Using your industry factors to review the current status
- In the previous activity, we asked you to pick out the top 3-5 industry factors that will be controlling or influencing your business. Using these factors we are now going to start to flesh-out a picture of how that industry currently “looks” to your business. This information will not only clarify how your business will operate, but also demonstrates to anyone reading the Business Plan, how your business will be positioned within the industry.
Let’s look at an example of the new school bus service from the previous activity.
- When the owner of that business was asked to list their top 3-5 industry factors, they said: local regulations, climate/geography and domestic trends. Just listing these industry factors doesn’t really mean much unless we explain them a little ie define what they mean to us and the impact they are likely to have on our business.
The owner of the school bus business had this to say:
The most important controlling factor on the school transportation industry at the moment is the safety and operating regulations set by the local authorities and school board. For example those factors dictate how many bus routes can be bid for by each school bus provider and how new the buses should be. Which routes we can bid for is also influenced by the geographical areas we are required to service; finding drivers who are happy to drive in out-of-town locations, especially in winter, can be problematic and may effect how many routes we can comfortably take on. Having said that, we are seeing an upsurge in in-town routes due to the influx of families settling in the area (an increase that has resulted in 5 more schools being built in the last 10 years). This trend does not appear to be slowing down, with 2 more schools planned in the next 5 years. See [website link].
What’s good about this explanation is that it gives a very clear statement of:
Overall, this relatively short paragraph proves that not only is the writer familiar with the industry but also they have done their homework.
- the industry factors that control the business and how they do so
- the industry factors that influence it and how they do so
- how these factors are currently beneficial and/or problematic to the business
- facts are demonstrated and the statistics quoted are backed up by a checkable link
Here’s another example from our regular Case Studies
- Jennifer, our potential health food store owner, listed her industry factors as: local regulations/standards, environmental factors (weather), global trends, cultural changes, media reports or trends.
Using the guidance above, she came up with the following:
The objective of the health food store is very much focused on providing good quality, pesticide-free and organic produce for our customers. In order to meet those requirements, there are both local and federal regulations to be met by our local providers before the status of their produce can be proven. There are also natural controlling factors such as seasonal fluctuations and the weather; these dictate what type of crops can be produced, when the produce will be available for sale, and how much can be provided (positive and negative impact). In terms of influencing factors, most of these centre on global cultural trends towards healthy “clean” living which encourages the consumption of organic, additive and pesticide free foods. This trend has been ongoing and only appears to be getting stronger [quotes source]. In addition, “buy local” campaigns in the media also continue to have a positive effect on sales in the health food industry as a whole [quotes figures].
- Your turn! Take the industry factors you identified in the previous activity and create a short paragraph – in the style of the examples above – explaining how those factors impact your own business.
Remember, you will create a more compelling argument if you have the data to back up your claims, but don’t include pages of research in your Business Plan. Instead you can: provide a weblink to a reputable source, summarise your findings very briefly and cite the source, or if absolutely necessary create an Appendix and reference it here.