industry analysis – GoForth Institute Blog | Canadian Entrepreneur Training

Six questions to help you understand your business’ industry

Every small business owner is part of a wider industry, and is affected by that industry to some degree. To help you determine the health of your industry, do some research to answer the following six industry health questions:

Is the industry growing?
Where are the opportunities in the industry?
Who are the key players in the industry?
Are there young, successful businesses in the industry?
What are the typical financial results for businesses in this industry?
How is new technology being used in the industry?

You can search for secondary data sources using your North American Industry Classification System (NAICS) code. Your NAICs code classifies companies to collect, analyze and publish statistics, and to provide collective industry definitions across Canada, the United States, and Mexico.

Finding your NAICS code

Visit Statistics Canada’s website to find your NAICS code and figure out which sector, subsector, industry group and industry your business falls under. Here, you can either browse through industries or search for example activities that these businesses perform.

Share this post:

How can an Achievability Analysis help your business?

How can you determine if your small business idea has the potential to succeed as an actual business? An Achievability Analysis is a great way to work out what your business will need to succeed – before you launch.

What is an Achievability Analysis?

An Achievability Analysis is research that helps you spot holes or fatal flaws in the business idea before you invest some savings and dive right in. It’s like running your business on paper first to make sure you’ve planned it out properly, thought through your business model canvas critically, tested your business concept with potential customers, answered fundamental questions ahead of time and achieved a higher level of confidence about your chances for success. Think about how much easier it would be to make changes to a business on paper than on a business that is up and running with real customers and real invoices needing to be paid.

The components of an Achievability Analysis

An Achievability Analysis covers four areas:

1) Customer Development
Gathering information on who would buy your products or services is Customer Development. Before you consider starting a business, you need to determine if a market for it even exists. Not only that — the market must be large enough to warrant you going into business and sustainable enough that your business becomes profitable. Small, scattered, unpredictable or unstable sales spell early doom for many small businesses. Here are some articles about finding and understanding your ideal customer:

2) Competition
Identifying both current and potential competition is important to understand the potential of your business idea. This can help you determine what proportion of the market you might expect to capture. To identify who your competition really is, look from the customer’s viewpoint at existing companies that offer the kinds of things they would look for in your own company. Make sure to include both direct competition (offering a product or service very similar to your business) and indirect competition (offering a substitute or a variation of the product or service delivered by your business).

For more about researching the competition, download GoForth’s free How Do I Measure Up? Competitive Matrix, or read about competitive analysis for small business, and all about the competitive advantage.

3) Industry
A well-planned and executed strategic positioning within an industry can help a new business succeed. By contrast, playing a weak role in the industry and not knowing much about the major players that shape your industry can put a serious damper on your chances of success. Understanding how your industry works is key to helping you figure out appropriate entry and growth strategies.

4) Business Environment
Before you take the leap into business, or if you are a current business owner, you’ll need to stay on top of the business environment. The only thing that’s constant is change! Learn to spot changes in the business environment before they arrive so that you can make adjustments to your business strategy to take advantage of these changes, before your competitor does.

To evaluate the current business environment, we recommend doing a STEP analysis — measuring Social, Technological, Economic and Political trends which may impact your success.

Taking the time to research and analyze your business idea thoroughly will help improve your odds of success — and that’s never a bad thing!

Share this post:

How to research your business’ industry

Researching your small business’ industry involves gathering large amounts of data, as well as talking to members of the industry – the ones who know most about it. Some important questions to ask about your industry are:

Is the industry growing?
Where are the opportunities in the industry?
What are the typical financial results for businesses in this industry?
How is new technology being used in the industry?
Who are the key players in the industry?
Are there young, successful businesses in the industry?

Do primary and secondary market research to learn more about your industry before you start or expand your business.

What is primary market research?

Primary market research is collected by you, from your target audience. Here are the four types of primary market research:

Observation – This means – without interacting – watching customers buying products or services similar to yours, listening to what they say as they shop, noticing what they buy and how much they paid. This type of market research works best if your business caters to customers, not to other businesses.
Focus Groups – Focus group market research means assembling a small group of eight to 12 potential customers to gather information and opinions about your product or service. These groups are led by an objective discussion moderator. Focus groups are a great way to get feedback on a product or service idea directly from several potential customers.
Interview – Interviews are 1:1, with a participant speaking to one researcher. Interviews are well-suited for product or service ideas that could be too personal or private for group discussion.
Survey/Questionnaire – This method of market research involves getting feedback from potential customers through a structured, multi-question survey. Market research surveys or questionnaires can be done over the phone, through mail/email or in person. You may need to conduct several surveys to several groups in order to get feedback from all possible types of customers. If you don’t have the resources to conduct a large amount of them, small sample groups are okay, but be wary of making major business decisions based on this small amount of feedback.

What is secondary market research?

Secondary market research is information that’s collected by another person or organization that entrepreneurs can use, often for a fee. If you’re interested in opening a book shop, you may access statistical information collected by the Canadian government on things like income levels in your desired area, spending patterns and neighbourhood development. This data was collected by someone other than you or your business, and you don’t own it.

Unlike primary market research, data from other sources isn’t gathered with your specific business in mind. This means you may need to access several sources of secondary data, or you may not be able to find information that covers exactly what you need to know. Look out for when the research was undertaken – in our opinion, a study older than three years is too old, given how fast the business world moves. Relying on old, inaccurate or irrelevant information can cost your small business a lot of time, money and stress. Analyze everything carefully and trust your instincts.

It’s also important to consider the source of your primary market research. Look for legitimate sources that wouldn’t have been influenced by a different agenda. Good sources of secondary market research are government organizations, research institutions, universities and academic journals.

Share this post:

Why is it important to know your NAICS code?

It’s important to know and analyze your business’ industry. For example, if you’re starting a hairstyling business, you’re a member of the services industry. If you’re starting a tiling business, you’re a member of the construction industry. Having a good understanding of how an industry works, who the big players are, and who the major suppliers are can help you find strategic partners, venture capital and customers.

Six industry health questions to ask

To help you find out the health of your industry, do some research to get answers to the following six industry health questions:

Is my industry growing?
Where are the opportunities in my industry?
How is new technology being used in my industry?
Are there young, successful businesses in my industry?
Who are the key players in my industry?
What are the typical financial results for businesses in my industry?

As a starting point, we recommend searching for secondary data sources using your NAICS code. Also known as the North American Industry Classification System, NAICS is used to classify companies, to collect, analyze and publish statistics, and to provide collective industry definitions across Canada, the United States, and Mexico.

Finding your NAICS code

To find which NAICS code matches your company’s industry, visit Statistics Canada’s website to figure out which sector, subsector, industry group and industry your business falls under. Here, you can either browse through industries or search for example activities that these businesses perform.

Here are the two-digit NAICS codes for sectors of the Canadian economy.

11 Agriculture, forestry, fishing and hunting
21 Mining, quarrying, and oil and gas extraction
22 Utilities
23 Construction
31-33 Manufacturing
41 Wholesale trade
44-45 Retail trade
48-49 Transportation and warehousing
51 Information and cultural industries
52 Finance and insurance
53 Real estate and rental and leasing
54 Professional, scientific and technical services
55 Management of companies and enterprises
56 Administrative and support, waste management and remediation services
61 Educational services
62 Health care and social assistance
71 Arts, entertainment and recreation
72 Accommodation and food services
81 Other services (except public administration)
91 Public administration

Researching your industry using your NAICS code will help you find data about your industry’s past and current growth; expected growth; key players in the industry; trends impacting the health of the industry and other unique aspects. So get to know your code!

Share this post: