business plan industry background

How to Write an Effective Business Plan: Industry Profile

Last Updated on March 16, 2024 by Treana Wunsch

Having an industry profile section in a business plan is essential for success. It serves to provide the reader with background information on the industry, along with its current trends and future projections. This section will help to assess whether or not an idea is feasible, as well as how competitive it may be in the marketplace.

The industry profile should include both qualitative and quantitative data. Qualitative data can illustrate points such as the current market share of competitors, product, price, promotion and distribution trends or any other relevant factors that may affect the business’s ability to succeed. Quantitative data consists of numerical figures like sales volume and growth rate of particular products within the industry over time.

Including this kind of information will help potential investors understand why your business should exist by highlighting its unique niche within the marketplace.

What is an industry?

An industry is an economic sector that produces goods and services. It is the driving force behind a country’s economy. Industries can range from large-scale enterprises with hundreds of employees to small, family-run businesses. As such, each industry has unique characteristics that must be taken into consideration when writing an effective business plan.

When researching an industry for your business plan, it’s important to understand the factors affecting its performance, including market trends and government regulations. Additionally, you should consider the competition in the market – both current players and potential new entrants – as well as customer habits and preferences. All this information will help you gain insight into how best to position your business within this particular industry in order to succeed.

Industry classification

When creating an industry profile, it’s important to understand the classification system used by experts in the field. This includes macro industries, subsectors, industries and even trade groups, each of which provides further detail on a company’s market.

The North American Industry Classification System (NAICS) is one of the most widely used systems for classifying businesses by type of activity and geographic location. It categorizes establishments based on their primary production process or product line and assigns them a six-digit code that uniquely identifies them within their sector. The NAICS also makes it easy to compare businesses across different sectors and regions by grouping similar companies together under broader categories such as transportation or manufacturing.

How to find your industry

Finding the right industry for your company is a crucial step in the process of writing an effective business plan. Understanding what industry you are entering and who your competitors are will help determine how to structure your plan and position yourself in the market. Knowing where to start can be challenging, so here are some tips on how to find your industry and create an effective business plan.

First off, research current trends in the market and identify areas that you believe have potential for growth or represent a good fit for your company’s products or services. Look at macroeconomic data from government sources such as the Bureau of Labor Statistics, as well as industry-specific reports from organizations like Forbes or Business Insider. Analyze these reports to determine which industries may offer more potential than others, then narrow down your choices by researching key factors such as demand, competition and capital requirements within those industries.

How to find your industry NAICS code

The first step in writing an effective business plan is to identify your industry and the associated North American Industry Classification System (NAICS) code. NAICS codes are used by governments, businesses, and other organizations to classify industries according to the type of economic activity they engage in. Knowing your industry NAICS code is essential for gathering information about your industry and its competitive landscape, as well as determining which regulations apply to you.

Fortunately, it’s easy to find out what your industry NAICS code is. To begin, visit the Statistics Canada website and use their searchable database of NAICS codes. You can also contact a government agency or trade association related to your industry for more help finding your specific NAICS code.

Financial Performance Data by Industry in Canada

Financial performance data by industry in Canada is an important factor to consider when writing an effective business plan. Knowing the key financial ratios specific to your industry will help you benchmark your performance, identify potential weak spots and develop strategies for growth. Different industries have their own unique financial metrics with which they measure success. It is important to understand these ratios and how they apply to you and your target market before writing a comprehensive business plan.

By analyzing the common financial trends of businesses within certain industries in Canada, you can gain valuable insight into how successful companies in that sector operate. Using this information, you can adjust your strategy accordingly so that it meets or exceeds the expectations of investors and other stakeholders involved with your venture. The ability to effectively identify industry-specific financial indicators gives businesses a competitive edge that can result in greater profitability over time.

You can find your industry’s financial performance here . Choose the location you want data from then choose ‘total revenue’ and ‘percentage’ and ‘search for an industry’ as your other options. Then type your NAICS code that you discovered under ‘Search for an industry’ and click on ‘search’.

Your options will come up below. Choose the appropriate option and ‘create report’.

If balance sheet data is available it will also be shown.

The lower portion of the report indicates the percentage of businesses that are profitable.

You can also do an internet search of the NAICS code to see what else comes up.

Industry codes help you to discover your specific industry and define the boundaries of that industry. Understanding the health of your industry and where the future of the industry may be going offers valuable insight into how successful your business could be. You can also measure your business performance against industry performance. All of this helps you to make better decisions for your business.

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Industry Lifecycle

Industry Lifecycle is an important concept for any business to understand and plan for. It is the process of a given industry maturing over time and passing through distinct stages of growth, decline, and eventual restabilization. Knowing the lifecycle of an industry can help you plan ahead by understanding where it is currently, what its likely future will be, and how to best capitalize on its strengths while minimizing weaknesses.

To write an effective business plan, an understanding of the industry’s current position in its lifecycle is essential. This knowledge will help you create realistic goals and strategies that are tailored to your specific market conditions.

This section should provide a comprehensive overview of the industry and its particular lifecycle. The lifecycle of an industry often determines how successful businesses in that sector will be and what strategies are best for them to pursue.

In order to determine the lifecycle of an industry, you must look at key factors such as trends in demand, competition from substitutes or new entrants into the market, technological advances, and changes in consumer preferences. It’s also necessary to assess potential risks within the sector including shifts in regulations or economic dips that could negatively impact performance. Additionally, you should consider how long the industry has been around and whether it’s likely to grow or decline over time.

The automotive industry is a good example of the industry lifecycle. It began with a period of introduction, followed by growth, then maturity and eventually decline. During the introduction phase, new technologies like the automobile were developed and brought to market. There was strong growth as the market for automobiles expanded. As the industry grew, it matured and reached a stable point where existing companies competed. Eventually, the industry declined as new technologies and sources of energy made it obsolete.

Industry History

It’s essential for aspiring entrepreneurs to have a basic understanding of the history of their chosen industry. Industry history is used to build an understanding of the current state of the market, as well as its potential for growth in the future. By studying past trends and developments in an industry, entrepreneurs can identify successful strategies that have been employed by previous businesses, enabling them to develop a comprehensive business plan that stands out from competitors. Moreover, they can use this information to gauge how quickly or slowly their venture may grow over time.

Industry Leaders

Industry Leaders are the heart of any successful business. Whether you’re launching a startup or expanding an existing business, understanding your industry and its leaders is essential for success. An effective business plan must include an industry profile to demonstrate comprehensive knowledge of the competitive landscape and identify strategies for establishing a foothold in the market.

An Industry Profile is a detailed analysis of your industry’s size, structure, growth rate, key players, trends and more. It begins with examining leading companies – their products/services; target markets; operations & financials; competitive advantages – and how they contribute to industry dynamics. Knowing who sets the standard in terms of quality, innovation & sustainability will also help evaluate customer preferences & overall satisfaction levels within the sector. Once identified, these insights can be used to craft actionable plans that position your company as a leader in its respective field.

Industry Threats

To create an accurate industry profile, you must carefully consider the various external factors that can potentially threaten your company’s operations. These threats may include changes in laws or regulations, economic conditions such as inflation or recession, competition from other businesses, technological advances, new entrants into the market, and customer preferences.

By analyzing these elements of your industry and assessing their potential impact on your business plan, you can better anticipate changes in the environment and develop strategies to minimize any adverse effects these threats might have on your company’s profitability.

Industry Predictions

Industry predictions can help businesses stay ahead of the curve and plan for the future. When researching your industry profile, it is essential to look at key economic indicators such as consumer spending habits, employment rates, and capital investments. Additionally, consider major disruptors like technological advancements or regulatory changes that may influence your market dynamics over time. By gaining a comprehensive understanding of these factors, you will be better equipped to make informed decisions when creating your business plan and developing strategies for growth.

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Industry associations.

Industry associations play an integral role in the development of a business plan. They provide industry professionals with information, resources, and contacts to help them create successful business plans and gain strategic insights into their industry. Furthermore, they can also help entrepreneurs identify potential customers and develop marketing strategies based on current industry trends.

The first step to utilizing an industry association is researching the available options and learning about their current activities. After finding one that fits the needs of your business plan, it’s important to join the organization so you have access to all the benefits they offer. Once you’ve joined, be sure to take advantage of any educational opportunities or events designed for members; these are excellent ways for entrepreneurs to network with other professionals in their field and learn more about specific trends related to their industry.

Industry Statistical Analysis

Industry statistical analysis is an important part of writing an effective business plan. Accurate and up-to-date industry data can provide invaluable insight into the current trends, potential risks, and opportunities in a particular market. Taking the time to research recent industry developments allows entrepreneurs to make more informed decisions regarding their business strategies going forward.

When conducting your own industry statistical analysis as part of a business plan, it’s important to look at both economic indicators and demographic trends for relevant market segments. Analyzing existing sales figures for similar businesses or products is also essential for understanding the size of the opportunity or assessing competitive threats. In addition, looking at various macroeconomic trends such as inflation rates or GDP growth can help inform your projections about future performance within the industry.

Putting it all together

Once you’ve gathered all your data, you’ll summarize it in your business plan. It may look like the following example:

As with any section of your business plan, this section required regular review and updating.

That's All Folks...

I hope with this information you will find it easier to write the Industry Profile section of your business plan. Up next…Marketing Strategy.

If you have questions, please comment below and I’ll be happy to answer them.

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Business Plan Example: The Industry Overview

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Wondering how to approach the industry overview section of your business plan? Having an example might help. Let's look at the industry overview for Pet Grandma, a fictional pet-based business invented for this business plan sample.

The Pet Industry

According to the American Pet Products Association, pet expenditures in the U.S. totaled slightly over $72.5 billion in 2018, up from $48 billion in 2010, an increase of 51% in eight years. This includes:

Food: $30.32 billion
Supplies/OTC Medicine: $16.01 billion
Vet Care: $18.11 billion
Live animal purchases: $2.01 billion
Pet Services: grooming & boarding: $6.11 billion

These figures reflect the increasing humanization of pets, a trend that is showing no signs of waning. More and more people consider their pets to be people too and treat them accordingly. Karen McCullough, then director of marketing (2000-2010) for Winnipeg-based Petland Canada, which operates both company-owned and franchise stores across the country, says, "People are looking for more these days—absolutely. We see a lot now in higher-end products, people are demanding more for their pets, from treats to grooming supplies to brand-name toys and even clothing."

And, because people want the best for their pets, there is also an increasing demand for pet-care services. Across North America, the pet care business has seen an explosion of growth over the last ten years.

Our Position in the Industry

West Vancouver is an affluent area with a high pet density, an ideal market for a pet-sitting business such as Pet Grandma. People in this area not only have pets but can afford to spend money on them and are willing to do so.

Our market research has shown that nine out of 10 pet owners polled in West Vancouver would prefer to have their pets cared for in their own homes when they travel rather than be kenneled, and six out of 10 would consider having a pet sitter provide company for their dog when they were at work.

The Competition

While there are currently eight businesses offering pet sitting in West Vancouver, only three of these offer on-site pet care and none offers pet visit services for working pet owners.

Currently, there is no single company dominating the market. This may be because all of the pet-sitting businesses are relatively new; the oldest, Paula's Pet Sitting, has only been in business five years. However, half of the existing pet-sitting businesses control the majority of the market—Paula's Pet Sitting, Doggie Care Services Inc., Pet Petters, and Pet Sitters on Demand together make up 65% of the market.

Save your full competitive analysis for section four of your business plan , but briefly share competitor insights here as it relates to your industry and your unique position in it.

What Makes Pet Grandma Unique

Pet Grandma's marketing strategy is to emphasize the quality of pet care we provide. As our slogan, "A Grandma for your pet!" says, we treat people's pets as family members and strive to give them the same loving, personal care that their owners would give. In our marketing , we will be emphasizing the quality and personalized service we provide.

We will also offer some services that are currently unique, such as our pet visit services, where one of our trained staff will go to a person's home while they're at work and feed, exercise, and play with their pet, allowing dog owners who work to come home to happy, friendly companions rather than demanding, whiny animals.

Your Business Plan

That's a basic example of an industry overview for your business plan. It provides an look at your business's industry and highlights your place within it. Your plan should present well-researched information to display that you understand the industry well.

Once you have yours written, you can move on to the next section of the business plan, the market analysis .

American Pet Products Association. " Pet Industry Market Size & Ownership Statistics ." Accessed Jan. 8, 2020.