What Goes Into a Market Analysis #
A market analysis is the section of a business plan, investor deck, or strategic document that proves the market opportunity exists and is worth pursuing. How to write a market analysis that actually convinces comes down to five components, each backed by verifiable data.
| Component | Question It Answers | Data Source |
|---|---|---|
| Market Size | How big is the total opportunity? | Census SUSB (revenue by NAICS) |
| Growth Rate | Is the market expanding or contracting? | Census CBP (CAGR from historical data) |
| Target Market | Who specifically will you serve? | Census CBP (geographic/segment filtering) |
| Competitive Landscape | Who else is in the market and how strong are they? | Economic Census (CR4); SEC EDGAR (competitor revenue) |
| Industry Trends | What forces are shaping the market's direction? | BLS QCEW (wages), FRED (economic indicators) |
Step-by-Step: Writing Your Market Analysis #
Step 1: Define your industry with a NAICS code. This sets the boundary for all subsequent data. "Food service" is too broad. NAICS 72251 (Restaurants and Other Eating Places) is precise and matches federal data classifications.
Step 2: Size the market. Pull total industry revenue from Census SUSB. Calculate TAM (national), SAM (your serviceable geography/segment), and SOM (realistic capture). Present all three — TAM alone isn't credible.
Step 3: Calculate the growth rate. Use Census CBP historical data to calculate employment and establishment CAGR over 3–5 years. Compare to GDP growth to classify the industry's life cycle stage (growth, mature, or declining).
Step 4: Map the competitive landscape. How many establishments exist (Census CBP)? How concentrated is the market (CR4 from the Census Economic Census)? Who are the top competitors by revenue? Is the market fragmenting or consolidating?
Step 5: Identify industry trends. What's happening with wages (BLS QCEW)? Employment direction? Technology adoption signals? Regulatory changes? Cite specific data where available; use qualitative language where data is limited.
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Complete data with 5-year forecasts, geographic breakdowns, and competitive analysis. Every data point sourced and cited.
Market Analysis Mistakes That Kill Credibility #
| Mistake | Why It Fails | Fix |
|---|---|---|
| "The market is worth $50B" (no source) | Lenders and investors can't verify the claim | Cite Census SUSB with NAICS code and year |
| TAM only, no SAM/SOM | Implies you'll capture the entire market | Always narrow to serviceable and obtainable market |
| "We have no competitors" | Either false or the market doesn't exist | Use Census CBP establishment counts to show competitive landscape |
| Growth projections disconnected from industry data | 40% growth in a 3% CAGR industry isn't credible | Derive projections from industry CAGR, justify deviations |
| Generic trends without data | "Technology is disrupting the industry" says nothing | Cite specific wage, employment, or establishment trend data |
Market Analysis Template #
Use this structure for a 3–5 page market analysis section:
| Section | Content | Length |
|---|---|---|
| Industry Overview | NAICS code, what the industry includes, total establishments and employment | ½ page |
| Market Size | TAM, SAM, SOM with Census SUSB data | ½ page |
| Growth Analysis | Employment and revenue CAGRs, life cycle classification, 3–5 year outlook | ½–1 page |
| Competitive Landscape | Establishment count, CR4, top competitors, market structure (fragmented/concentrated) | 1 page |
| Industry Trends | Wage trends, technology impact, regulatory environment, SWOT summary | 1 page |