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Feasibility Study Course Lesson 2 – How to Write a Market Feasibility Study
Part 3 - Competition in the Industry & How to Calculate Sales Projections

By Lahle Wolfe, About.com Guide

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(Continued from Page 2)

Feasibility Study Course Index - List of All Lessons

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Tips on How to Research Local Competition in Business

If you are planning to serve only a local market, start by identifying every competitor within a fifty (50) mile radius. The fastest way to do this is using a telephone book or online business locator.

List each competitor by location and distance from you, and from each other. You should closely examine all competing businesses that are within fifteen miles of your location. Consider their locations, business hours, and how long they have been in business. These things can help you determine how hard it will be to establish a similar business in the same geographic area.

You should also make note of any similar businesses in your area that have recently gone out of business. There may be a reason such as poor location, high taxes or operating restrictions, or there may be not enough demand for the product or service in that area to sustain a business.

Researching local competitor information can tell you two things: What works and what has not worked.

Tips on How to Research National Competition in Business

If you are planning to sell your products or services on a larger scale through franchise development, or Internet sales, you need to look beyond local competition. You can start with Forbes “World’s Biggest Companies (click "skip this welcome screen"). You can search the list by country, rank, industry, and by other variables to fine-tune your search.

To find smaller competition, use a search engine to find businesses by key words related to your industry. For example, if you are starting on online retail outlet for specialty apparel, try searching on “specialty apparel.” The return will show you companies selling similar products that are ranking high in search engine results and may be getting more business. Visit their websites to see what they are selling – and what they are not selling.

If you are not sure what keywords relate to your industry, use free, online keyword search tools to help you know what most people are searching for in your related field.

How to Calculate Sales Projections

Sales projections can be a challenge for any new business owner because there is little, or no track record to support how fast you will grow, or what products or services will sell best.

Sales projections should factor in how much time and money will be invested into the business, and the markets you will be targeting. For example, if you get your product in the door at Wal-Mart or Target, your sales are more likely to grow faster and your profits will be higher than if you sell your product at the Dollar Store or only in local “mom and pop” stores.

For this reason, it is important that you write market feasibility study first. Your market study will help you decide where to sell your product of services, and what products and services are most likely to generate the most revenue.

If you are have an Internet-based business:

Estimate the total traffic (number of visitors) to your website each month.
Project anticipated site traffic volume over time.
Use traffic projections to estimate the average number of sales per every 10,000 visits to your site.
Finally, calculate the average amount of each sale.

The more traffic you can drive to your site, the more opportunities you have for making a sale. Do you have good Search Engine Optimization (SEO) skills? Do you have your website live and ready to go? These things are important to all Internet businesses because as your site becomes more popular, you can project an increase in sales.

Tip: Summarize sales projections in the content but attach a spreadsheet showing actual numbers based on sales projections.