Industry Research
You will need to research the industries that you and your competitors operate in. All industries are separated into basic areas and categories. Manufacturing, Hospitality, Agriculture, and so forth are examples of these broad categories.
For a complete list of industry codes for North America, visit NAICS Codes and Titles.
For a complete list of industry codes for Australia, visit ANZSIC Codes. For a list of the Standard Industrial Classification Code List, used by many countries, visit Standard Industrial Classification.
Decide which category you operate in or will operate in. If it is an internet business, think about the product or service you are offering and this will help you decide which category to choose.
This part of the planning process is gathering the secondary data. What this means is that you are now researching and gathering information that has already been gathered by someone else, for another purpose.
As part of this process, you will be able to learn how the industry has performed in the past, and how it is expected to perform in the future. Other information you can gather are industry benchmarks - performance indicators that current successful businesses in your industry are already achieving.
Here is a sample list of sources of information. For a more detailed list, check out our
Resources Page.
1. Industry Reports
- http://www.ibisworld.com/ – This is a great resource for information. It will cost you, but check with the Local County or government in case they can get this information for you for free, or at a very low cost.
- http://www.valuationresources.com/
IndustryReport.htm
2. Internet Libraries
- http://www.libraryspot.com/
- http://www.ipl.org
- U.S. Industrial Outlook - Provides an overview and forecasts for 200 American industries and gives short profiles of those industries, including statistics on recent trends and a five-year outlook. Found in most local libraries (US Only)
3. Census data
4. Local libraries
For large companies, you can ask to get a copy of their annual report and prospectus (if they are listed on the Stock Exchange).
What information should you look for?
As you will find pages upon pages of information about the industry you operate in, there are a few key areas that you will need to look for. These areas will help to set the benchmarks and expectations of your business, which is very useful for new enterprises and for those wanting to grow and expand.Industry Performance
Most respectable reports that you will be able to purchase will provide you with a breakdown on the performance of the industry. This breakdown may be over 5 years or 15 – it doesn’t really matter. Ideally, the longer the timeframe the better. You can then use this information to set benchmarks for what you should aim for.
As an example of the data you may find, If the industry standard for net profit was 7.9%, then you will need to aim for 7.9% net profit or better in your business. Likewise, the remainder of the financial statistics can be used to measure the success of your business.
Industry Characteristics
Just like with a person, an industry has characteristics. Basically, it can be described as an aggressive, growing, steady, or a shrinking industry. There will also be other characteristics about the industry that you can use to help you understand it in more detail. This will put you in a better position for planning your success.
If the industry has been described as in a growth phase, then this will mean that you can expect the demand for products and services in this sector to continue rising. On the other hand, if the industry is described as in a decline phase, then you can expect that businesses in this sector will need to provide new products and services to the market in order to remain relevant. Otherwise, their business will also decline.
If you are contemplating starting a business in a declining industry, then consider the ramifications and plan for it.