To plan the future of your business you need to be aware of where your industry is going and track the trends that are taking place. Industry trends can change quickly and require intensive and ongoing analysis to determine just what’s happening.
For instance, a sudden drop in an industry’s sales commission rates combined with a reduction in minimum order size and a big increase in outstanding debtors would indicate a shift of power to consumers and a consequent weakening in prices.
All very important if you are in that industry and trying to work out your new price list or produce a catalogue of merchandise for the next season.
Trend analysis is conducted on many levels – global, national and local. In today’s business world you need to have an understanding of all three types of trends to position your business for greatest advantage.
It’s beyond the ability of most SMEs to conduct their own research for a comprehensive analysis of their industry. Fortunately there are many sources of statistics and data on most industries that are available to tap for the information you need.
This article is a brief introduction to the methodologies of DIY industry trend analysis.
Define your Industry
Start by defining your industry in as much detail as possible. ‘Accountant’ or ‘Consultant’ is far too broad. Something like ‘Two partner accounting firm providing taxation services to suburban retail clients’ is more like it. Now the research can begin.
Trade Journals
Every industry has its own trade publications. These can be produced by industry associations or by publishers targeting members of a particular industry. If you happen to be a ‘two partner accounting firm providing taxation services to suburban retail clients’ you really need to know about more than just accounting firms; trends in suburban retailing will also be essential to know.
This type of publication is often very restricted in its geographic coverage. There could well be a separate publication for each state or region, and it’s a good idea to get as many different journals as you can to obtain the widest possible picture. Your local library will often be a good place to start searching for a list of available titles.
Even the advertisements in a trade journal can be a good guide to an industry’s trends. “New” or “Just Released” can indicate a hot new product or service that will have an industry-wide impact in the near future.
Editorials and other ‘comment’ types of content are also likely to give indications of major trends that are just now or will soon be affecting an industry.
The Financial World
People who invest large sums of money in the financial markets are very big on monitoring industry trends. Analysts pore over data on every industry segment to see what’s successful and what’s on the decline, often to a very high degree of detail.
Much of this information is available free or at very low cost in business journals and financial newspapers and is a good source of knowledge about national and international trends.
If you’re an active investor and have a stockbroker you can always go to them for industry advice; they have access to analytical reports that often don’t go into print.
The Internet
Log on to the internet and go to your favorite search engine. Key in the name of your industry and wait for thousands of websites to show up. You’ll soon find that too much information is the problem.
This is why you have to refine the definition of your industry and get down to specifics. Google’s ‘Advanced Search’ lets you stipulate additional words or terms to search for as well as those words you want to leave out of the search.
In our example of a hypothetical accounting firm, a search for ‘accountants’, and ‘retail clients’ would narrow it down tremendously.
Be sure you only visit sites with information that’s up-to-date. Too many older documents are still alive long past the time they became irrelevant. If a date isn’t there don’t accept it as being current information. Also, be careful to note the national origin of each bit of information you gather.
Your Report
The next step is to summarize the information you’ve found in dot points. Treat this as if you are writing a report for someone else and stay objective, even if you may initially disagree with what you’ve found.
Put all the facts down, noting the source and the date for later reference. Look for the trends to show themselves – lines of thought that converge in such areas as growth or contraction, rises or falls, stability or uncertainty and patterns will begin to emerge.
These patterns are your industry’s trends, culled from a range of sources and opinions. No doubt you’ll find some contradictions between individual sources but that’s to be expected. Extremes are unlikely and so is it for any industry to go from one year to the next unchanged.
How you use this information is up to you. A trend is only a direction and trends can reverse as quickly as they begin. But if you try to plan the future of your business without knowing your industry’s trends you’re likely to later find yourself wondering why your competitors seemed to know what was coming and you didn’t.
Copyright 2004, RAN ONE Inc. All rights reserved. Reprinted with permission from www.ranone.com
Chris’ combination of academic credentials, career experience and temperament ideally suit his calling as a business development advisor. Clients say he has a mind for business and a heart for service.