Q: How do I find out what the Industry standard is for the units of my products and services?
Q: What is the rationale behind having 12 or fewer products?
Q: How do I find out what the Industry standard is for the units of my products and services?
There are a number of great sources for this type of information, a few of which are listed here.
Personal Experience Don’t underestimate your experience and knowledge about your business. Consider what you already know about how products and services are bought and sold in the industry you’re getting into.
Research Competitors Track down the major players in your industry, your competitors. Visit their websites, obtain their marketing materials and any other pricing information you can access. Learn how they arrange their products and how they communicate their offerings to customers.
Search Engines Search engines continue to get more effective and powerful. Pose your questions and try a few searches for information on defining units for your industry.
(Visit the Search Engine Links Page )
Trade Publications Comb through articles and advertisements for clues on how units are defined for your industry or business.
Business Guides Search local economic development agencies for business guides, local and regional business specific information. See an example at http://www.missouribusiness.net/sbtdc/industry/index.asp
Industry Associations Look for newsletters, websites, articles and workshops. Try calling and doing a bit of networking to access the information you seek.
Census Websites Search your local census websites. If you have difficulty locating usable information, don’t be shy about contacting the agency via contact info at their website and asking for assistance. (Visit the Census Links Page)
Free Feasibility Studies/Market Analysis Publicly funded government and educational feasibility studies and market are sometime made public. The best way to access these will be to contact your local university or search for documents via the Internet using search engines.
Commercial Sources Organizations such as First Research and BizMiner conduct analysis of different businesses and sell business-specific information. BizMiner reports on more than 16,000 lines of business with specific trends analysis reports for every US market area down to the zip code. First Research offers market analysis tools – they perform the “heavy lifting” by synthesizing hundreds of sources into succinct digestible formats.
Happy searching!
Q: What is the rationale behind having 12 or fewer products?
In limiting the number of units to 12, we are not suggesting that you limit the number of products. There is no limit to the number of products a business might sell, but we do recommend a limit of 12 units (some of which might include many products) for the purpose of planning and communicating your concept to others. To begin with, business planning is not a perfect process. Like the weather forecast, it’s not always going to be perfectly accurate. What we strive for in planning a business is to prove the financial case within a reasonable, believable degree of accuracy. We do this by using conservative pricing and sales assumptions and forecasting sales for only up to 12 “most important” products, services or packages. “Most important” is this case will almost always mean those products and services that are likely to bring in the most revenue. Another way to state this is to pick the low hanging fruit (for forecasting purposes) and not sweat about the rest.
The most important reason to do a business plan is to prove or disprove your business case. The second most important reason is to create a document with which to communicate your concept to others (lenders, investors, stakeholders, etc.) From a communications standpoint, rather than listing 1,000 products and or services, it’s going to be more effective to group products according to type or product line. As long as your arrangement of products and services makes sense, and most importantly, as long as you are confident in the projections – having not more than 12 units will make it easier for anyone reviewing the business plan to understand.
For example:
- A furniture retailer – instead of listing couches, chairs, armoires, dressers, beds, tables and night tables – might instead forecast these under one unit named “Bedroom Furniture”. In this case the units of sale might be based on the average anticipated sales like individual items or bedroom suites, or some other sort of package deals.
- A renovator – instead of listing every type of job possible (floors, walls, ceilings, roofing) – might instead forecast jobs under different categories such as residential and commercial. ”. In this case the units of sale might be based on the average anticipated sales like small jobs, medium jobs, and/or large jobs.
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