Business Plans: How Much is Too Much Research?
By Ellen Arndt
For the last five years, I’ve personally written and delivered over a thousand business plans, which means a thousand marketing strategies, a thousand competitive and market analyses, and a thousand executive summaries. It goes without saying that I know business plans better than most; in fact, I could easily write one in my sleep. To all of the veteran business owners out there as well as aspiring entrepreneurs who are in the process of writing a business plan, this article (and more to come) may help you.
Every business plan should include specific sections that showcase the need for your product or service. We’ll discuss the financials at a later date, but for starters, I’d like to bring your attention to the market research section of a business plan. The market analysis (i.e. the market research) of your business plan should cover industry statistics/figures, noteworthy market trends and opportunities, the market need, and information on your target market.
Creating a concise, polished market analysis is really not as awful as we make it out to be, because despite popular belief, less is MORE. Yes, I said it: Less is MORE. What does that mean exactly? Well, the reason many of us get a headache – and dread this section – is that we assume that a business plan must contain a long, drawn-out, time-consuming written research report spanning 5-7 pages that is chock-full of statistics, industry data, and buzz-worthy quotes from industry experts. Oh, and throw in five pie charts and three graphs for kicks.
After writing business plans for some time, I have come to the conclusion that the most well written, eye-catching market analyses were heavily abridged. Perhaps, we are now beginning to understand why it takes the average layperson hundreds of hours to complete a business plan on their own; they’re devoting too much of their time to compiling and writing the plan’s market analysis. Stop already! I’m here to tell you that no one is going to read seven pages of research… or six… or five. In fact, the SBA avers that “the specific details of your marketing research studies should be moved to the appendix section of your business plan.” So, all that nitty-gritty stuff can be pushed to the back.
The market analysis should include several short paragraphs that are identified with subheadings. Examples of subheadings I have used in the past include “Industry Description,” “Industry Outlook,” “Trends and Opportunities,” “Industry Growth,” “Target Market/Customer Groups,” etc. Remember, that these subsections do not have to be titled exactly the same as you may see or read on other business plans, but the point is to include the same type of information. Besides, you want your business plan to stand out.
Key bits I want you all to remember: If there is a clear need for your product or service, it should be obvious to the reader. After reading (or perusing) 1-2 pages of your market analysis, one should be able to easily identify the market need. Less is more. Less is more. Less is more. Financial Web apparently agrees with me: “Your plan should be all-encompassing of the necessary items, but it should not be too long. Lenders will rarely read your plan word-for-word. They will look for highlights and key facts.”
In my video, I provide a brief overview of the importance of identifying and analyzing your competition, another critical portion of your business plan. Learn from your competition – don’t lambaste them.