Are you asking yourself, how do I develop my idea into a business? The first step in evaluating the feasibility of your idea is to do an Industry Analysis to understand the industry that your business concept will focus on. This will provide an educated estimation that includes statistics, porter 5 forces analysis, statistics and fundamental analysis of the viability of your business concept.

Importance of Understanding Your Industry

The analysis focuses on group dynamics. This indicates that group behavior can be forecasted at a higher certainty than the behavior of individual members in that group. If one is able to understand how the behavior of the industry changes then one can better adapt to the changing environment. This is becuase companies within an industry tend to follow the same patterns. So, its important to understand who are the leaders in your industry and this will also help with benchmarking when preparing the financial statements for your company.

Concept of Fit in Industry Analysis

After performing the analysis, you will be know what types of businesses are leading and lagging in the industry. You will also know where the blue oceans are and this will lead to more business concepts. In addition, you will discover the industry financials, which will be useful in benchmarking as you develop the financial plans regarding your idea. At this stage, focus on the industry and learn as much as you can about the industry. In the feasibility study, you can evaluate the effectiveness of you business concept.

NAICS Classification System

All businesses in United States are classified under certain industry codes established by the North American Industry Classification System (NAICS). Prior to NAICS codes, businesses were classified under the Standard Industrial Classification(SIC) system. The NAICS codes are six digit codes that identifies the industry, sector and the type of business. More information and how to instructions about the codes referring to specific sectors can be found here.

The above video provides detailed information about finding the NAICS codes for specific businesses.

DIY – Download the Industry Analysis Plan

You can download the analysis outline by clicking the download button and use it to complement your research. I used this outline to develop a business plan for my concept as an undergrad. With this you will discover numerous tips on howto refine your concept. Thank you again for reading my post on Industry Analysis and how it can be beneficial to your firm.

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