Starting a small business is an exciting time for entrepreneurs, especially if it is in an industry that they love. Taking a hobby or interest and turning it into a business is a common trend for many entrepreneurs. Having the love and dedication that small business owners need to start their business is important, but you can't make common mistakes to keep your business from success. An important step in starting your own business is knowing your industry.
An industry is defined by Princeton as, "the people or companies engaged in a particular kind of commercial enterprise." It is important to know specifics about your industry for many reasons. Knowing your industry will not only help your business succeed, but also give you an edge on your competition, and provide banks and other lenders information that they need to make an educated decision about loans for your business.
So what do you need to know?
Industry Participants
You need to know who is selling in your industry. Most importantly, you need to know the different types of businesses that are selling in your market. For example, make sure you know whether big name chains are infiltrating your industry, or if smaller businesses are dominating.
Competition
You absolutely must know your competitors. They are the individuals who will either make or break your business. You should know your main competitors and a few specifics of their business. This includes: strengths, weaknesses, products, distribution tendencies, finances, reputation, pricing, and more.
Distribution Patterns
Know every step on the path between suppliers and users. Who uses distribution companies? Manufacturers? Retail stores? Door to door? Telemarketing? Analyze the success rate of each of these different strategies. Also, keep in mind that the Internet has changed the way distribution works. You can find out specifics on different companies through various websites. Additionally, Internet sales have skyrocketed in the past years and have created new distribution channels and processing.
Buying Patterns
Buying patterns include factors or key selling points which lead to a consumer's decision to make a purchase. These factors include: service, support, price, sales staff, training, software, delivery, brands, and reputation. Understand what is working for your industry, and what is not.
Trends
Know what is popular, and what is not. Gain an edge on your competitors by knowing and providing consumers what is desired and wanted right now. Know the environment, especially when the trends change.
Entrepreneurs must have a grasp on their business' industry before opening its doors. You need to know what is working in your industry and what is not, who your competition is and what they offer, and patterns of your consumers.
