How to conduct a market analysis
Tips / 23.06.2020
As a small business owner, you have probably considered the thought of expanding your business.
This could be in the form of launching new products, expanding into new territory or some other means of expansion.
With the changing times, you need to consider how to take your business further and not remain stagnant.
This blog post will take a closer look at how you can conduct a market analysis for your business, and offer some thoughtful questions for expanding it.
Keep reading to find out more.
Conducting a market analysis
Whether you intend to set up a company, start an online business, or simply expand your operations, the first thing you need to do is do a market analysis.
This move will help you identify your strengths and weaknesses, compare yourself to competitors and will allow you to find the sweet spot for your business to expand.
But what is a market analysis and what steps does it entail?
Let’s take a look at the definition first.
In short, a market analysis may be defined as the in-depth process which examines your potential customers and competitors as well as acquires detailed information about the industry you’re about to enter.
Now that you have the basics of a market analysis, how do you go about undertaking one?
Here are some steps to guide you:
1. Take a closer look at your industry
The industry in which your business operates will play a large role in doing your market analysis.
Factors such as its size and scope, projected growth rates as well as the life cycles of other businesses in the industry should be considered.
Armed with this information, you’re ready to proceed to step two.
2. Determine who your customers are
Research into your consumer base is very important, too.
You need to segment potential customers into some of the following categories: gender, age, income and location.
Another important step to take here would be to spend some time researching their spending and shopping habits.
This insight will give you better analysis of who your ideal customers are.
3. A spotlight on your competitors
Your competitors are one of the biggest factors you’ll need to consider when undertaking your market analysis.
Look into their strengths and weaknesses and determine what value they offer to your potential clientele. Check out their prices, offering, location and market saturation.
Another element here is to look at indirect competition, too.
Are there accessories for your products that you’ll want to add to your product mix? Who sells them and at what price?
Ask yourself these questions before you move on to the next step.
4. Look into the regulatory landscape
Once steps 1, 2 and 3 have been covered, consider the regulatory landscape within which you’re going to be working.
What are the regulations in place for running your business? Is it an easy space to enter or are there high barriers?
This part of your research should not be too difficult or time-consuming to complete, but nevertheless, it’s important.
5. Analyse the results and create your plan
Without the above information, going to an investor or seeking out a loan for your business would be pointless.
That’s why it’s important to gather all the data, analyse your findings and start creating your plan.
Your ultimate plan should have a cash-flow analysis and projections of your profitability.
This type of mid- to long-term forecasting will help you establish the longevity and sustainability of your business venture.
What you should ask yourself when expanding your small business
With a market analysis under your belt, you’re ready to venture off and see your business grow.
But growth should be a natural extension of your business and you need to ask yourself some tough questions when embarking on this journey.
Here are some of them:
- What is your company culture?
- Have you hired the right people for the job?
- Are you innovating in the right places?
- How far does your brand recognition extend?
- Are you paying your existing customers enough attention?
With these questions in mind, you’ll be able to delve into some serious introspection and see whether the expansion journey is worth it now or whether you should wait it out.
Embarking on business expansion can be very exciting, but it needs to be done incrementally with the right information.
It’s not a random endeavour; rather, it’s a well-considered and thought-out process that requires the earnest consideration of a variety of factors.
In this blog post, we’ve given you some of the key tools to begin on your market analysis and business expansion journey, which we hope will help you in the future as you seek to carve out new markets and a niche for your business.
Disclaimer: Please be aware that the contents of this article and the myPOS Blog, in general, should not be interpreted as legal, monetary, tax, or any other kind of professional advice. You should always seek to consult with a professional before taking action, since the particulars of your situation may materially differ from other cases.