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What's the Market, and How Big Is It?

Socrates said, "Know thyself." In business, we say, "Know thy market." Your business plan should reflect not only who your customers are, but also the size of the market they inhabit and its trends. From this information, you should be able to estimate your sales revenues and company growth over time.

Ask yourself, where is your market? Is it local, regional, national, international? You'll need to know the answer to that question when it's time to create your marketing plan. You can help identify the common characteristics of the people who will buy your product or service by downloading and using a Customer Profile Worksheet.

When considering a market's size, keep in mind the factors that affect market growth: social and economic trends, technology innovations, government regulations, trends in your particular industry, and so on. When selling a product or service online, many or all of these factors will affect your business. For example, what improvements in Net technology will change the way you offer and deliver your product or service? Is your business positioned to take advantage of the relentless change of the Internet? Within a few short years, consumers will surf the Net with ever-increasing speed. Is your business prepared to take advantage of the multimedia possibilities that will be available to the common Net user? What about government regulation? Will sales on the Net be taxed? You should consider how this would affect your online business.

As for sales projections, break them down to best case, worst case, and most likely scenarios. This way, you can offer a spectrum of revenue projections.

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