This is a 4 part blog series that’s designed to educate entrepreneurs and small business owners on how to develop a business plan according to the average lender’s standards. Developing a business plan that meets lender standards will contribute to getting your small business loan request approved. This is part two of the blog series. Go here to read parts one and two.
A business plan should include researched information about your industry and target market from reliable and solid information sources. When writing business plans for my clients I only use the most reliable sources of information on the internet. As I stated in part one of this blog series, the internet if full of inaccurate and unreliable information, however there are some sources you can trust. In this part of the blog series I will discuss the second part of my formula for writing a winning business plan that will get your small business loan request approved and that is “Using the Right Research Sources.” Below is a list of reliable research sources that I use to write about the industry and target market of my clients.
Research Source 1: The U.S. Census Bureau – The U.S. Census Bureau offers a plethora of free, reliable information that can be used to write about the industry and target market of any business. I use their American FactFinder tool to find out everything to know about business and people. For example, if you are targeting other businesses, you can use the tool to find more information on the industries you are targeting. This includes the number of businesses in each industry (based on their NAICS code), how much revenues the businesses in each industry generate collectively, how many people are employed in the industry, and their location (state, city, and county). If you are targeting people you can use the tool to find out their income level, educational background, race and ethnicity, and location. The tool will generate a chart of all of the information you need about the businesses and people you are targeting.
Research Source 2: FirstResearch – FirstResearch will provide you with everything you need to know about you industry including the competitive landscape, industry regulations, international insights, regional highlights, industry employment growth, average hourly earnings & annual wage increases, quarterly industry updates, business challenges, trends, and opportunities, executive insights, and industry growth forecast. Based on my experience, FirstResearch provides so much information about a particular industry that you won’t need another source!
Research Source 3: IBISWorld – There only one setback (in my opinion) of using sources like FirstResearch and that is that they don’t have reports on more specialized industries. For example, when writing my first business plan I was looking for an industry report on “Loan Brokers.” Upon checking the FirstResearch website I noticed that did not have a single industry report for loan brokers. It had been combined with another industry and there wasn’t much information on it. This led me to finding IBISWorld. IBISWorld provides industry reports that contain data similar to that of FirstResearch. However, I found that IBISWorld tends to have reports on larger varieties of industries than FirstResearch. If your business is in a specialized industry you may want to check out IBISWorld. Keep in mind that they are also a bit more expensive than FirstResearch because they provide more data in their reports. I suggest using FirstResearch if you can find a report on your industry (and you want to save money).
Research Source 4: Manta – Manta provides basic information about millions of businesses. This website can be used to find basic information on your local competitors. This includes business location type (e.g. single location, branch office, or franchise), state of incorporation, year established, annual revenue estimates, number of employees, SIC Code, NAICS Code, and business categories (i.e. the business industry). Most of the information on the site is an “estimate” but it’s still useful information that will help you understand more about your local competition.
Research Source 5: HighBeam Business – HighBeam Business is another site that provides business industry reports. These reports are free so they don’t contain a significant amount of information but the information they do contain is still very useful. This is a good site to use when you need additional information to supplement any information you obtain about your industry from FirstResearch or IBISWorld.
This concludes the list of suggested research sources you should use when writing about your industry and target market in your business plan. I’ve found information from these sources to be accurate and they are a favorite amongst the lenders my clients have worked with. In the 4th and final part of this series I will discuss the “Structure and Setup” of your business plan. The structure and setup of your business plan is important because it consists of formatting the business plan in a way that makes it easy for a lender to understand. Stay tuned!