number of people who are purchasing insurance.
AIC projects revenues of $20M in year one, which is equivalent to 100% growth over the previous year. AIC forecasts revenue growth of 40%-60% each year on average for 10 years. After that, revenue growth is expected to slow down significantly due to market saturation.
The following table illustrates these projections:
Direct Competition: P&C Insurance Market Leaders
Indirect Competition: Banks, Other Insurance Companies, Retailers
Market Analysis Conclusion
When writing the market analysis section, it is important to provide specific data and forecasts about the industry that your company operates in. This information can help make your business plan more convincing to potential investors.
If it’s helpful, you should also discuss how your company stacks up against its competitors based on what makes it unique. In addition, you can identify any strengths or weaknesses that your company has compared to its competitors.
Based on this data, provide projections for how much revenue your company expects to generate over the next few years. Providing this information early on in the business plan will help convince investors that you know what you are talking about and your company is well-positioned to succeed.
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Other Resources for Writing Your Business Plan
How to Write a Great Business Plan Executive Summary How to Expertly Write the Company Description in Your Business Plan The Customer Analysis Section of Your Business Plan Completing the Competitive Analysis Section of Your Business Plan The Management Team Section of Your Business Plan Financial Assumptions and Your Business Plan How to Create Financial Projections for Your Business Plan Everything You Need to Know about the Business Plan Appendix Best Business Plan Software Business Plan Conclusion: Summary & Recap
Other Helpful Business Planning Articles & Templates
- 11.4 The Business Plan
- 1.1 Entrepreneurship Today
- 1.2 Entrepreneurial Vision and Goals
- 1.3 The Entrepreneurial Mindset
- Review Questions
- Discussion Questions
- Case Questions
- Suggested Resources
- 2.1 Overview of the Entrepreneurial Journey
- 2.2 The Process of Becoming an Entrepreneur
- 2.3 Entrepreneurial Pathways
- 2.4 Frameworks to Inform Your Entrepreneurial Path
- 3.1 Ethical and Legal Issues in Entrepreneurship
- 3.2 Corporate Social Responsibility and Social Entrepreneurship
- 3.3 Developing a Workplace Culture of Ethical Excellence and Accountability
- 4.1 Tools for Creativity and Innovation
- 4.2 Creativity, Innovation, and Invention: How They Differ
- 4.3 Developing Ideas, Innovations, and Inventions
- 5.1 Entrepreneurial Opportunity
- 5.2 Researching Potential Business Opportunities
- 5.3 Competitive Analysis
- 6.1 Problem Solving to Find Entrepreneurial Solutions
- 6.2 Creative Problem-Solving Process
- 6.3 Design Thinking
- 6.4 Lean Processes
- 7.1 Clarifying Your Vision, Mission, and Goals
- 7.2 Sharing Your Entrepreneurial Story
- 7.3 Developing Pitches for Various Audiences and Goals
- 7.4 Protecting Your Idea and Polishing the Pitch through Feedback
- 7.5 Reality Check: Contests and Competitions
- 8.1 Entrepreneurial Marketing and the Marketing Mix
- 8.2 Market Research, Market Opportunity Recognition, and Target Market
- 8.3 Marketing Techniques and Tools for Entrepreneurs
- 8.4 Entrepreneurial Branding
- 8.5 Marketing Strategy and the Marketing Plan
- 8.6 Sales and Customer Service
- 9.1 Overview of Entrepreneurial Finance and Accounting Strategies
- 9.2 Special Funding Strategies
- 9.3 Accounting Basics for Entrepreneurs
- 9.4 Developing Startup Financial Statements and Projections
- 10.1 Launching the Imperfect Business: Lean Startup
- 10.2 Why Early Failure Can Lead to Success Later
- 10.3 The Challenging Truth about Business Ownership
- 10.4 Managing, Following, and Adjusting the Initial Plan
- 10.5 Growth: Signs, Pains, and Cautions
- 11.1 Avoiding the “Field of Dreams” Approach
- 11.2 Designing the Business Model
- 11.3 Conducting a Feasibility Analysis
- 12.1 Building and Connecting to Networks
- 12.2 Building the Entrepreneurial Dream Team
- 12.3 Designing a Startup Operational Plan
- 13.1 Business Structures: Overview of Legal and Tax Considerations
- 13.2 Corporations
- 13.3 Partnerships and Joint Ventures
- 13.4 Limited Liability Companies
- 13.5 Sole Proprietorships
- 13.6 Additional Considerations: Capital Acquisition, Business Domicile, and Technology
- 13.7 Mitigating and Managing Risks
- 14.1 Types of Resources
- 14.2 Using the PEST Framework to Assess Resource Needs
- 14.3 Managing Resources over the Venture Life Cycle
- 15.1 Launching Your Venture
- 15.2 Making Difficult Business Decisions in Response to Challenges
- 15.3 Seeking Help or Support
- 15.4 Now What? Serving as a Mentor, Consultant, or Champion
- 15.5 Reflections: Documenting the Journey
- A | Suggested Resources
By the end of this section, you will be able to:
- Describe the different purposes of a business plan
- Describe and develop the components of a brief business plan
- Describe and develop the components of a full business plan
Unlike the brief or lean formats introduced so far, the business plan is a formal document used for the long-range planning of a company’s operation. It typically includes background information, financial information, and a summary of the business. Investors nearly always request a formal business plan because it is an integral part of their evaluation of whether to invest in a company. Although nothing in business is permanent, a business plan typically has components that are more “set in stone” than a business model canvas , which is more commonly used as a first step in the planning process and throughout the early stages of a nascent business. A business plan is likely to describe the business and industry, market strategies, sales potential, and competitive analysis, as well as the company’s long-term goals and objectives. An in-depth formal business plan would follow at later stages after various iterations to business model canvases. The business plan usually projects financial data over a three-year period and is typically required by banks or other investors to secure funding. The business plan is a roadmap for the company to follow over multiple years.
Some entrepreneurs prefer to use the canvas process instead of the business plan, whereas others use a shorter version of the business plan, submitting it to investors after several iterations. There are also entrepreneurs who use the business plan earlier in the entrepreneurial process, either preceding or concurrently with a canvas. For instance, Chris Guillebeau has a one-page business plan template in his book The $100 Startup . 48 His version is basically an extension of a napkin sketch without the detail of a full business plan. As you progress, you can also consider a brief business plan (about two pages)—if you want to support a rapid business launch—and/or a standard business plan.
As with many aspects of entrepreneurship, there are no clear hard and fast rules to achieving entrepreneurial success. You may encounter different people who want different things (canvas, summary, full business plan), and you also have flexibility in following whatever tool works best for you. Like the canvas, the various versions of the business plan are tools that will aid you in your entrepreneurial endeavor.
Business Plan Overview
Most business plans have several distinct sections ( Figure 11.16 ). The business plan can range from a few pages to twenty-five pages or more, depending on the purpose and the intended audience. For our discussion, we’ll describe a brief business plan and a standard business plan. If you are able to successfully design a business model canvas, then you will have the structure for developing a clear business plan that you can submit for financial consideration.
Both types of business plans aim at providing a picture and roadmap to follow from conception to creation. If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept.
The full business plan is aimed at executing the vision concept, dealing with the proverbial devil in the details. Developing a full business plan will assist those of you who need a more detailed and structured roadmap, or those of you with little to no background in business. The business planning process includes the business model, a feasibility analysis, and a full business plan, which we will discuss later in this section. Next, we explore how a business plan can meet several different needs.
Purposes of a Business Plan
A business plan can serve many different purposes—some internal, others external. As we discussed previously, you can use a business plan as an internal early planning device, an extension of a napkin sketch, and as a follow-up to one of the canvas tools. A business plan can be an organizational roadmap , that is, an internal planning tool and working plan that you can apply to your business in order to reach your desired goals over the course of several years. The business plan should be written by the owners of the venture, since it forces a firsthand examination of the business operations and allows them to focus on areas that need improvement.
Refer to the business venture throughout the document. Generally speaking, a business plan should not be written in the first person.
A major external purpose for the business plan is as an investment tool that outlines financial projections, becoming a document designed to attract investors. In many instances, a business plan can complement a formal investor’s pitch. In this context, the business plan is a presentation plan, intended for an outside audience that may or may not be familiar with your industry, your business, and your competitors.
You can also use your business plan as a contingency plan by outlining some “what-if” scenarios and exploring how you might respond if these scenarios unfold. Pretty Young Professional launched in November 2010 as an online resource to guide an emerging generation of female leaders. The site focused on recent female college graduates and current students searching for professional roles and those in their first professional roles. It was founded by four friends who were coworkers at the global consultancy firm McKinsey. But after positions and equity were decided among them, fundamental differences of opinion about the direction of the business emerged between two factions, according to the cofounder and former CEO Kathryn Minshew . “I think, naively, we assumed that if we kicked the can down the road on some of those things, we’d be able to sort them out,” Minshew said. Minshew went on to found a different professional site, The Muse , and took much of the editorial team of Pretty Young Professional with her. 49 Whereas greater planning potentially could have prevented the early demise of Pretty Young Professional, a change in planning led to overnight success for Joshua Esnard and The Cut Buddy team. Esnard invented and patented the plastic hair template that he was selling online out of his Fort Lauderdale garage while working a full-time job at Broward College and running a side business. Esnard had hundreds of boxes of Cut Buddies sitting in his home when he changed his marketing plan to enlist companies specializing in making videos go viral. It worked so well that a promotional video for the product garnered 8 million views in hours. The Cut Buddy sold over 4,000 products in a few hours when Esnard only had hundreds remaining. Demand greatly exceeded his supply, so Esnard had to scramble to increase manufacturing and offered customers two-for-one deals to make up for delays. This led to selling 55,000 units, generating $700,000 in sales in 2017. 50 After appearing on Shark Tank and landing a deal with Daymond John that gave the “shark” a 20-percent equity stake in return for $300,000, The Cut Buddy has added new distribution channels to include retail sales along with online commerce. Changing one aspect of a business plan—the marketing plan—yielded success for The Cut Buddy.
Link to Learning
Watch this video of Cut Buddy’s founder, Joshua Esnard, telling his company’s story to learn more.
If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept. This version is used to interest potential investors, employees, and other stakeholders, and will include a financial summary “box,” but it must have a disclaimer, and the founder/entrepreneur may need to have the people who receive it sign a nondisclosure agreement (NDA) . The full business plan is aimed at executing the vision concept, providing supporting details, and would be required by financial institutions and others as they formally become stakeholders in the venture. Both are aimed at providing a picture and roadmap to go from conception to creation.
Types of Business Plans
The brief business plan is similar to an extended executive summary from the full business plan. This concise document provides a broad overview of your entrepreneurial concept, your team members, how and why you will execute on your plans, and why you are the ones to do so. You can think of a brief business plan as a scene setter or—since we began this chapter with a film reference—as a trailer to the full movie. The brief business plan is the commercial equivalent to a trailer for Field of Dreams , whereas the full plan is the full-length movie equivalent.
Brief Business Plan or Executive Summary
As the name implies, the brief business plan or executive summary summarizes key elements of the entire business plan, such as the business concept, financial features, and current business position. The executive summary version of the business plan is your opportunity to broadly articulate the overall concept and vision of the company for yourself, for prospective investors, and for current and future employees.
A typical executive summary is generally no longer than a page, but because the brief business plan is essentially an extended executive summary, the executive summary section is vital. This is the “ask” to an investor. You should begin by clearly stating what you are asking for in the summary.
In the business concept phase, you’ll describe the business, its product, and its markets. Describe the customer segment it serves and why your company will hold a competitive advantage. This section may align roughly with the customer segments and value-proposition segments of a canvas.
Next, highlight the important financial features, including sales, profits, cash flows, and return on investment. Like the financial portion of a feasibility analysis, the financial analysis component of a business plan may typically include items like a twelve-month profit and loss projection, a three- or four-year profit and loss projection, a cash-flow projection, a projected balance sheet, and a breakeven calculation. You can explore a feasibility study and financial projections in more depth in the formal business plan. Here, you want to focus on the big picture of your numbers and what they mean.
The current business position section can furnish relevant information about you and your team members and the company at large. This is your opportunity to tell the story of how you formed the company, to describe its legal status (form of operation), and to list the principal players. In one part of the extended executive summary, you can cover your reasons for starting the business: Here is an opportunity to clearly define the needs you think you can meet and perhaps get into the pains and gains of customers. You also can provide a summary of the overall strategic direction in which you intend to take the company. Describe the company’s mission, vision, goals and objectives, overall business model, and value proposition.
Rice University’s Student Business Plan Competition, one of the largest and overall best-regarded graduate school business-plan competitions (see Telling Your Entrepreneurial Story and Pitching the Idea ), requires an executive summary of up to five pages to apply. 51 , 52 Its suggested sections are shown in Table 11.2 .
Are You Ready?
Create a brief business plan.
Fill out a canvas of your choosing for a well-known startup: Uber, Netflix, Dropbox, Etsy, Airbnb, Bird/Lime, Warby Parker, or any of the companies featured throughout this chapter or one of your choice. Then create a brief business plan for that business. See if you can find a version of the company’s actual executive summary, business plan, or canvas. Compare and contrast your vision with what the company has articulated.
- These companies are well established but is there a component of what you charted that you would advise the company to change to ensure future viability?
- Map out a contingency plan for a “what-if” scenario if one key aspect of the company or the environment it operates in were drastically is altered?
Full Business Plan
Even full business plans can vary in length, scale, and scope. Rice University sets a ten-page cap on business plans submitted for the full competition. The IndUS Entrepreneurs , one of the largest global networks of entrepreneurs, also holds business plan competitions for students through its Tie Young Entrepreneurs program. In contrast, business plans submitted for that competition can usually be up to twenty-five pages. These are just two examples. Some components may differ slightly; common elements are typically found in a formal business plan outline. The next section will provide sample components of a full business plan for a fictional business.
The executive summary should provide an overview of your business with key points and issues. Because the summary is intended to summarize the entire document, it is most helpful to write this section last, even though it comes first in sequence. The writing in this section should be especially concise. Readers should be able to understand your needs and capabilities at first glance. The section should tell the reader what you want and your “ask” should be explicitly stated in the summary.
Describe your business, its product or service, and the intended customers. Explain what will be sold, who it will be sold to, and what competitive advantages the business has. Table 11.3 shows a sample executive summary for the fictional company La Vida Lola.
This section describes the industry, your product, and the business and success factors. It should provide a current outlook as well as future trends and developments. You also should address your company’s mission, vision, goals, and objectives. Summarize your overall strategic direction, your reasons for starting the business, a description of your products and services, your business model, and your company’s value proposition. Consider including the Standard Industrial Classification/North American Industry Classification System (SIC/NAICS) code to specify the industry and insure correct identification. The industry extends beyond where the business is located and operates, and should include national and global dynamics. Table 11.4 shows a sample business description for La Vida Lola.
Industry Analysis and Market Strategies
Here you should define your market in terms of size, structure, growth prospects, trends, and sales potential. You’ll want to include your TAM and forecast the SAM . (Both these terms are discussed in Conducting a Feasibility Analysis .) This is a place to address market segmentation strategies by geography, customer attributes, or product orientation. Describe your positioning relative to your competitors’ in terms of pricing, distribution, promotion plan, and sales potential. Table 11.5 shows an example industry analysis and market strategy for La Vida Lola.
The competitive analysis is a statement of the business strategy as it relates to the competition. You want to be able to identify who are your major competitors and assess what are their market shares, markets served, strategies employed, and expected response to entry? You likely want to conduct a classic SWOT analysis (Strengths Weaknesses Opportunities Threats) and complete a competitive-strength grid or competitive matrix. Outline your company’s competitive strengths relative to those of the competition in regard to product, distribution, pricing, promotion, and advertising. What are your company’s competitive advantages and their likely impacts on its success? The key is to construct it properly for the relevant features/benefits (by weight, according to customers) and how the startup compares to incumbents. The competitive matrix should show clearly how and why the startup has a clear (if not currently measurable) competitive advantage. Some common features in the example include price, benefits, quality, type of features, locations, and distribution/sales. Sample templates are shown in Figure 11.17 and Figure 11.18 . A competitive analysis helps you create a marketing strategy that will identify assets or skills that your competitors are lacking so you can plan to fill those gaps, giving you a distinct competitive advantage. When creating a competitor analysis, it is important to focus on the key features and elements that matter to customers, rather than focusing too heavily on the entrepreneur’s idea and desires.
Operations and Management Plan
In this section, outline how you will manage your company. Describe its organizational structure. Here you can address the form of ownership and, if warranted, include an organizational chart/structure. Highlight the backgrounds, experiences, qualifications, areas of expertise, and roles of members of the management team. This is also the place to mention any other stakeholders, such as a board of directors or advisory board(s), and their relevant relationship to the founder, experience and value to help make the venture successful, and professional service firms providing management support, such as accounting services and legal counsel.
Table 11.6 shows a sample operations and management plan for La Vida Lola.
Here you should outline and describe an effective overall marketing strategy for your venture, providing details regarding pricing, promotion, advertising, distribution, media usage, public relations, and a digital presence. Fully describe your sales management plan and the composition of your sales force, along with a comprehensive and detailed budget for the marketing plan. Table 11.7 shows a sample marketing plan for La Vida Lola.
A financial plan seeks to forecast revenue and expenses; project a financial narrative; and estimate project costs, valuations, and cash flow projections. This section should present an accurate, realistic, and achievable financial plan for your venture (see Entrepreneurial Finance and Accounting for detailed discussions about conducting these projections). Include sales forecasts and income projections, pro forma financial statements ( Building the Entrepreneurial Dream Team , a breakeven analysis, and a capital budget. Identify your possible sources of financing (discussed in Conducting a Feasibility Analysis ). Figure 11.19 shows a template of cash-flow needs for La Vida Lola.
Entrepreneur In Action
Laughing man coffee.
Hugh Jackman ( Figure 11.20 ) may best be known for portraying a comic-book superhero who used his mutant abilities to protect the world from villains. But the Wolverine actor is also working to make the planet a better place for real, not through adamantium claws but through social entrepreneurship.
A love of java jolted Jackman into action in 2009, when he traveled to Ethiopia with a Christian humanitarian group to shoot a documentary about the impact of fair-trade certification on coffee growers there. He decided to launch a business and follow in the footsteps of the late Paul Newman, another famous actor turned philanthropist via food ventures.
Jackman launched Laughing Man Coffee two years later; he sold the line to Keurig in 2015. One Laughing Man Coffee café in New York continues to operate independently, investing its proceeds into charitable programs that support better housing, health, and educational initiatives within fair-trade farming communities. 55 Although the New York location is the only café, the coffee brand is still distributed, with Keurig donating an undisclosed portion of Laughing Man proceeds to those causes (whereas Jackman donates all his profits). The company initially donated its profits to World Vision, the Christian humanitarian group Jackman accompanied in 2009. In 2017, it created the Laughing Man Foundation to be more active with its money management and distribution.
- You be the entrepreneur. If you were Jackman, would you have sold the company to Keurig? Why or why not?
- Would you have started the Laughing Man Foundation?
- What else can Jackman do to aid fair-trade practices for coffee growers?
What Can You Do?
Textbooks for change.
Founded in 2014, Textbooks for Change uses a cross-compensation model, in which one customer segment pays for a product or service, and the profit from that revenue is used to provide the same product or service to another, underserved segment. Textbooks for Change partners with student organizations to collect used college textbooks, some of which are re-sold while others are donated to students in need at underserved universities across the globe. The organization has reused or recycled 250,000 textbooks, providing 220,000 students with access through seven campus partners in East Africa. This B-corp social enterprise tackles a problem and offers a solution that is directly relevant to college students like yourself. Have you observed a problem on your college campus or other campuses that is not being served properly? Could it result in a social enterprise?
Work It Out
Franchisee set out.
A franchisee of East Coast Wings, a chain with dozens of restaurants in the United States, has decided to part ways with the chain. The new store will feature the same basic sports-bar-and-restaurant concept and serve the same basic foods: chicken wings, burgers, sandwiches, and the like. The new restaurant can’t rely on the same distributors and suppliers. A new business plan is needed.
- What steps should the new restaurant take to create a new business plan?
- Should it attempt to serve the same customers? Why or why not?
This New York Times video, “An Unlikely Business Plan,” describes entrepreneurial resurgence in Detroit, Michigan.
- 48 Chris Guillebeau. The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future . New York: Crown Business/Random House, 2012.
- 49 Jonathan Chan. “What These 4 Startup Case Studies Can Teach You about Failure.” Foundr.com . July 12, 2015. https://foundr.com/4-startup-case-studies-failure/
- 50 Amy Feldman. “Inventor of the Cut Buddy Paid YouTubers to Spark Sales. He Wasn’t Ready for a Video to Go Viral.” Forbes. February 15, 2017. https://www.forbes.com/sites/forbestreptalks/2017/02/15/inventor-of-the-cut-buddy-paid-youtubers-to-spark-sales-he-wasnt-ready-for-a-video-to-go-viral/#3eb540ce798a
- 51 Jennifer Post. “National Business Plan Competitions for Entrepreneurs.” Business News Daily . August 30, 2018. https://www.businessnewsdaily.com/6902-business-plan-competitions-entrepreneurs.html
- 52 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition . March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf
- 53 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition. March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf; Based on 2019 RBPC Competition Rules and Format April 4–6, 2019. https://rbpc.rice.edu/sites/g/files/bxs806/f/2019-RBPC-Competition-Rules%20-Format.pdf
- 54 Foodstart. http://foodstart.com
- 55 “Hugh Jackman Journey to Starting a Social Enterprise Coffee Company.” Giving Compass. April 8, 2018. https://givingcompass.org/article/hugh-jackman-journey-to-starting-a-social-enterprise-coffee-company/
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What is an industry analysis.
An industry analysis is a marketing process that provides statistics about the market potential of your business products and services. This section of your plan needs to have specific information about the current state of the industry, and its target markets. An industry analysis may contain reference materials such as spreadsheets, pie charts, and bar graphs in order to represent the data.
- Library Business Research Resources
- Government Websites, Including Labour Market Information Sources
Identify your industry and provide a brief overview. You may need to explore your industry on a local, regional, provincial, national, and/or global level. Be sure to define relevant industry codes. Provide statistics and historical data about the nature of the industry and growth potential for your business, based on economic factors and conditions.
Summarize the nature of the industry. Include specific information about growth patterns, fluctuations related to the economy, and income projections. Be sure to document recent developments, news, and innovations. Also, discuss marketing strategies, and the industry's prevalent operational and management trends.
Provide a forecast for your industry. Compile economic data and industry predictions at different time intervals (5, 10, 20 years). Be sure to cite sources. Note: the type and size of the industry will determine how much information you will be able to find about a particular industry. Define if it is new and emerging, growing, maturing or declining.
Identify government regulations that affect the industry. Include any recent laws pertaining to your industry, and any licenses or authorizations you would need to conduct business in your target market. This section may include information about fees and costs involved.
Explain your unique position within the industry. Once you have completed your Competitive Analysis (in the next section) you can list the leading companies in the industry, and compile an overview of data of your direct and indirect competition. This will help you communicate your unique value proposition.
List potential limitations and risks. Write about factors that might negatively impact your business and what you foresee in the short-term and long-term future. Outline what you know about the driving forces: new regulations, technology, globalization, competitors, changing customer needs.
Talk to people! Go to tradeshows, do cold calls, talk to people in relevant associations and go to business events.
Tip: How to generate keywords to search databases
Before you access the resources and databases below, it is best practice to consider the key words you can use as search terms to find information about your industry. Follow the steps below:
- Pinpoint the main words/phrases that describe your industry. (i.e. "bar")
- Brainstorm several alternative words/phrases that will bring you additional search results. These may be direct synonyms, or tangentially related. (i.e. "pub," "nightclub," "drinking place," "tavern," "restaurant.")
Tip: How to use NAICS codes
At the start of your research, it may not be clear what specific industry you should be examining. A good strategy is to find out if your business idea is classified in an industrial classification system. These systems organize industries by assigning them a numeric code. The most commonly used system is the North American Industry Classification System (NAICS). Once you know your Industry Classification Code you can use this number to :
- Find industry-specific statistics on government websites or in library databases
- Generate lists of competitors in company directories
Another common classification system is the Standard Industry Code (SIC). NAICS have most replaced the SIC, but the SIC is still used by some commercial databases. Finding and using these classification systems to effectively search can be tricky, so don't hesitate to ask a librarian for help.
You can keyword search for your industry NAICS code here:
Search or browse all NAICS or SIC codes on the NAICS Association website . Some NAICS codes are different in Canada — you can search by keyword or browse Canadian NAICS codes at Statistics Canada or Canadian Industry Statistics. To search for a SIC code using a NAICS code and vice versa, use the NAICS & SIC Crosswalks.
For more information about planning your industry research, including identifying your industry codes, check out the video tutorial for Module 3: Planning Your Industry Research .
Don't forget to take a look at our Industry Guides for detailed industry-specific market research resources!
Library Business Research Resources:
Business resources at academic libraries .
Colleges and Universities with business programs will have useful business collections you may be able to get access to through their academic library. Often these academic libraries can provide the general public with access to their collections, which include electronic resources like databases and e-books. For example, they could have alumni or community cards, and can provide temporary "guest" passes in certain situations. Contact your local college or university library to see what they can provide. Please note: you probably will not get access to their electronic resources with remote access.
UBC Library Business Databases
How to access: If you are a UBC student, staff, faculty or in-person library visitor you may have access to business databases through the David Lam Management Research Library and Canaccord Learning Commons through the links below.
Full Listing By Title or Full Listing By Subject
There are two different ways to identify databases: Use "by title" if you already know the name; otherwise you can search the list "by subject" to find starting places for undertaking market research, finding articles or researching companies. To learn more about how you can access library resources if you are a community user or temporary visitor, check out the UBC Library Community Users & Visitors Guide . Community users and temporary visitors may have additional access restrictions to specific databases because of license agreements.
Discovering where you can access the information you need to complete your research can be tricky. Below, we have a few examples of potential sources that collect the type of information you will need.
Ibis World Industry Reports
Business Source Complete
Canadian Business and Current Affairs
Trade Publications, Journals, and Magazines:
Industry and trade associations work to keep people within an industry informed about the industry through newsletters, magazines, and trade fairs. The information can range from a detailed focus on a specific product line, to general coverage of an industry or key business risk and trends. Industry and professional association websites can be excellent sources of free information whether or not you are a member of that organization. In addition, you can find news about industries via government websites, news databases, as well as news directories and search engines.
Ulrichsweb Provides publisher information on more than 300,000 periodicals of all types. Use this to create a list of relevant ones to check out in your industry. Search by keyword, publisher or geographic location.
Trade associations often publish free industry newsletters that are excellent sources of information for your business plan. Such newsletters often have articles that cover in-depth topics on business management, manufacturing practices, how-tos, current industry news and much more. One good reason to create a list of relevant associations is to see if any of them publish a monthly industry newsletter on their website.
ASAE Gateway to Associations Directory Use this directory to search for an association by name, interest area, or international geographic location (including Canada and BC). You can also search using a combination of various fields.
Associations Canada This library database covers Canadian, as well as some international, industry, professional or special interest associations. Searchable by type or keyword. You can use this to identify key associations' websites and search for freely available newsletters, blogs or reports they they may publish on your industry. Please contact your local public or research library for access. Use of your library card may be required for online access to this resource. Print copies may also be available for in-person users.
Web searching tip: Use Google or another search engine to search for industry associations relevant to your industry in your location. If you don't find a relevant industry association, try broadening your geographic area (e.g. from Vancouver to British Columbia, or from Canada to the U.S. or international). If your industry is very specialized or new, look for associations for broader or similar industries.
Government Websites, Including Labour Market Information Sources:
BC Stats | Current reports and statistics from British Columbia's central statistical agency including labour market information, economic statistics and bankruptcies. Start by searching their Industry section and narrowing by industry type or go to the Business, Industry & Trade page to skim all the different business-related topics.
WorkBC | Find current employment outlooks, labour market information, relevant links, and a geographic representation of the BC workforce. Start by searching your Industry Profile .
Innovation, Science, and Economic Development Canada Provides market research, industry statistics, licensing information for intellectual property, and information about doing business internationally. The Industry Canada site features interactive applications such as customizable trade reports, cost calculators, and online business planning guides. You can also search broad Canadian industry statistics .
Entrepreneurship Indicators Database This database is intended to provide comprehensive business demography statistics and performance indicators for enterprises in Canada. This information is available upon request.
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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:
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:
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
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:
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:
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
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
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.
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.
On a similar note...
Free PDF Business Plan Templates and Samples
By Joe Weller | September 9, 2020
We’ve gathered the most useful collection of business plan PDF templates and samples, including options for organizations of any size and type.
On this page, you’ll find free PDF templates for a simple business plan , small business plan , startup business plan , and more.
Simple Business Plan PDF Templates
These simple business plan PDF templates are ready to use and customizable to fit the needs of any organization.
Simple Business Plan Template PDF
This template contains a traditional business plan layout to help you map out each aspect, from a company overview to sales projections and a marketing strategy. This template includes a table of contents, as well as space for financing details that startups looking for funding may need to provide.
Download Simple Business Plan Template - PDF
Lean Business Plan Template PDF
This scannable business plan template allows you to easily identify the most important elements of your plan. Use this template to outline key details pertaining to your business and industry, product or service offerings, target customer segments (and channels to reach them), and to identify sources of revenue. There is also space to include key performance metrics and a timeline of activities.
Download Lean Business Plan Template - PDF
Simple 30-60-90 Day Business Plan Template PDF
This template is designed to help you develop and implement a 90-day business plan by breaking it down into manageable chunks of time. Use the space provided to detail your main goals and deliverables for each timeframe, and then add the steps necessary to achieve your objectives. Assign task ownership and enter deadlines to ensure your plan stays on track every step of the way.
Download Simple 30-60-90 Day Business Plan Template
PDF | Smartsheet
One-Page Business Plan PDF Templates
The following single page business plan templates are designed to help you download your key ideas on paper, and can be used to create a pitch document to gain buy-in from partners, investors, and stakeholders.
One-Page Business Plan Template PDF
Use this one-page template to summarize each aspect of your business concept in a clear and concise manner. Define the who, what, why, and how of your idea, and use the space at the bottom to create a SWOT analysis (strengths, weaknesses, opportunities, and threats) for your business.
Download One-Page Business Plan Template
If you’re looking for a specific type of analysis, check out our collection of SWOT templates .
One-Page Lean Business Plan PDF
This one-page business plan template employs the Lean management concept, and encourages you to focus on the key assumptions of your business idea. A Lean plan is not stagnant, so update it as goals and objectives change — the visual timeline at the bottom is ideal for detailing milestones.
Download One-Page Lean Business Plan Template - PDF
One-Page 30-60-90 Day Business Plan Template
Use this business plan template to identify main goals and outline the necessary activities to achieve those goals in 30, 60, and 90-day increments. Easily customize this template to fit your needs while you track the status of each task and goal to keep your business plan on target.
Download One-Page 30-60-90 Day Business Plan Template
For additional single page plans, including an example of a one-page business plan , visit " One-Page Business Plan Templates with a Quick How-To Guide ."
Small Business Plan PDF Templates
These business plan templates are useful for small businesses that want to map out a way to meet organizational objectives, including how to structure, operate, and expand their business.
Simple Small Business Plan Template PDF
A small business can use this template to outline each critical component of a business plan. There is space to provide details about product or service offerings, target audience, customer reach strategy, competitive advantage, and more. Plus, there is space at the bottom of the document to include a SWOT analysis. Once complete, you can use the template as a basis to build out a more elaborate plan.
Download Simple Small Business Plan Template
Fill-In-the-Blank Small Business Plan Template PDF
This fill-in-the-blank template walks you through each section of a business plan. Build upon the fill-in-the-blank content provided in each section to add information about your company, business idea, market analysis, implementation plan, timeline of milestones, and much more.
Download Fill-In-the-Blank Small Business Plan Template - PDF
One-Page Small Business Plan Template PDF
Use this one-page template to create a scannable business plan that highlights the most essential parts of your organization’s strategy. Provide your business overview and management team details at the top, and then outline the target market, market size, competitive offerings, key objectives and success metrics, financial plan, and more.
Download One-Page Business Plan for Small Business - PDF
Startup Business Plan PDF Templates
Startups can use these business plan templates to check the feasibility of their idea, and articulate their vision to potential investors.
Startup Business Plan Template
Use this business plan template to organize and prepare each essential component of your startup plan. Outline key details relevant to your concept and organization, including your mission and vision statement, product or services offered, pricing structure, marketing strategy, financial plan, and more.
Download Startup Business Plan Template
Sample 30-60-90 Day Business Plan for Startup
Startups can use this sample 30-60-90 day plan to establish main goals and deliverables spanning a 90-day period. Customize the sample goals, deliverables, and activities provided on this template according to the needs of your business. Then, assign task owners and set due dates to help ensure your 90-day plan stays on track.
Download Sample 30-60-90 Day Business Plan for Startup Template
For additional resources to create your plan, visit “ Free Startup Business Plan Templates and Examples .”
Nonprofit Business Plan PDF Templates
Use these business plan PDF templates to outline your organization’s mission, your plan to make a positive impact in your community, and the steps you will take to achieve your nonprofit’s goals.
Nonprofit Business Plan Template PDF
Use this customizable PDF template to develop a plan that details your organization’s purpose, objectives, and strategy. This template features a table of contents, with room to include your nonprofit’s mission and vision, key team and board members, program offerings, a market and industry analysis, promotional plan, financial plan, and more. This template also contains a visual timeline to display historic and future milestones.
Download Nonprofit Business Plan Template - PDF
One-Page Business Plan for Nonprofit Organization PDF
This one-page plan serves as a good starting point for established and startup nonprofit organizations to jot down their fundamental goals and objectives. This template contains all the essential aspects of a business plan in a concise and scannable format, including the organizational overview, purpose, promotional plan, key objectives and success metrics, fundraising goals, and more.
Download One-Page Business Plan for Nonprofit Organization Template - PDF
Fill-In-the-Blank Business Plan PDF Templates
Use these fill-in-the-blank templates as a foundation for creating a comprehensive roadmap that aligns your business strategy with your marketing, sales, and financial goals.
Simple Fill-In-the-Blank Business Plan PDF
The fill-in-the-blank template contains all the vital parts of a business plan, with sample content that you can customize to fit your needs. There is room to include an executive summary, business description, market analysis, marketing plan, operations plan, financial statements, and more.
Download Simple Fill-In-the-Blank Business Plan Template - PDF
Lean Fill-In-the-Blank Business Plan PDF
This business plan is designed with a Lean approach that encourages you to clarify and communicate your business idea in a clear and concise manner. This single page fill-in-the-blank template includes space to provide details about your management team, the problem you're solving, the solution, target customers, cost structure, and revenue streams. Use the timeline at the bottom to produce a visual illustration of key milestones.
Download Fill-In-the-Blank Lean Business Plan Template - PDF
For additional resources, take a look at " Free Fill-In-the-Blank Business Plan Templates ."
Sample Business Plan PDF Templates
These sample business plan PDF templates can help you to develop an organized, thorough, and professional business plan.
Business Plan Sample
This business plan example demonstrates a plan for a fictional food truck company. The sample includes all of the elements in a traditional business plan, which makes it a useful starting point for developing a plan specific to your business needs.
Download Basic Business Plan Sample - PDF
Sample Business Plan Outline Template
Use this sample outline as a starting point for your business plan. Shorten or expand the outline depending on your organization’s needs, and use it to develop a table of contents for your finalized plan.
Download Sample Business Plan Outline Template - PDF
Sample Business Financial Plan Template
Use this sample template to develop the financial portion of your business plan. The template provides space to include a financial overview, key assumptions, financial indicators, and business ratios. Complete the break-even analysis and add your financial statements to help prove the viability of your organization’s business plan.
Download Business Financial Plan Template
PDF | Smartsheet
For more free, downloadable templates for all aspects of your business, check out “ Free Business Templates for Organizations of All Sizes .”
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Industry Analysis – Definition, Types, Examples & How-to Guide
Studying the market trends and the competition level is important for businesses because it helps them to lay out their future strategies. Therefore, they use various tools and methods to achieve their goals. Industry analysis is the same process. Today, we’ll discuss industry analysis, its types, examples, and guide.
Table of Contents
What is Industry Analysis?
Industry analysis is a market evaluation tool that businesses and companies use to comprehend and analyze the degree of competition in a certain industry. It helps you to understand the market position of the industry. Like the external factors impacting the industry, credit system, technological changes and how shaping the future, other competitive developing industries, competition level within the industry, and statistics of supply and demand.
Industry analysis helps an entrepreneur or a startup company to comprehend the position of a business relevant to the other competitive businesses in the industry. Most importantly, it helps you to recognize the upcoming threats and opportunities and how you can handle them with your strong points. The only way to survive in today’s business environment is to distinguish yourself from the competitors within the industry.
Types of Industry Analysis
Businesses and companies use three main tools and methods to perform industry analysis, and they’re as follows;
Competitive Force Model (Porter’s Five Forces)
Michael Porter introduced this model in the 1980s and it goes by the name of Porter’s 5 Forces. It analyzes the five forces impacting the industry. They are as follows;
- The intensity of Industry Rivals. The businesses operating in the same industry and their market share makes them industry rivals. Some of the factors that make the competition intense are; increasing fixed cost, lower differentiation, and high exit cost.
- The threat of Potential Entrants. The entrance of the new business in the industry makes the business environment competitive. If the entrance is easier, then it makes the business environment risky. If the entrance is difficult, then they could enjoy benefits for a long time.
- Bargaining Power of Supplier. If a business depends on the supplies of suppliers, then they would have a significant influence over your businesses. It could directly impact the price and quality of your product.
- Bargaining Power of Buyer. Here the customers have more negotiating power over the business. They would demand discounts, better quality, and economical price. It usually happens when there are more competitors in the industry.
- Threats of Substitute Products. It’s when competitive businesses are offering similar substitute products of the other industry. A business usually has to face competitors from various industries and they impact your revenue stream. However, the substitute’s products are of two types; same product features with the higher price and same product features with lower price.
SWOT analysis comprises strengths, weaknesses, opportunities, and threats, and its analysis studies the impact on the business. It further consists of two parts;
- Internal Factors. The strengths and weaknesses fall under the category of internal factors. They exist within any business and continue to play their role.
- External Factors. The opportunities and threats are the external factors. They tell us the impact of potential happenings and how the company should react. Now it depends on the management whether it has the ability to exploit the opportunities and ignore threats.
PESTLE analysis comprises six macro-environmental factors like political, economical, social, technological, legal, and environmental factors.
- Political. Political factors mean government regulations, trade policies, tariffs, and the country’s overall stable environment.
- Economical. Economical factors include revenue, GDP, net income, import and exports, taxation, unemployment, growth rate, interest rate, and many other factors.
- Social. The social factor comprises fashion, trends, shopping, attitude and behavior, demography, healthy standards, and cultures.
- Technological. Technological factors consist of research and development, latest innovation and creativity, internet, and digital tech trends.
- Legal. Legal factors comprise labor laws, regulations, minimum wage, employment contracts, paychecks, leaves, and other issues.
- Environmental. The environmental factor comprises environmental issues like deforestation, pollution, carbon emission, soil degradation, and others.
Reasons to Perform an Industry Analysis
Industry analysis allows you to have an insight into the competitive business environment. The weaknesses of your competitors would be your strong suits. You can integrate such information to make the marketing plan to grow your business.
The result of industry analysis provides you an insight into the future growth of your business. If the report tells you upcoming threats, then you can take preventive measures to avoid them.
The analysis confirms and ensures the credibility of your business, and it would help you attract investors. It means that you’re familiar with competitors and knows what your customers want.
How to Perform Industry Analysis Effectively
Review available documented/reports.
You should take some time to find and study already published reports relevant to your industry. You would probably find a well-detailed report, and studying it would answer your questions. It doesn’t mean that you should completely rely on such published reports.
Therefore, you should choose the most report of your industry. It’s because trends and statistics change over time. If you rely on the old report, it won’t give you conclusive results.
Carefully Choose the Industry You Analyze
You must select the most relevant industry for your business. It’s because every industry has got many sub-categories. For instance, a chemical industry would have sub-categories of pesticides, organic, inorganic, and so on.
Come up with the Supply and Demand of Industry
Supply and demand play a significant role in controlling the market. You should study the past trends and product and product scenarios, and the findings would help you to predict the future.
Know Your Competitors
You should consider studying your competitors and their expectations and plans from the market. Porter’s 5 forces model would help you in this regard.
Follow Recent Developments in the Industry
Most importantly, you should study the macro-environmental factors that could impact your industry. Like the technological development, the latest tech trends, and technology innovation would impact many businesses worldwide.
Focus on dynamics of the Industry
The industry analysis should focus on the particular industry in question and understand the various dynamics of the industry. It should be direct, to the point, and in-depth. For instance, if your focus industry is aluminum, then you should be aware of the per capita consumption within the industry along with production and total consumption.
Examples and Templates of Industry Analysis
If you want to study the industry analysis of other businesses relevant to the industry as an example, it’s because it helps business owners to understand the position of their business. It answers them that how they can get a competitive edge over competitors.
- Industry Analysis Example, Templates, and Reports
Advantages of Industry Analysis
- It helps you to touch the unexplored opportunities
- It helps startup companies to know the position of their business relevant to the competitors
- Its focus is to point out the opportunities and threats
- It helps you to find out those points that could provide you the best results
- It helps you to develop a competitive strategy that would defend you in the competition
- It helps you to evaluate the profitability of the relevant industries
Disadvantages of Industry Analysis
- Misinterpretation of the statistics and data could lead you to make the wrong decision
- It’s a one-sided approach and it doesn’t guarantee success
- If inflation decreases the sale and company’s revenue stream, it would badly impact the report
- Season factors usually have a good and bad impact on the business, if the interpreter doesn’t consider these factors, it would impact the conclusions.
About The Author
Ahsan Ali Shaw
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Autumn statement 2023: key points at a glance
Jeremy Hunt has announced his financial update – here are the main points, with political analysis
- UK politics live – latest updates
- Hunt announces sweeping tax cuts for firms and workers
Hunt’s opening remarks
Jeremy Hunt says the government has taken difficult decisions to put the economy back on track and halve inflation but “the work is not done”. The chancellor says his priorities are to avoid big government spending and high tax, and instead cut taxes and “reward hard work” with 110 “growth measures” for business.
Aletha Adu, political correspondent: The chancellor opens his second autumn statement with a few attempted jabs at the Labour party, saying the government will not give the unions “unaffordable pay offers”, not ban new gas and oil exploration or increase borrowing by £28bn a year. Labour’s £28bn “green prosperity plan” is the party’s biggest single spending commitment; that has already been watered down.
Before he kicked off with economic forecasts, Hunt hoped to create more distance between the Conservatives and Labour by using the moment to express his horror at the Hamas attack in Israel on 7 October and announc ing up to £7m a year over the next few years for organisations such as the Holocaust Educational Trust to tackle antisemitism in schools and universities.
Hunt says he will cut the main 12% rate of employee national insurance contributions by two percentage points to 10%.
This tax cut will be take effect from 6 January 2024, the chancellor says.
He says this will affect 28 million people, saving someone on the average salary £450.
Aletha Adu, political correspondent: While the Tories have achieved their manifesto commitment of eradicating low pay by 2024 with its “national living wage” increase, Tory MPs across all sides of the party will be concerned that they have little to say to their constituents on which measures give them immediate financial relief. Hunt’s widely trailed national insurance cut will take effect from January, but frozen tax thresholds the chancellor announced at his first autumn statement last year means the Conservatives will be able to demonstrate their attempts to help working people, but low -earning workers may not feel the full benefits.
Hunt says government spending on public services will take a “responsible approach” and focus on “tackling waste”.
The OBR says the measures will result in a £19bn reduction in spending on public services, after accounting for inflation.
Aletha Adu, political correspondent: Hunt said he wanted to create a “more productive state not a bigger one”, as he announced plans to reform public services. But this has left him open to attack from Labour, the unions and ultimately voters who have said in recent polls the Conservatives have left their public services at the brink thanks to years of underfunding.
The chancellor says forecasts from the Office for Budget Responsibility (OBR) show the economy will grow by 0.6% this year and 0.7% next.
It is now 1.8% larger than it was before the Covid-19 pandemic, according to the official figures, he says.
GDP will then grow 1.4% in 2025, and 1.9% in 2026 and 2% in 2027 and 1.7% in 2028.
In March, the OBR had forecast the economy would shrink by 0.2% in 2023, before growing by 1.8% in 2024, 2.5 % in 2025, 2.1% in 2026 and 1.9% in 2027.
The wider picture of “slower growth from a higher starting point” means that compared with March, the OBR improved its forecast for GDP growth in 2027 by only 0.6%.
Aletha Adu, political correspondent: In what is meant to be an uplifting statement that could be the last before the next general election, Hunt leaned on the Office for Budget Responsibility forecast claiming the 110 measures announced will raise business investment, get more people into work, reduce inflation next year and increase GDP. The chancellor sought to portray the prime minister as getting the job done, in order to charm voters, suggesting Sunak has already ticked off three of his pledges.
Inflation is expected to fall to 2.8% by the end of 2024, according to the spending watchdog, down from 11.1% last year when Hunt and Rishi Sunak took office.
The spending watchdog now expects inflation to stay “higher for longer” and that it will not drop to the Bank of England’s target of 2% until mid-2025. This is a year later than it expected in March.
Higher inflation will keep interest rates elevated, the OBR says. It expects the central bank’s key interest rate to stick at about 4% until 2028, rather than drop to 3%, at it predicted in the spring.
Aletha Adu, political correspondent: The Conservatives have already popped the champagne over the fall in inflation rate last week . In an attempt to shut down recent polls that suggest Sunak is seen as less competent on economic affairs than most recent Conservative prime ministers, the chancellor did not lead with the fall in inflation rate but a sharp personal swipe on the shadow chancellor, Rachel Reeves, who has been viewed positively by voters as a politician who is economically competent and responsible, according to recent surveys. Hunt relies on what will become a popular Tory attack line in the run-up to the next election, calling Reeves a “copy and paste” chancellor. “My conference speech was before hers, so all she had to do was a bit of copy and pasting, which I’ve heard she’s good at,” he says.
Wages and benefits
Hunt says he is making the biggest set of welfare reforms in a decade and will get a further 200,000 people into work.
People claiming benefits will face mandatory work experience if they do not find a job within 18 months.
As pre-announced, the “national living wage” will increase by more than a pound an hour from April to £11.44. It will also be extended to 21-year-olds.
Benefits will be increased by 6.7%, and there will be tougher requirements for those who claim them to look for work.
The state pension will be increased by 8.5%.
Hunt says he will raise the local housing allowance, which has been frozen since 2020, in a measure worth £800 for some households next year.
Aletha Adu, political correspondent: The rise in benefits and unfreezing of housing benefits may bring sweet relief to many moderate Tories who were concerned the chancellor’s statement would struggle to shatter claims that the Conservatives are completely out of touch with the struggles of vulnerable people. But the uncertainty placed on these benefits, and the pressure placed on struggling households as a result, is a feeling many Tory MPs fear their constituents will not be able to forget at the ballot box.
Creating more political traps for Labour, Hunt confirmed benefit sanctions that will certainly appease rightwing Tory MPs but concern many who already believe 13 years of Conservative governments have failed to invest in healthcare and public services, increasing the rise in long-term sickness and also destroying the barely there safety net for the most vulnerable.
Hunt says headline debt is to be worth 94% of GDP by the end of the forecast period, lower than forecast by the OBR in March.
In cash terms, the OBR estimates the budget deficit – the gap between spending and income – is 4.5% of GDP in 2023-24.
In its previous forecasts in March, the OBR had estimated borrowing would be 5.1% of GDP or £132bn in cash terms, in 2023-24.
Overall, the OBR says that the course for borrowing in the next five years is “little changed” from March, as any improvement has been wiped out by the chancellor’s new measures.
Aletha Adu, political correspondent: The chancellor said the government had “supported families with rising bills, cut borrowing and halved inflation”. But it has been noted that Hunt may fail to meet his overall target of reducing debt, while persuading voters that the Tories are making long-term decisions for a brighter future, over the next five years if fuel duty is kept frozen.
Hunt will make so-called full expensing permanent. This allows businesses to offset investment in items such as new IT equipment and factory machinery against tax.
The chancellor adds that the total package of measures will help increase business investment by about 1% of GDP.
Hunt says he wants to reform taxes paid by self-employed people, and will abolish their “class 2” national insurance contributions, which count towards their state pension entitlements. This will cut taxes for 2 million people, he says. “Class 4” contributions will be cut by one percentage point. Together these will be worth £350 a year.
There will be a business rates discount for hospitality, retail and leisure worth £4.3bn.
Aletha Adu, political correspondent: These tax cuts will be celebrated by Tory MPs in the “red wall” who had urged Hunt to focus on growth and help small businesses that have been forced to pay more tax upfront in a faster pace than expected. The cuts have also allowed the Tories to open another dividing line from Labour as Hunt billed the “full expensing” scheme for businesses introduced in March will become permanent, the chancellor confirmed, calling it the “largest business tax cut in modern British history”.
The chancellor will invest an extra £4.5bn between 2025 and 2030 in manufacturing.
About £1m will go to aerospace companies and businesses working on green technologies.
Hunt says he will accept recommendations from a review of foreign direct investment into the UK, carried out by the former business minister Lord Harrington.
He says there will be a new “investment zone” in Wrexham, Wales, in an attempt to increase employment in the area. There will be three others in England: in Greater Manchester, and the West and east Midlands.
The chancellor says he will explore options for the sale of some of the government’s stake in NatWest. This will be done through a “retail share offer”.
Aletha Adu, political correspondent: The chancellor’s attempt to bill this statement as one filled with growth measures may struggle to fly very far as Reeves and other opposition parties have continued to highlight the economic failures of previous Conservative governments. A number of Conservative MPs have already noted their fears that the economy’s long-term growth prospects still have a way to go.
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- Jeremy Hunt
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