Every industry is shaped by a range of factors that affect how customers behave and businesses operate. As you consider factors and trends affecting your industry, pay special attention to those you think present special opportunities or challenges for your business.

Industry Outlook

Industry reports, trade associations, business magazines, and the Internet can all be valuable resources when predicting the future of your industry. Describe factors and trends affecting your industry, and consider their implications for your business. Issues to think about include:

• Demographic
  These refer to the basic characteristics that your customers tend to have in common, like age, income level, geography or gender.
  
  
• Social
  These are fads or shifts in popular opinion, often strongly influenced by the media, including television shows and commercials; sports teams and icons; magazines.and peer pressure.
  
  
• Economic
  These indicate the state of the economy, on both a local and national level. Is the national economy booming? Is your community suffering through a recession, according to your local Chamber of Commerce and the local press?
  
  
• Technological
  These demonstrate how technology is affecting your industry. For instance, how is the Internet changing who you compete with? How is it changing the way customers research their purchases?
  
  
• Regulatory
  These describe the role government or other rule-making bodies play in your industry. Rules about how businesses must operate often means that not everyone who wants to can be your competitor.
  
  
• Environmental
  Many industries have a unique relationship to the environment. What is your industry's relationship
  to the environment? Are there any trends, like a call for environmentally-friendly products, that may affect the way your business operates.

Based on the factors and trends you've described, what's the outlook for your industry over the next 3 to 5 years? Will it grow or shrink? How else do you think it will be different?

Market Size

Imagine you have no competition, and customers' only option is to buy your product or service. How many customers would you have? How much money would your business make? That's the size of your market.

A very small market may mean you'll have to fight tooth and nail with your competitors for every sale. A very large market may lead you to target a relatively narrow group of customers.

When estimating the size of your market, consider industry factors and trends, and pay special attention to those you think present special opportunities or challenges for your business. Such as:

• Focus on what's relevant to your business.
  
  
• Consider doing some research, at sources such as GDSourcing, a directory of free statistics specifically designed for entrepreneurs doing market research.Where possible, cite sources for your information.
  
  
• If you can, quantify your market in terms of dollars in sales. Doing so will help you confirm that your own revenue goals are reasonable.
  
  
• If you can't find the exact information you're looking for, work with what you know.