Industry Analysis

 

In my last blog post, I talked about generating an idea and determining if it is marketable, technologically feasible, and economically viable.  Now it is time to understand the state of the industry.

First and foremost, you need to define what industry you are competing in.  On the surface, that may seem pretty obvious, however, in many instances, you can choose the industry you want to be a part of.  For example, in my company, I could choose to be in the B2B consulting industry (NAICS code 541611) or I could choose Professional and Management Development Training (NAICS code 611430).  In either case, I can help businesses to start up and navigate growth, however, the size and strength of my competition would vary greatly.

Once you decide on the industry, or probably part of the process of deciding, you need to learn everything you can about it.

·         Size:

How large is the industry (revenue overall)

How many competitors?  Where are they located?

·         Lifecycle:

Is the industry in a growth stage or has it reach maturity or even in decline?  In actuality you can succeed in an industry in any stage, however, your strategy will need to be reflective of what you find.

·         Profitability:

What are the profits that the leaders in the industry are achieving?

What is the market penetration for the leaders?

·         Trends:

Understanding what is trending in the industry will help you to formulate your entry strategy.  For example, in the automotive industry, the biggest trend is electric vehicles. Every automotive manufacturer is launching an electric car line and starting to phase out their large SUVs as the consumer needs are changing.

 

To start your research Google the North American Industry Classification System (NAICS).  You can go to the search page and find your industry’s specific code and name.  You also want to check out the Census Business Builder site which will give you information on competitors in your target market.  I would also check out BizStats.com for information on profitability.

 

Next you can Google that industry and see what comes up.  In particular, you want to find one of the industry associations for that industry.  An industry association is organized by players in the industry to promote that industry.  Just about any industry will have at least one association.  Earlier in my career I did a good deal of work with the National Wholesale Druggist Association (NWDA), now the Healthcare Distribution Alliance. 

 

Industry associations are tasked specifically to provide information to any interested party.  You will find a wealth of information just reading their website but there is no need to stop there.  If you contact the association (phone or email is best) they will gladly provide all the reports and working papers you could possibly want.  All for free!!


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