Many owners or managers of small businesses, whether starting or growing, underestimate the value or simply don’t know the importance of industry-related research. Most of them don’t even know why a sound business plan should rely heavily on this type of information.
According to Javier Marin, a Certified Global Business Professional (CGBP) and certified business consultant with the Florida SBDC at University of South Florida, business owners are deterred by the expense associated with market research, which normally ranges in the hundreds of dollars. Some may be even turned off by how extensive and intimidating the reports may look.
The good news, Marin said, is that there is professional, no-cost support to help business owners and managers navigate through the reports to help them understand the areas that are relevant to their business.
According to Marin, industry research reports come in different formats and from different providers, but in general they cover the following areas: current conditions, products, competition, operations, and trends and statistics. Each of these areas, he said, “are relevant and should be carefully evaluated by all businesses regardless of their growth stage or sales size.”
What will I learn from these reports?
Marin indicates that research on the current condition of the industry, which addresses issues such as industry performance, future outlook, and industry life cycle helps a business owner or manager understand the opportunities, challenges and risks currently faced by similar companies as well as estimates of where the industry as a whole may be headed.
Information on the products offered by the industry cover issues including the raw materials’ life cycle, how the raw material producers are performing, as well as the current and projected demand of the industry products.
Most companies may be more interested in the competitive landscape, which Marin said covers the market share concentrations by U.S. regions, the competitive activities that seem to prove effective for most companies in the industry, the cost structure, and the ease of joining the industry based on financial or regulatory barriers.
Marin added that the section on operations is generally very appealing to small business owners because it addresses issues that cover average expense distributions, how technology impacts similar companies, labor issues, and the benefits or threats perceived as a result of regulation.
Reviewing trends and statistics of a given industry, as unappealing as a business owner or manager may find it, helps to keep a pulse on issues that can affect the growth or contraction of the industry. Financial statistics report the different average financial ratios reported by companies in the industry.
Marin and other Florida SBDC Network consultants use industry research in order to provide small business owners and managers the tools to devise a strategic plan that will make the company more efficient and profitable.
“Once managers have the power of understanding how other companies in the industry are operating and how this industry information that can help them take advantage of positive trends and avoid risk, they are in a position to steer their companies towards improving their bottom line” he said.
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