Research is an integral part of prepping for your business plan. It’s one of those things where it’s all too easy to get overwhelmed and completely lose your way. You need to paint a picture of the macro industry. But with so much information available, you may find yourself struggling to decide what does and does not matter.
One thing I’ve learned in my years helping clients is that when it comes to writing the macro industry section of your business plan, less is more.
Think of it this way:
Have you ever found a really interesting article you want to read? Then, once you get going, you realize it’s incredibly long and all you really want are the highlights?
Your macro industry section is the same thing.
If your business plan is overflowing with information, investors or bankers will end up skimming and looking for the highlights. Your job is to organize the information in a way that provides all of the details they want and skip over anything extraneous.
The key is to keep the macro industry section short, simple and visual. This way, you can increase the odds that it will be read in full.
Let’s take a look at how you can make that happen.
What’s Your Goal?
You want to use the macro industry section to give the reader the big picture. This section is about educating and informing. It’s common for people to spend far more time than necessary on it. They end up providing information that isn’t relevant.
So how do you avoid that?
By having a plan BEFORE you get started.
You want to be purposeful in your work, so understanding how much research you should do, how much data you should include and how much information is enough is your starting point.
The macro industry section is used as a baseline for investors to understand your industry. For those that don’t know your industry, it’s a mini-lesson. For those that do, they will be considering how you interpret and understand the data you found.
Bankers and underwriters will be more concerned with looking for trends in the data, and whether the industry is steady or has frequent fluctuations.
You may find yourself with a business idea that doesn’t easily fit into one specific industry. Should this be the case, you should be looking at similar ones to help you gather data.
Where and What to Research
Before you begin your research, it’s important to understand that you WILL find conflicting data. That’s normal. You may find so much information that you can’t even begin to figure out what matters most. That’s also normal.
What you don’t want to do is waste three full days gathering information only to use a tiny fraction of it. The truth is, to write a great macro industry section you actually only need to know the answers to a handful of questions.
Quick tip: Make sure you have your reference page handy while you research as you’ll need to cite your sources and you don’t want to have to go back and find everything again after the fact. Include the source, the year, the title of any articles and the URL.
To get started, find the North American Industry Classification (NAICS) code for your business. This code is used by Federal statistics agencies to classify business establishments.
Once you know your code, you can use this to find out the size of your macro industry, specifically the revenue the industry generates annually.
The NAICS code allows you to narrow the field and get more accurate data. Knowing this information means you can pull research reports specific to the industry.
I’m also a fan of checking the United States Census Bureau’s Industry Statistics Portal to find helpful graphs, charts and statistical data.
As you sort through all the data, specifically look for information that speaks to the macro industry’s growth projections.
Once you’ve gathered the information you need to show growth projections, the next step is to identify the factors and drivers that will impact the industry over the next five years — both positive and negative.
I recommend choosing between three and five factors that you feel have the potential to make the biggest impact.
Avoid These Common Mistakes
The macro industry section should be 100% based on the data you’ve gathered, not your own knowledge.
When writing this section, your goal is to interpret the information critically and objectively. Don’t just try to make it fit your desired narrative. Avoid making any assumptions about what things mean, or simply copying and pasting existing data you’ve sourced.
Also, avoid using information or data that you cannot cite.
When trying to find the balance between too much and not enough information, ask yourself this question — Why does this information matter? You should be able to answer that for every piece of information you choose to include. If you’re not sure why it matters, then leave it out entirely.
Finally, when you’re getting started, focus more on reading instead of writing.
If you’re feeling like your macro industry section information is too broad, don’t forget that you’ll also be creating a micro industry section that will get into more detail about where specifically your business will be operating.
If you’re working on a business plan and need help rounding out your macro industry section, I can help!
