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How to Prove Your Case to Investors [VIDEO]
August 17th, 2010 1 comment
Hey, have you seen this?
Watch this free presentation to discover how to finish your business plan in 8 hours (or less)!
Your market potential is the number of customers whom you can realistically capture. Give investors a portrait of this number and how you arrived at it.
There are two ways to prove market size and growth rates in your business plan. The knowledge acquired from doing this will affect many sections of your business plan.
1. Peeling Back the Onion
Approximate the size of your target market through a process of elimination. Determine the total relevant market size. Then begin eliminating the sectors and customer segments you will not target.
For example, if your company produces a $600 espresso machine, your relevant market size is everyone who serves or drinks coffee. Peel back customer segments from general to specific. Use hard market research. Peel off the low-income segment right away. Then remove segments that have not bought a new household appliance in five years. Then get rid of those that only drink at coffee shops.
In the end, you are left with a profile of your target market. These facts go on your Customer Analysis.
2. Assessing Market Factors
Take a look at all the factors that will effect your target market:
Competition
How many of your customers can your eventual competition take away from you? This will reduce your total market share, but do not be shy about including this information in your Competitive Analysis. Investors are looking for realistic numbers.
Customers
Using demographics and psychographics, describe your customer degments. What are their income levels? Do they live in rural areas, or metro areas? Where are they, geographically? If you are targeting businesses, how many employees do those business have? This goes into your Customer Analysis.
Market Trends
What government regulations will affect your market share? What changes are taking place in terms of market shifts and materials pricing?
Case Studies
Describe cases in which other companies have found success in doing something similar to what your company does. This information will show up in your Competitive Analysis and Industry Analysis.
Providing a clear picture of your true market potential gives investors confidence in your management team; and helps you to focus your own marketing efforts in your Marketing Plan.
Still haven’t finished your business plan?
Watch this free presentation to discover how to finish your business plan in 8 hours (or less)!
1 responses to “How to Prove Your Case to Investors [VIDEO]” 
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I think market surveys and case studies are so important because they mean real data and really have something to prove. They’re also good for basing projections on them.