From Business Plan Essentials: How to Write a Business Plan
Why Research Matters
Strong business plans replace assumptions with evidence. Market research shows who your customers are, how they buy, and where your business fits. Done well, it anchors your pricing, forecasts, hiring plan, and capital needs.
A Practical Research Workflow
- Define scope: market you serve, geography, segments, B2B/B2C, and buying triggers.
- Collect data: government stats, industry reports, trade groups, competitor sites, review platforms.
- Validate: interviews, surveys, pilot offers, letters of intent, and small paid tests.
- Interpret: translate raw numbers into insights that affect pricing, channels, and capacity.
- Document & cite: keep a simple source log so reviewers can verify key claims.
Market Sizing & Segmentation
Use the TAM → SAM → SOM ladder to keep numbers realistic. Focus your plan on SOM (serviceable obtainable market) tied to the channels, budget, and capacity you’ll actually deploy in Year 1–2.
- TAM: total demand in your space (context only).
- SAM: the portion you can serve (your geography/segment).
- SOM: the share you can realistically win with planned spend and resources.
Competitive Analysis that Investors Respect
Skip the generic 2×2 quadrants. Build a short table that compares the 5–8 closest alternatives on what buyers actually weigh: price, convenience, brand trust, key features, switching costs, and reach.
| Competitor | Primary Segment | Price Position | Strengths | Weaknesses |
|---|---|---|---|---|
| Competitor A | SMBs, local | Low–Mid | Speed, distribution | Limited customization |
| Competitor B | Mid-market | Mid–High | Brand trust, support SLAs | Higher TCO |
| Competitor C | Budget buyers | Low | Price, volume | Quality concerns |
Positioning & Value Proposition
Your positioning is the specific place you want to occupy in the customer’s mind. A good statement is clear, specific, and testable:
For [segment] who need [problem solved], [Brand] provides [solution] that delivers [measurable benefit], unlike [main alternative], because [credible reason why].
Market Validation (Evidence > Opinions)
- Signals: signed LOIs, paid pilots, preorders, pipeline with dates and values, referral partners.
- Metrics: CPC and conversion from a small test, inbound/meetings booked, lead-to-close time.
- Learning: note what didn’t work; credibility grows when you show iteration and focus.
Writing the Market Section
- Market overview: size, trend, drivers (cite 2–3 reputable sources).
- Customer: segments, problems, willingness to pay, decision process.
- Competition: alternatives, gaps, and your edge (table above).
- Positioning: your value proposition and proof.
- Go-to-market: channels, CAC targets, first-year milestones.
Tie Research to Your Financial Model
- Acquisition volume and CAC should reflect channel benchmarks from your research.
- Pricing and gross margin should be consistent with competitor quotes and supplier terms.
- Capacity assumptions (hours, staff, inventory turns) must match operations.
Download the Market Research Workbook
A source log, TAM/SAM/SOM calculator, and competitor grid template.