Michael Sheridan, COO of Docstoc (http://www.docstoc.com/) talks about key elements of a business plan concerning market size and competition. Watch this video to learn about your individual market including businesses you may be up against and customer base size.
- How big will your customer base be?
- How lucrative is your market?
- What other businesses are you up against?
The market size and competition section of a business plan is critical in not only constructing to the audience how big your potential is as a company but it also is one of the key drivers of the financial plan so you’ve really got to spend a lot of time here focusing on how many target customers are really out there for you.
And if you’re talking about, you know, one of the bigger mistakes that we see is you’ll see on a global basis, someone will say, “Well, there’s 5 billion people that may use our product.”
For the most part, you’ve really got to spend the time and analysis of who you’re trying to sell to and basically how you can reach them so what are those people, what is the dollar value of that market. In other words, how much are they spending on products like yours right now or what do people think might be the expenditure in a few years to come and focusing and doing the research out there is really important in understanding what that true market size is.
The last piece of the market size piece is what is the competitive and comparable alternatives to what you’ve got. So when we’ve talked about differentiation of your competition – of your product and services, you’ve really got to take an understand what the risks are, what the competition piece is there out there and who you’re going to be competing against from a – at a target customer basis again in their choices and alternatives when deciding to buy your product or not.
And when we think about competition and the market size, this is definitely one of the places you want to spend the most time on when you’re constructing your business plan.