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Identify the Problem and the Market – Part 6 of the 2009 Business Plan Series

February 20, 2009 :: Steve Fisher

The core reason your business exists is to provide a product and/or service to the marketplace that solves a problem and/or meets a need. Many market analysis questions should be answered in the beginning to uncover if you actually have something that people want to buy.

Basic things you must try and answer with the problem/market analysis:

• Do you have a market?
• Is there a viable niche that makes sense to focus on first?
• Does your product or service fill a need or solve a problem?
• Can you appeal to cross-segments within your market by highlighting different aspects of your product?
• How should you price your product or service?
• Who are your potential customers? What are the various customer profiles?
• How will you deliver your product to the customer?

Once those questions are answered you need to tell the story of the problem that exists and how there is a market.

Writing the Problem/Market Analysis Section

I break down the Market Analysis into four sub-sections:

1. Market Overview – describe the market you are in or the market you are planning to enter: product coverage area, environment, additional product area if necessary and potential customers.
2. Market Background – This provides historical data (i.e., market size, demographics, psychographics), needs and trends; buying patterns; preferences and market growth
3. Market Challenges – Here is where you analyze data and focus on the unique issues that create the challenges and problems you see could be solved.
4. Market Opportunity – This is where you used data in the previous section to explore the problems and expose the opportunities that exist to discuss the opportunities to be solved.

IMPORTANT NOTE: Remember to properly cite your sources of information within the body of your Market Analysis as you write it. You and other readers of your business plan will need to know the sources of the statistics or opinions that you’ve gathered from others.  It is important that they see that the basis for your analysis comes from well-known sources.

Where does it go in the business plan?

This is usually the first section because it sets up the problem and discusses the market in order to set you up for the following section which discusses the solution in-depth. You could also have this go after the Product and Services/Solution section if you structure the Solution section as an “Opportunity” section with the Problem and Solution that leads naturally to explaining the market and how the revenue model is proven and will scale.

If you are a more established business, this will usually be right after the “Corporate Overview” because you will be demonstrating how you are performing with your current products and services in the market analysis you have researched.

NEXT TIME: Now that you have shown the problem and the market that exists you need to talk about the Solution.

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