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Coaching Company

Market Analysis Summary

Coaching Company will focus on small business owners, managers and entrepreneurs who are concerned that their businesses have not grown at the rate they want or need them to, frustrated that they are spending too much time in their businesses and may be burning out and worried that their business will not survive without them. These companies will have revenues of $10 million or less.

According to the July, 2002 census, there are approximately 81,600 small businesses in the 5 county Anytown Metropolitan area. Although the majority are manufacturing based, there are a significant number of service related companies. Coaching Company will not take a position of industry expert but of leadership and development expert; therefore industry will not have an impact on any prospective markets.

4.1 Market Segmentation

Coaching Company will focus on two markets within the Anytown Metro area, the small business segment (businesses with more than one employee/owner), and the entrepreneur segment, which includes home-based and one-person business operations. Although the company can handle larger organizations, the greatest benefit will come to businesses with under $10 million in annual sales. The majority of these companies are comprised of “technicians” who are gifted in the work of their business, but typically do not have the resources to have in-house staff dedicated to strategic planning, professional development and/or coaching.  Our goal is to eventually obtain approximately two-thirds of all our business from the small business segment, since this generates the greatest cash flow. Furthermore, this segment has the lowest percentage of variable costs. The small business segment is considered to be the company’s cash cow.

Initially the company will focus on the two segments in just the A County and B County area. However, by the end of the three-year projections, the company expects to be serving the entire Anytown Metropolitan area. The Market Analysis table and chart show the number of small businesses in each county.

Management consulting business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
County A 3% 31,424 32,367 33,338 34,338 35,368 3.00%
County B 2% 14,130 14,413 14,701 14,995 15,295 2.00%
County C 3% 6,189 6,375 6,566 6,763 6,966 3.00%
County D 2% 2,849 2,906 2,964 3,023 3,083 1.99%
County E 2% 27,008 27,548 28,099 28,661 29,234 2.00%
Total 2.46% 81,600 83,609 85,668 87,780 89,946 2.46%

4.2 Target Market Segment Strategy

The small business and entrepreneur markets are ideal targets for several reasons:

  1. As a small or entrepreneurial business, resources are often limited to core business functions such as production, administration, finance and distribution. Professional development, training, coaching or planning frequently goes unnoticed or even forgotten. As economic pressures increase and competition becomes more intense, these companies are always looking for effective ways to make themselves more prosperous.
  2. As a small or entrepreneurial business, the owner is typically an accountable technician which means he or she has everything on the line with regard to their business succeeding or not, and that their area of expertise is in the business they are “in.”  Frequently, a technician will be attracted to the “work” of the business and neglect the fundamental health of the business, which includes nurturing both themselves and the customer base.

4.3 Service Business Analysis

The United States spends more per capita on education than any other country. Training or professional development in America is a $210+ billion industry.

There are five basic groups that need training as follows:

  1. Government – Those employed in federal, state, and local governments, the military, post office personnel, school teachers and administrators. This group spends more than $23 billion in training funds annually.
  2. Large Businesses – These are firms with 100 or more employees. This group spends more than $28 billion in training, with the largest portion going to training managers and career personnel.
  3. Small Businesses – These are firms with fewer than 100 employees. There are more than 79 million small businesses in the U.S. This group spends more than $20 billion on training each year.
  4. Professional Service Firms – This group includes doctors, lawyers, accountants, engineers, consultants, etc. Continuing education requirements move this group to spend training dollars disproportionate to their size, more than $11 billion per year.
  5. Individuals – Those who buy training with their own money and on their own time. This group spends more than $2.5 billion on training and they tend to be highly motivated.

4.3.1 Competition and Buying Patterns

The key element in purchase decisions made at Coaching Company client level is trust in the professional reputation and reliability of the professional development firm. The professional development industry is pulverized and disorganized, with thousands of smaller consulting organizations and individual consultants for every one of the few dozen well-known companies.

Competitors range from major international name-brand consultants to tens of thousands of individuals. One of Coaching Company’s challenges will be establishing itself as a real professional development company, positioned as a relatively risk-free corporate purchase.

When dealing with the small or entrepreneurial business market, cost or price will be one of the greatest obstacles Coaching Company will face.  It will be up to Coaching Company to assist its clients in the discovery of how much it may cost them NOT to pursue professional development and establish Coaching Company as the most effective solution to their challenges.

With time, reputation and referrals will allow for a steady stream of new clients as well as regular price increases. This is not a business to build brand as much as it is to build reliability.