Business Plan is a document to be prepared by the entrepreneurs themselves and not outsourced as they are giving shape to their ideas and they have to execute their plans. Planning is an essential part of any business activity. The entrepreneur should plan how much of each resource is required to convert his idea into a viable business.
A detailed plan is required especially if you want to source external funding. Further, if you are a B-B supplier your customers may want to look at your plans before they can commit for long term relationship.
Market and customers are synonymous. You should have an in-depth understanding of the customer needs and also how their needs are currently being fulfilled by your competitors. Why will customers switch over to your product or services and what is your unique selling proposition?
This is required even if you are a startup entrepreneur and not planning to have a formal plan document. A good market analysis will help you with a clear vision while attracting investors. It helps you avoid pitfalls and bring in more customers. Thus market analysis is one of the critical components of any business plan.
The following factors have to be taken into account for preparing a detailed market analysis.
“If there is no competition, there is possibly no market”.- ---- Brian Wood
“One of the most critical sections of your business plan is your market analysis”- Tim Berry
Thanks to Prof.Ramachandran, Kavil-Clinical Professor-Executive Director, Thomas Schmidheiny Centre for Family Enterprise, ISB Hyderabad for some of the inputs.
1. Shampoos in Sachets
This was launched by an Indian company pricing it at 2 cents as their market analysis showed that people earning less than $2 per day could not afford to buy a bottle of shampoo. This idea revolutionized the entire industry across all segments. Further this has become an important concept. The late Prof. CK. Prahalad propounded this idea in his book – “ Fortune at the bottom of the pyramid” .
2. Play School:
An entrepreneur wanted to setup a second play school in another part of the same metro. She wanted to fix annual fees at INR 50000. She did a market analysis and to her surprise found that market was willing to pay only INR 30000
However for a startup business, industry analysis
may not be needed but the competitor’s analysis will be required