Why is the Market Analysis so Important for your Business Plan?

If seeking for external capital for your business, you have to consider writing a professional business plan with which to apply for investments from venture capitalists, angel investors or private equity funding. One of the most important parts of a business plan is the market analysis section. This will help you persuade investors that you know your target audience and that there is a real need for your product on the market. If not providing this very important information, you will never manage to raise money from investors. As investors will place their money in your business, it is very important for them to understand that they will not loose their capital as customers are just waiting for you to provide them the product you are raising venture capital for.

Click here to download your business plan template <==== This part of your business plan should include the following information that is essential for investors:

  • The market analysis ΓÇô this consists in a detailed description of your target audience, including demographic and sociologic information such as location, sex, age, income, interests, education level, job, hobbies etc. Here is where you also have to provide information about the size and structure of the market, its need for your product and the growth perspectives and the time frame in which these expectations are likely to become real.
  • The pricing strategy ΓÇô this refers to your method of setting the price according to the production price and correlated with the cost-plus pricing, the demand pricing, and the competitive pricing. You can also put to a good use the new pricing strategies such as the penetration pricing, the market skimming and the flexible pricing. You can also add details about the ways in which you intend to add value to your product as a way of establishing the price.
  • The promotion plan ΓÇô this refers to the communication channels you will use in order to advertise for your products. This also refers to the ways in which you will manage to track your target customers and convince them about the qualities of your product. Here is where you have to state the strategies you will use in order to persuade your clients into becoming faithful clients, your reward strategies which will apply to VIP clients.
  • The distribution plan ΓÇô this is related to the kind of product you will be producing. You have to let investors know whether you want to use direct sales, wholesales distributors, brokers or online agents in order to sell your products.
  • The demand forecast ΓÇô this refers to the estimated sales which are based on the previous market analysis and on assumptions regarding the effectiveness of the pricing, promotion and distribution strategies stated before.

Click here to download your business plan template <==== Investors absolutely need to have all these information in order to decide if your business can be successful and if this estimated growth will take place rather fast as for it to guarantee their return rate on the investment. Having a well-written market analysis in your business plan will guarantee the full attention of investors during your pitch and larger chances of easily raising funds from venture capitalists, angel investors or equity investors.

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