The market refers to the direct economic environment in which you want to offer your product or your service.
The main players in the market are your potential customers, dealers, suppliers and competitors. You can find the right market for your startup by using the following criteria:
- Catchment area
- Products or services
- Target groups
Importance for your Business Plan
Describing the market helps you and your potential investors to assess whether your business idea is viable. A dynamically growing market offers higher sales, than a shrinking one. If you want to establish on a saturated market, you need high risk tolerance and particularly compelling marketing strategies.
Answer the following questions for the market analysis:
- Which sector is concerned?
- How big is the market? Name sales figures and industry-standard revenue.
- How has the market developed in recent years? Has it grown, shrunk or stagnated?
- What is the prospect for the next years? What are the most important new innovations?
- How do they affect the market? Are there technological developments or legislative reforms planned? Are the lifestyles and consumption patterns of the target audiences have changed?
- If you systematically analyse the market, you can obtain convincing results with reasonable effort: Formulate your first key assumptions for the market (hypotheses). Orient yourself on the questions above. Think about what data you will need to prove those assumptions and where you can find them. Collect the data and evaluate it.
- Don’t overcomplicate things. Sometimes it is enough to write a single sentence per question, if you can prove it with a reliable source. In order not to get bogged down, ask yourself what information you would be interested in as an investor.
- Several industry associations offer market studies that you can evaluate. You can obtain industry information from exhibitions, scientific journals, banks or the federal statistical office. Chambers of commerce or chambers of trade have the key market data at the regional level.
- A lot of data can be accessed via the Internet. If you’re stuck online with no data, you should pick up the phone and try calling these places. They might help you.
- The figures should be as up-to-date as possible and should always be connected to your start-up project. Check if you can illustrate the market analysis with a graphic (e.g. a development chart). Do not forget to credit your information sources.
- It can happen that you lose sight of the actual market during research. Ask yourself again and again: Am I still describing the relevant market or am I in the process of writing an overall industry analysis?