A business plan includes a brief industry overview that helps readers understand the history of your firm in the context of recent industry trends and leads into an analysis of your strategies for the future.
Coming as it does the beginning of the plan, if you cut and paste boiler plate language, you’ll likely lose your reader’s interest long before he or she gets to the part where you ask them to support your mission. Moreover, if this section is just filler because you haven’t actually sat down to determine your strategic direction, that’s a sign that maybe your business isn’t yet ready to roll out.
Christina Reddin and the team at the Motus business strategy and development firm in Grand Junction have more than 25 years of consulting experience, which often begins with clients providing a corporate history and asking the burning question — “Where do we go from here?”
“It is vital to understand the context in which your business operates in order to develop an effective strategy for growth,” Reddin said. “Is your industry growing or in decline? Are businesses in your sector consolidating with larger players buying up smaller ones? Or is the sector diversifying as new players enter the market? Do you operate in a mature industry where there is steady demand for known goods and services? Or is your industry experiencing a lot of disruption and variances? The nature of the industry is important to understand because it shapes how you enter a market and what clients you target.”
The Motus team knows that if an industry experiences growth, this means something in the market has changed. Either existing customers want more or the sector has attracted new customers. While it’s good to see revenue figures climbing, you’d better be able to explain what’s really behind the growth if you want your business to be a part of that growth. Is your industry gaining sales because customers have needs and see the existing product offering as the only solution or because industry players are doing a great job delivering on their needs?
“From a new business perspective, growing market segments with poor customer satisfaction provide a ripe opportunity for a new business to jump in and snatch up business,” Reddin said.
For established businesses, the challenge is to make sure you don’t leave a door open for new competitors to enter. Take the time to conduct your industry research to understand the causes of change so you can adjust and adapt appropriately.
The industry overview section of a business plan gives you an opportunity to don your own management consulting hat for a day. This section should make a strong case for exactly why your industry is the right place for you to be operating a business. To do this, you need to answer the question “What do you do best?” Think about your ideal clients and how you want to proceed with their relationships. As you look to the future, do you want to expand by creating add-on sales or selling more things to existing clients? Another way to grow is to invest in your marketing efforts to increase market awareness, bringing in more ideal clients to serve. A third strategy tests new waters, selling the same products or services to customers in a new region or specialty group. Finally, larger organizations could be looking for opportunities to diversify their revenue streams and start new product categories or services that takes what you do best in a different direction.
If you weren’t born with natural management consulting skills, online tools can help you develop the habit of asking the right questions. Motus founders Christina Reddin and Andrew BE share great ideas on their own blog at www.ThinkMotus.com. You also can stop by the Mesa County Library and ask for help using the business research databases available there.
For additional reading on industry research, read the online articles at www.investopedia.com/university/business-plan/business-plan4.asp and www.inc.com/articles/1999/12/15964.html
The industry overview should meld your experience and vision into a cohesive plan that takes advantage of current trends in your field. Ideally, readers will have a sense of inevitability after reading this section. Your vision will make them want to help you. Knowing why you’re perfectly suited to bring your solution to market, your strategic plan should give them the confidence to know you’re positioned for success with your new endeavor.