It’s easy enough to say you are going to start a new business. Just find a product (or multiple products) to sell, and open your store to the public. Or you could simply start selling your expertise as a service.
However, starting a new small business should be more than hanging the proverbial shingle above your door. You need to know specifics about your industry. How well are you prepared?
Why Study Your Industry?
What is there to glean from industry analysis? A tremendous amount of information that you can use to your advantage and make decisions that help your small business succeed!
Here are a few benefits to keeping your ear to the ground about your chosen small business industry:
Your business strategy – You can open your doors day after day and hope that customers will show up and your business will stay alive. However, with a sound strategy, you are more in control of the destiny of your small business. Using industry research and analysis you can form a strategy that helps give you the edge against the competition and get customers in your door.
Your business plan – All companies, big or small, should not operate without a plan. A strategy gives you operational goals, but a business plan is your entire blueprint of why you’re in business, what you sell, who’s in charge, identified competition, and projected financial goals.
Industry and product trends – Every product has a life cycle, and industry practices can change on a dime. Without constant monitoring and study of your industry, you could fall behind on trends that might give you an edge.
What exactly should you study and research about your industry? Plenty!
Status Of Your Industry
As an entrepreneur, you need to know everything that affects your growing business. Everything that is in the nature of your industry that impacts your business should be studied and followed, including industry economics, average industry indicators, competition, and of course, product or service trends.
Take for instance the dot-com boom and bust of the early 21st century. In the late 1990s, more and more internet companies started up and obtained large amounts of venture capital with a pending IPO that gave the founders and investors mountains of money. However, those who kept their ear to the ground close to the industry realized that many companies had big bucks of capital thanks to the stock price, but did not earn revenues to meet continuing goals. Smart entrepreneurs that tracked the industry saw impending doom and got out before the dot-com “bust.”
The Players in Your Industry
You will never be the only one serving your industry. There will always be competition of either identical or similar business. You need to know what you are up against.
For instance, does your industry consist of thousands of smaller companies? Or is it dominated by a few giant corporations? Don’t expect to compete in a major market with the likes of AT&T, Starbucks, or Disney. But rather, if you identify who the smaller participants are, then you can better find a way to acquire your desired market share.
Analyzing your competition also gives you a potential edge on marketing. Watch publicity tactics and advertising strategies. See what works and what doesn’t. Learn from their mistakes and from their triumphs as well.
Product (or Service) Movement In Your Industry
What is the cycle of your product? Do you know where the raw materials come from? Are you aware of how and where it is manufactured or assembled? How far do the products travel before they reach your shelves? And how many “middle men” are there in-between?
Finding these types of distribution patterns can help your business succeed because you can find out where you can buy at the cheapest price. The closer you can obtain your products to the manufacturer, the less you’ll pay. Keeping tabs on distribution trends gives you that edge.
You are but one player in a large industry. Know where you stand and find out how to improve. With industry analysis, you can gain the edge over acquiring customers and beating the competition.