Please note: the sound on this recording is a little low, you may wish to listen through headphones.
How well do you know your industry?
Identifying your industry, and the segment you’d like to target within that industry, is important background information which will help you develop your business idea fully.
On the surface this is a simple exercise:
- If you industry is Pet Care for example, your industry segment may be Grooming, or Dog Walking, or Cat Boarding, etc.
- Alternatively, if you industry is Finance, your industry segment may be Personal Financial Advise, Business Investment, Accountancy, etc.
But delving a little deeper not only helps shape your product or service, but it also supports the decisions your make throughout the remainder of the business planning activities.
To that end, it is also useful to understand more about other industry aspects that may influence your business model now, and possibly, in the future.
Industry factors are those things that either directly or indirectly affect your business model.
Factors are divided into two different types – Controlling factors, and Influencing factors:
- Controlling factors are created by the organizations that call the shots where your industry is concerned, like: Associations, Regulatory authorities like Government or safety standards, etc. We’ll also slot Environmental factors into this category, because preparing certain business to deal with environmental factors are also unavoidable. And example of this would be a business that can only operate at certain times of year in some climates, like construction in Canada, or snow removal.
- Influencing factors mold your business around trends, social or political influences, media trends or support, technical advancements, etc. These factors can be ad hoc or cyclical.
The second industry factor to consider is current status:
- What is the current status of my industry? Is my industry currently stable, in recession, growing?
- Considering the status of your industry helps you be realistic about whether now is a good time to open a new business, and if you believe it is, what sort of risk management strategies you may want to consider if the industry isn’t looking too stable.
Finally, ask yourself:
- What is the future outlook for my industry (1-3 years)? If it’s in recession, does it look like there could be a recovery coming on the horizon soon?
- Again, if the outlook isn’t good, consider timing or risk mitigation.
The more you know about your industry, the more you can design your business model to take it into account. It also helps a financial adjudicator or potential business partner put your business in the context of a bigger whole.
Let’s move on to consider our Competition.