Key elements of industry research:
- Industry Analysis
- A good business plan will include an analysis of all aspects of your industry. This also helps you in your planning process.
- Even if your business is already established, you need to keep up on what's going on in your industry to stay competitive.
- Competition Analysis
- Keep a list of your biggest competitors.
- Understand how the industry is segmented - are there a few large firms, or thousands of smaller firms that make up the industry?
- Distribution Patterns
- How does your product or service reach consumers?
- What distribution options will work best for your company?
- Some information from "Know Your Industry Before You Start Your Business," BPlans.
Understanding Financial Ratios
- Financial ratios are indicators of the health of a business.
- If you're planning your business, you might use financial ratios to project how your business will perform.
- You'll need to have good ratios if you're seeking funding from banks, venture capitalists, or other investors.
- Common types of financial ratios:
- Liquidity Ratios - measure a company's ability to meet short-term financial needs.
- Asset Turnover Ratios - measure the efficiency of asset utilization.
- Financial Leverage Ratios - measure a company's ability to meet long-term financial needs.
- Profitability Ratios - measure a company's success at generating profits.
- Some information from "How to Write the Financial Section of a Business Plan," Inc. Magazine Online
- Some information from "Financial Ratios," NetMBA.
