Analyzing the Health of Your Industry Sector and Overall Market – Gathering Facts and Stats

Introduction:

In the same way that your business will be most attractive to buyers when your financials are on an upswing, it will also be more attractive when your industry sector is strong and growing and when the size of the market for your offering is also rising.

The truth is, though, that some industries go out of market favor, and some market areas recede in population. When that happens, the attractiveness of a business serving the industry and market also diminishes. Face it; buyers prefer to buy businesses that ride the promise of a strong industry and a growing market area.

As you assess the condition of your industry sector and market areas, see if any of the following conditions apply;

Your industry faces regulatory, legal, or growth challenges. If this is the case, you want to reduce the reliance of your business on high-risk aspects of your industry and find undamaged niches that you can grow.

Your industry has undergone changes and your business hasn’t adapted. If this is the case, consider updating your business plan and investing time and funds to bring your business current so it’s competitive in the marketplace and attractive as a sale prospect.

Consumers have declining interest in the products or services of your business. If this is the case, update your business plan to bring your product or service into line with current market tastes.

Your market area has a declining number of prospective customers for your business. If this is the case, you can either alter your product line to appeal to those in your market area, or you can develop new market areas to build up sales to compensate for the dwindling prospective customer group in your established market area.

This paper will help you get a feel for how your business’s industry and market sector as a whole are faring so you can decide whether the market conditions that surround your business are favorable for the sale.

When selling your business, you need to assess the condition of your industry and marketplace.

Gathering the Facts and Stats

Research helps you determine the marketplace situation your business faces by keeping you abreast of shifts in consumer interests, government regulations, economic conditions that affect your industry or market, and changes in the population that alter your prospective customer pool.

You can compile information on your industry and market growth trends in a number of ways, which are outlined in this section.

Consulting Your Industry Association

If you’re not already a member of your industry association, are you’re not sure whether you industry has an association, do an online search by entering a word that describes the focus of your business, plus the word “association.” For example, enter “advertising” and “association” in the search engine, and the first result is the American Association of Advertising agencies. Enter “remodeling association” and the first result is the National Association of the Remodeling Industry. Try a similar search for your field.

After you find an association source, visit the association’s Web site for information on industry growth and health, or call the association to request information on industry growth prospects.

Searching Online for Research Groups

Enter a term that describes your industry into a search engine and check out some of the top results. For instance, when you enter “golf industry statistics” in a search engine, one of the top results is the Golf Research Group, which describes itself as the world’s leading consultant and publisher of business information to the golfing industry. As another example, when you enter “cellular phone industry statistics” into a search engine, one of the top results is the Cellular Telecommunications & Internet Association, the self-described international association for the wireless telecommunication industry. Similar industry groups probably service your business arena and can provide industry growth trends that are useful during your sale process. You’ll probably be amazed by the amount of information that available for free on industry online sites. Other information is available for a price, and often industry magazines invest to obtain the information. It’s worth it to ask for the media kits from leading industry publications, which likely excerpt key points from industry studies they’ve purchased.

Looking Up Other Business and Government Web Sites

Start with www.census.gov for information on population and resident characteristics in practically any U.S. community. From the home page, click Quick Facts to browse population statistics for any U.S. county and for incorporated cities. Then move on to the Web sites of the business development departments that serve your market area, ranging from your state’s economic development department to the business resource center at your chamber of commerce to the small business department center at your community colleges. These groups will likely be able to provide you with detailed local market information, including market area growth trends and growth trends by various age groups. This information helps you present the strength of the market your business serves, if in fact the prospective customers you serve are growing in number. If they aren’t, the information helps you make decisions about how to target alternate market segments, if necessary to maintain sales momentum.

Studying Publications in Your Industry and Market Area

Most publications post online versions of their media kits, which provide trends and forecasts that supply you with useful information on how your industry and market are growing and changing.

If the information isn’t available online, call the publication and talk to a sales representative. Explain that you’re compiling industry statistics for a presentation and are seeking information on issues facing the industry, industry growth statistics, growth information by market niche or segment, and any other information that affects the health of businesses in the industry sector.

Information from “Selling Your Business For Dummies” by John Davies (Founder of Sunbelt) and Barbara Findlay Schneck 

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