by Sue Lewis
How do you know if your new business will be successful? A thorough understanding of the industry you plan to enter will help you answer the questions about why your business will succeed and how you will achieve this success.
The first step is to describe the industry that you plan to enter. What is the economic sector of the industry: manufacturing, merchandising, service, transportation, or construction?
Next, find the industrial classification, which divides the economic sectors into various segments. Research Standard Industrial Classification (SIC) codes
The North American Industry Classification System (NAICS) is replacing the SIC in many publications. Find the NAICS for your business.
Now that you have this information, you can research the suppliers, customers, distributors, competition, historical performance, and future outlook of this industry. The US Government provides much of the research that you will need for free or a very small cost.
Do you want to know how many businesses like the one you want to start already exist in your area?
The US Gross Domestic Product (GDP) table will show you at a glance such things as historical performance and cyclical patterns in your industry.
There is also a resource for GDP by region.
More performance information can be found in the Industrial Production Indexes by Industry.
The US Industrial Outlook provides data on historical trends and future growth prospects for a variety of US industries. Includes the full text of the 1994 edition.
The newest version of this publication is the US Industrial & Trade Outlook published in May 2000. Some information from the book and ordering information are included. Be sure the check your local library for a copy, as well.
The International Trade Administration has links to many industry resources. Even though the site is geared to exporting, there is valuable information there for your industry research project.
An industry analysis is necessary for your business plan and may seem like a daunting task. Prepare you analysis by following these steps:
- prepare an industry description
- identify industry suppliers, customers, and distributors
- identify your competitors
- chart historical performance of the industry
- predict the future outlook of the industry
- pinpoint strategic opportunities for your business
Once you have a complete industry analysis, you will find it much easier to prepare the rest of your business plan. Realistic operating, marketing, and financial plans cannot be developed without first understanding your industry and a solid plan will help you succeed in your new business.