“I just want to sell and make money! I don’t need to spend my time collecting all that information about market trends in the industry. That’s for big companies! I just need to get out there and sell.”
Sound familiar?
Industry research takes time, sometimes a little money, and may often turn up information that brings our business idea or strategy into question, destroying our dreams of profit. But, that is the reason we perform the research. A review of your industry is your first step to understanding whether or not your ideas are worth pursuing.
Why perform industry research?
No one wants to spend time planning for a business that is unlikely to succeed. It is a waste of time.
Understanding your industry helps you identify trends in the markets that are likely to impact your business. Will there be a shortage of supplies and other resources that will drive up costs? Or, will there be a surplus that will drive down costs? Will there be an increase in demand for goods and services making it relatively easy to find customers? Or, will demand likely decline? Understanding the trends in the markets is a first step to identifying a market opportunity.
Understanding your industry can also provide valuable insights into the behavior of competitors and the challenges your business will face. Is the industry old and established making it difficult for a new business to get started? Or, is the industry young and growing with new businesses starting up all the time? What companies currently dominate the industry? Are these companies so large and entrenched that a new business will find it difficult to start-up and survive? Or, is the competition small and diffused making it possible for a company to distinguish itself?
It is having the answers to questions like these that makes it possible for you to develop strategies to cope with challenges in the market and effectively compete.
Where can you find information about your industry?
The good news is that the information you need to obtain is for the most part readily available on the Internet for free (or for a nominal cost). Most public libraries subscribe to online references that publish summaries about industries which provide a quick overview (which may be all that you need). Additional information can be obtained by checking various census reports as well as other government publications that provide information about industries. Often, you can find useful information about how market leaders view the industry and markets in their annual reports. Most annual reports can be downloaded on the Internet for free. Finally, trade or professional organizations often conduct research about their industries to share with their members.