Barringer, B. R. (2009), Preparing effective business plans: an entrepreneurial approach,
Pearson Education, New Jersey – page 101 to 120
An industry is a group of firms producing a similar product or service, such as music,
electronic games, clothing, etc.
Separating the analysis of a firm’s industry and its target market is important because it’s
premature for a new firm to select, or even talk about, a specific target market until an
understanding of the broader industry is obtained.
It is important for this section to appear early in the plan because it logically precedes the
analysis of the market and marketing strategy.
3. Industry analysis
3.1. Industry definition
3.2. Industry size
3.3. Growth
3.4. Sales projections
3.5. Industry characteristics
3.5.1. Industry structure
3.5.2. Nature of participants
3.5.3. Key Ratios
3.5.4. Key success factor
3.5.5. Industry trends
3.5.6. Long-term prospects
Industry definition
Briefly describe the firms industry (no more than several sentences long). You need to go to
online database to identify the list of industry and locate your appropriate industry.
Industry size
It is normally displayed in a money sign (£) over a three to five year period.
2004 2005 2006 2007 2008
Industry
sales
£16.1 billion £17.3 billion £18.4 billion £19.7 billion £21.0 billion
Number of
establishment
48,284 49,544 50,523 51,245 51,831
Employment 464,418 486,739 506,879 516,843 531,964
If your industry is broken down into identifiable segment, then you should also report the
share of each segment. E.g. Clothing
Tops 62%
Pants 18%
Dress 20%
Industry analysis
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Resource for Ideas, Creativity and Entrepreneurship Unit © F. Lourenço
Growth
This figure is usually reported in percentage. Some plans compare the growth rate of similar
industries.
2004 2005 2006 2007 2008
Industry
sales
8.2% 5.4% 3.5% 3.9% 3.6%
Number of
establishment
-0.7% 2.6% 2.0% 1.4% 1.1%
Employment 5.2% 4.8% 4.1% 2.0% 2.9%
Sales projections
If you are reporting on an established industry, reports from Mintel as an example, will report
their predictions. But most readers are interested to see what you think. You should include
numbers for what you think the sales and sales growth will be for the next 2 to three years,
explain how you arrive to those estimates. You also look at the pattern of grown from the
previous years to establish a predicted growth rate.
2009 2010
Industry
sales
£21.8 billion £22.5 billion
Growth rate 3.7% 3.3%
Industry characteristics
This section talks about the structure of your industry and lays out its competitive landscape.
Industry structure
Refers to how concentrated or fragmented the industry is and whether the industry’s
competitive landscape is in general attractive or unattractive. Concentrated industry is
dominated by a few large firms and a fragmented includes large number of smaller
companies. An industry is typically fragmented if it’s an emerging stage at its life-cycle, or
the cost of entry is low. An industry is concentrate if large capital requirements are necessary
to participate. If you are entering to a concentrated industry, you need to justify how you will
compete and reason.
You should also describe the attractiveness of the industry’s competitive landscape. You can
think around Porter’s 5 forces and focus on the most important aspect. Don’t have to cover all
forces.
Nature of participants
Provide a brief view of the nature and mixture of firms in your industry. Who are the major
players and what percentage do they hold?
Moreover, indicate how the industry is segmented.
Key Ratios
You report the industry’s key financial ratios and other ratios related to this section.
Industry analysis
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Resource for Ideas, Creativity and Entrepreneurship Unit © F. Lourenço
Key success factor
Most of the successful firms in an industry are competent in all of their industry’s key success
factors, and they try to differentiate themselves by excelling in two or three areas. You need
to identify them. These vary widely by industry. For example, for the electronic games
industry:
Product features and playability
Brand name recognition
Compatibility of products with popular platforms
Access to distribution channels
Quality of products
Ease of use
Price
Marketing support
Quality of customer service
Industry trends
There are two types. Environmental and business trends. The best place to look for trends
information is industry trade journals, industry-specific magazines, industry reports.
Environmental trends are economic trends, social trends, technological advances, and
political and regulatory changes (PEST analysis). Business trends should also be noted in the
report e.g. the profit margin of the industry is increasing.
Long-term prospects
This is a statement that concludes the section by highlighting your beliefs regarding the longterm prospect for the industry. You don’t need to include new information. Draw from the
preceding sections of the industry analysis to support your conclusion.
Industry analysis
Guide
The key to this analysis is not to report the numbers. You need to make sense of the data and
present them in a way that builds the credibility of your business plan.
Most of the data can be obtained online. Go to the Research_Resource_list_1.1 and
Internet_resource_1.1, these provide an intense list of various databases that allows you to
obtain data about your industry. If the industry is new and data cannot be obtained in reliable
sources, then you need to be creative to identify your data. E.g. searching on magazines, news
paper, articles and report the industry’s sales and sales growth or finding an industry trade
association that tracks and reports the numbers.
E.g.
Kelly’s www.kellys.co.uk
Key Note Ltd www.keynote.co.uk
Mintel International Group Ltd www.mintel.com
Standard & Poor’s Industry Surveys www.standardandpoors.com
Euromonitor www.euromonitor.com
The Office for National Statistics (ONS) www.statistics.gov.uk
IBISWorld www.ibisworld.com
There are lots of ways to do this. These books offer some guide. But nevertheless, there are
lots of websites that guides you to do this as well. You don’t have to cover all the above
aspects. What you need to do is to create a convincing argument and credibility. It is very
important for you to read lots of business plans to get a good understanding of how to write
one.
Sample of business plans http://www.bplans.co.uk/ – over 500 UK business plans
Starting up advice www.businesslink.gov.uk
Books: Barringer, B. R. (2009), Preparing effective business plans: an entrepreneurial
approach, Pearson Education, New Jersey
Workbook: Barrow, P and Abrams, Rhonda (2008), The Successful Business Plan: Secrets
and Strategies, Capstone, Chichester