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Step 3 - Description of The Market

In this part of the business plan you must:

  • Describe your customer as precisely as possible
  • Convince the reader that you understand the needs of your customers

Questions to ask

There are a lot of questions that could be asked in order to establish a clear picture of your customer.

  • How many customers can there potentially be?
  • Do they live in the neighbourhood or in the urban area, in the province, in the country, in Asia or all over the world?
  • Are they men, women, young children, teens, adults or the elderly?
  • What do they do in their spare time?
  • What is the limit they are willing to pay for the product?

Competitors

In the market you also find competitors. You have to find out what you are up against.

  • On what level is the quality of the competitor’s product?
  • What is the price? How big is their turnover?
  • How is their marketing and what is their website like?
  • How is their product development?
  • Where are their weak points?

Ways of research

In order to structure your collecting of information on potential customers, you can make a distinction between:

  • Desk research – what you can find from your desk
  • Field research – ask customers out in the field

Questions in business plan

In the business plan template you must answer questions about the following issues:

Consumers

Usually, there is a notable difference in purchasing patterns between consumers and corporate customers.
Generally, consumers are less rational than corporate customers when deciding which products to buy.

Which purchasing behaviour does your customer have?

Corporate customers

There is a notable difference between selling to companies and private individuals.
How does your corporate customer decide where to purchase its products?

Realistic number of customers

It can be fairly easy to estimate the potential amount of customers. But how many will actually want to take money out of their wallet and pay you for your product or service? This is much more difficult to estimate.

Can you estimate your number of realistic customers?

Competitive parameters

Competitive parameters are the things that make the customer buy a specific product. Depending on the product, the competitive parameters will be different. Different lines of business have different parameters.

Which competitive parameters are essential in your industry?

Possibilities and threats in the market

Sometimes the market hands a company possibilities it was not previously aware of. For instance, the government could pass a new law saying that everyone must wear a mask protecting themselves against smog. If you are selling masks, this law has given you a huge selling possibility.

Also, things in the world affect the market. A catastrophe like an explosion in a chemical factory that pollutes a river, changing fashion trends, or more purchasing power in society in general.

Which possibilities and threats do you foresee in your market?

Download business plan template

Go to Download Center and find the template in which you can write your own business plan.


Losers make excuses, winners makes progress.
- Brian Tracy, motivational speaker and author

Download Business Plan templates
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Step 1 Entrepreneur /Team Resources
Step 2 Product or Services
step 3 Description of the Market
Step 4 Sales and Marketing
Step 5 Organising your Company
Step 6 Business Development
Step 7 Budgets
Step 8 Financing
Step 9 Business Concept
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