How to Write a Market Analysis for a Business Plan

A market analysis is one of the most important sections of any business plan — and one of the most commonly done wrong. Most entrepreneurs either skip it entirely or fill it with vague claims like "the market is huge" without any supporting data.

Investors and lenders have seen thousands of business plans. They know what a real market analysis looks like, and they can spot a padded one in seconds. Here's how to write one that holds up to scrutiny.

A credible market analysis section answers five specific questions with data:

1. 1How large is the total addressable market (TAM) — in dollars?
2. 2Is the market growing, shrinking, or flat — and at what rate?
3. 3Who are the main competitors, and what market share do they hold?
4. 4Who is the target customer — demographically and behaviorally?
5. 5What are the barriers to entry, and how will you overcome them?

Use three numbers, each more specific than the last:

• TAM (Total Addressable Market): The entire US or global market for your category. Use Census Bureau or BLS data for US industry totals.
• SAM (Serviceable Addressable Market): The portion you can realistically reach given your geography and model. Example: not the entire US food services market, but food services in your state or metro area.
• SOM (Serviceable Obtainable Market): What you can realistically capture in years 1–3. Usually 0.1–2% of SAM for a new entrant.

Don't make up a growth rate. Use the Bureau of Labor Statistics Current Employment Statistics (CES) series for your industry — it publishes monthly employment growth by NAICS sector. Annual employment growth is a reliable proxy for industry growth when revenue data isn't available.

For long-term trends, the BLS Employment Projections table (published every 2 years) gives 10-year outlook by industry sector — this is what consulting firms use. It's free at bls.gov.

Name your top 3–5 competitors. For each one, cover:

• Their pricing tier (budget / mid-range / premium)
• Their primary strength and primary weakness
• Estimated local market share if available
• The gap your business fills that they don't

Avoid generic statements like "our main competitor is everyone in the industry." Name specific businesses. If you can't name competitors, that's a red flag — it suggests you haven't done the research.

Go beyond "adults aged 25–45." A strong customer profile includes:

• Age range and household income (use Census ACS data for your area)
• Primary pain point your product solves
• Where they currently find solutions (and why those solutions fall short)
• How they prefer to discover and buy (in-person, online, referral)
• How frequently they need your product or service

Be honest here. Investors respect founders who understand their risks. Common barriers include:

• Licensing and regulatory requirements (health permits, professional licenses, zoning)
• Capital requirements (equipment, inventory, buildout)
• Established competitor relationships with your target customers
• Brand recognition advantages of incumbents
• Supplier or distribution access

After naming the barriers, explain specifically how you plan to overcome each one. This transforms a weakness into a demonstration of preparation.

• Keep the market analysis section to 1–3 pages in a business plan
• Lead every claim with a data source — not "experts say" but "according to the US Census Bureau"
• Include a simple TAM/SAM/SOM funnel diagram if you have design tools
• Put your SOM number in context: "capturing 0.5% of the $200M regional market = $1M in year 3 revenue"