Business Plan Research

Business Plan Economic and Industry Overview

If you were writing a formal business plan for submission to a financial institution you would be doing some heavy-duty research in this area to prove, basically, that the trends are moving in a direction that supports your business concept. While you won't need to go to the same lengths in researching your home base business idea, you will still need to research industry trends and economic outlooks.

You can find the information you need at your local library. Look for articles about your industry (the broad category of similar businesses to yours) in business magazines, or business newspapers like the Wall Street Journal. Look for trade magazines for your industry. Of course, search the Internet.

Business Plan Market and Competition

Competitor research is incredibly important, yet the majority of work from home businesses give it little attention. Many start out with totally incorrect mental pictures of what they are up against. I've had clients who thought they had developed a unique home base business idea, only to have their research reveal dozens of others operating, essentially, the same business. Others believed they had one, or maybe two, major competitors before their research revealed the truth.

It is critical that you make yourself aware, early, of the depth and breadth of the competition you will face. Learn what your competitors charge, learn what they are doing right and adopt those strategies as your own. Learn where they are missing the mark with their pricing, service, or product mix and use that information to create your niche. Pay attention to both direct (those in exactly the same business) competitors, and indirect (those offering different products or services that can still fill your customers needs) competitors.

Lastly, determine your market share. How big is your target market? How many people share it with you. All things being equal, what is your fair share of the market? Apply the Pareto Principle. You are the "new kid on the block" so you'll be among the 80% of the businesses sharing 20% of the market - at least in the beginning. Don't be negative, but be realistic. Is there a large enough market, shared by a small enough competitor pool, for you to reach your financial and business goals?

Mistakes People make when doing Business Plan Research

1. Failing to research objectively. Many people decide on a business, and then go and find research to support that decision. That isn't what you want to do. To research properly you must look for information about your business idea - good, bad and indifferent - then decide based on what you have learned whether the idea is feasible or not. In research, like anything else, you find what you look for. If you overlook information that doesn't fit your preconceptions you may be setting yourself up for failure.

2. Not doing enough research. You can research too much, but that is seldom the problem. Research can be tedious, and boring. It can feel like you are wasting your time because you aren't "doing" business, you are only researching it. Don't fall into that trap. Get enough information to make a sound decision, based on objective data.

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