Quick Answer: How do you conduct market research for a business plan?

To conduct market research for a business plan, start by defining your target customer and local trade area, then gather data on industry trends, competitors, pricing, and demand from trusted U.S. sources such as the Census Bureau, BLS, and NAICS. Combine this secondary data with real-world validation — like surveys, interviews, and test marketing — to estimate how many customers you can reach, what they’ll pay, and how you will stand out. Finally, convert this analysis into a clear Market Analysis and Marketing Strategy section that directly supports your financial projections.

This step-by-step guide walks you through each part of the process so your market research doesn’t feel abstract — it becomes a concrete story lenders, investors, and AI platforms can trust.

When lenders, investors, or even AI platforms evaluate your business plan, they are quietly asking one big question: “Does this entrepreneur really understand their market?” A polished Executive Summary and a strong financial forecast are important, but without credible market research behind them, your plan can feel like guesswork.

The good news is that you don’t need a PhD in statistics to do effective market research. You just need a clear process, the right data sources, and a way to connect what you learn back to your step-by-step business plan and the 7 core sections every lender expects.

In this guide, you’ll walk through a practical, no-fluff approach to market research that works whether you’re launching a retail shop, a medical service, a trades business, or a home-based online startup. You’ll use the same mindset built into BPlanMaker’s Ultimate Guide to Business Plan Templates and the Complete Business Plan Blueprint — but this time, focused entirely on understanding your market.

By the end, you’ll know exactly what to say in your Market Analysis and Marketing Strategy sections so your plan feels grounded, data-backed, and lender-ready.

What Market Research Really Is (And Why It Matters in Your Business Plan)

Market research is the process of understanding who your customers are, what they want, who else serves them, and how big the opportunity really is. In a business plan, it shows lenders and investors that your idea isn’t just exciting — it’s supported by real-world data.

Strong market research answers questions like:

• How many potential customers are in your trade area?
• What do they currently buy, and from whom?
• What are the major trends in your industry?
• How is your business different from local competitors?
• Is there enough demand to support your revenue projections?

In other words, market research is the bridge between your vision and your numbers. It supports the narrative you lay out in your other pillar resources — like your 3-year financial forecasts — and makes it easier for reviewers to say “yes” because the opportunity feels tangible, not theoretical.

Now let’s walk through the step-by-step process you can use for any business idea.

Step 1: Define Your Target Market and Ideal Customer

Before you dive into statistics and spreadsheets, you need a simple, clear statement of who you plan to serve. This becomes the anchor for all your research and the first part of your Market Analysis section.

Start with Segments, Not “Everyone”

Even if your product could help many people, your business plan is stronger when it names specific segments. For example:

• An apartment cleaning service might target busy working professionals and property managers in mid- to high-income apartment communities.
• An archery pro shop might focus on hunters, competitive shooters, and recreational archery customers within a 30–45 minute drive of the store.
• A 3D/4D ultrasound studio might define its core market as expectant parents in their second and third trimesters, plus gift buyers (friends and family) within a defined metro area.

Use Demographics and Psychographics

To make your target market description more concrete, describe your ideal customer using:

• Demographics: age, income, education, household size, employment
• Psychographics: interests, lifestyle, buying motivations, pain points
• Location: ZIP codes, neighborhoods, commuting patterns

If you want extra help defining your target market, pair this guide with Discover Your Target Market: The Key to Successful Business Plans, which walks through examples and prompts you can plug straight into your plan.

Step 2: Use Industry, NAICS, and BLS Data to Understand the Landscape

Once you know who you’re serving, zoom out and look at your broader industry. Lenders and investors want to see that your plan aligns with real data on growth, employment, and spending patterns — not just local anecdotes.

Find Your NAICS Code

Most U.S. industries are classified by a six-digit NAICS (North American Industry Classification System) code. Knowing your NAICS code makes it easier to pull relevant statistics and benchmarks. You can search for your code using resources like:

• U.S. Census Bureau – NAICS
• U.S. Bureau of Labor Statistics (BLS)

For example, a bakery & pastry shop might fall under “Retail Bakeries,” while an antique furniture restoration business may be classified under “Furniture Repair & Related Services.”

Pull Key Industry Statistics

Use NAICS, BLS, and trade associations to find:

• Industry size and annual revenues
• Number of businesses and employees in your sector
• Growth or decline trends over the last 5–10 years
• Average wages and employment outlook (useful for staffing plans)

You don’t need to quote dozens of numbers. Pick 3–5 of the most important statistics, cite the source, and explain what they mean for your business. This gives your Market Analysis section depth without overwhelming the reader.

Step 3: Estimate Local Demand and Define Your Trade Area

National data is helpful, but your business lives and dies on local demand. That’s why lenders like to see a clear description of your trade area and a reasonable estimate of how many potential customers live or work there.

Draw Your Trade Area

Your trade area is where most of your customers will come from. For example:

• A cell phone store might draw customers from a 5–10 mile radius or specific ZIP codes around a shopping center.
• An ultrasound studio might serve an entire metro area, especially if appointments are destination-based.
• A mobile air duct cleaning service might define its trade area as any home within 45–60 minutes of its base.

Use Population and Household Counts

Once you’ve drawn your trade area, use demographic tools (such as Census data, city planning reports, or commercial mapping tools) to estimate:

• Total population
• Number of households
• Relevant age or income bands (e.g., households earning $75,000+)

For more ideas on using demographics and goals to shape your numbers, you can also lean on Crafting Your Path: Setting Realistic Business Goals for Success, which pairs nicely with the demand-side thinking in this step.

Step 4: Analyze Competitors and Pricing (So Your Positioning Makes Sense)

A great market research section doesn’t just say “there’s demand.” It also shows how your business will stand out against existing competitors and alternatives. This is where your competitor and pricing analysis comes in.

Build a Simple Competitor Table

Identify 3–7 key competitors in your trade area. For each one, list:

• Name and location
• Type of business (independent, franchise, chain)
• Product or service focus
• Observed pricing level (budget, mid-level, premium)
• Notable strengths and weaknesses

You can gather this information from websites, reviews, mystery shopping, and local conversations. For example, if you’re opening a bakery & pastry shop, you might compare pricing on signature items, days and hours of operation, product variety, and online ordering options.

Show How You’ll Be Different

After mapping competitors, explain your positioning in 3–5 bullet points. For example:

• Faster response times or more convenient hours
• Premium quality or specialized expertise
• Lower prices or more transparent pricing packages
• Unique experience, technology, or add-on services

For extra support crafting a strong value proposition out of your research, align this section with Creating a Compelling Unique Value Proposition for Your Business and The Art of Crafting a Winning Marketing Strategy.

Step 5: Talk to Real People — Surveys, Interviews, and Test Marketing

Secondary research (data from reports and websites) is powerful, but nothing beats hearing from real potential customers. Even a small amount of primary research can dramatically strengthen your plan.

Simple Ways to Validate Your Idea

Consider:

• Short online surveys of local groups or email lists
• One-on-one interviews with potential customers
• Pilot services or “beta” offers to a small group
• Special events or pop-ups to test pricing and demand

For instance, an app developer service might offer discounted prototypes to a handful of local businesses in exchange for feedback, while an antique furniture restoration shop might run a “pre-opening waiting list” to gauge interest and collect photos of pieces customers want restored.

Turn Feedback into Evidence

In your business plan, summarize what you learned:

• How many people participated
• What percentage said they would buy or switch
• Which features or price points were most attractive
• Any adjustments you made to your offer as a result

This type of evidence can be incredibly persuasive to lenders, especially when paired with the operational thinking you’ll show in your Operating Plan and the financial projections outlined in your 3-year forecast.

Real-World Market Research Examples by Industry

Let’s bring everything together with examples pulled from different kinds of businesses. These are the types of concepts BPlanMaker’s templates are built around, each with its own market research story.

1. Retail & Specialty Shop – Archery Pro Shop

An archery pro shop might:

• Use NAICS and sporting goods data to estimate national industry trends.
• Count local archery ranges, hunting clubs, and sporting events.
• Map competing sporting goods stores within a 30–45 minute drive.
• Survey local hunters and youth leagues about brand preferences and spending.

This gives lenders confidence that the shop isn’t just hoping people “show up” — there’s a defined community ready to be served.

2. Local Services – Air Duct Cleaning

An air duct cleaning service might:

• Define its trade area using ZIP codes within 45 minutes of its base.
• Estimate how many owner-occupied homes fall in the right age/price range.
• Review competitors’ websites for pricing, online reviews, and service menus.
• Pull EPA or HVAC association data about air quality and health concerns to support demand.

3. Medical & Wellness – 3D/4D Ultrasound Imaging

A 3D/4D ultrasound studio might:

• Use birth statistics and OB/GYN clinic counts to estimate annual pregnancies in its metro area.
• Analyze competitor studios, imaging centers, and hospital offerings.
• Survey expectant parents about interest in elective ultrasounds and preferred appointment times.
• Combine demographic and income data to support pricing tiers and package options.

4. Technology & Creative – App Developer Service

An app developer service might:

• Review local business counts by size and industry to estimate B2B demand.
• Analyze competitor agencies’ pricing models, service bundles, and case studies.
• Interview small business owners about their biggest technology pain points.
• Validate demand for subscription-based support or app maintenance plans.

5. Niche & Restoration – Antique Furniture Restoration

An antique furniture restoration business might:

• Map higher-income neighborhoods with older homes.
• Talk to estate sale companies, antique dealers, and moving firms.
• Analyze online search trends for refinishing and restoration services.
• Estimate how many projects per month are needed to hit revenue goals.

6. Specialty Retail – Bakery & Pastry Shop

A bakery & pastry shop might:

• Measure local foot traffic around their proposed location.
• Compare competitors’ product lines, pricing, and customer reviews.
• Survey residents about dietary preferences, special events, and catering needs.
• Use Census data to estimate household spending on food away from home.

Each of these examples uses the same framework: define the market, measure demand, map competitors, and validate the concept with real people. BPlanMaker templates walk you through these elements for your chosen industry so the research doesn’t feel overwhelming.

Turn Your Research into Powerful Market Analysis & Marketing Sections

Once you’ve gathered your data, your job is to convert it into clear, lender-friendly narrative inside your business plan. This is where your market research must match the structure outlined in The 7 Sections Every Business Plan Template Needs and the broader guidance in The Complete Business Plan Blueprint.

Your Market Analysis Section Should Cover:

• Industry Overview: 2–3 paragraphs with key NAICS/BLS data and trend commentary.
• Target Market: who you serve, where they live/work, and why they buy.
• Local Demand: population/household counts and spending patterns.
• Competitor Analysis: a concise table or narrative summarizing 3–7 competitors.
• Competitive Advantage: 4–6 bullet points explaining how you will stand out.

Your Marketing Strategy Section Should Show:

• How you’ll reach your target market (channels, tactics, budget).
• How your messaging ties back to your unique value proposition.
• How your marketing activities support the revenue levels shown in your financial forecast.

When these sections align with your 3-year financial forecasts, lenders can see exactly how your marketing efforts are designed to produce the sales you’re projecting.

To keep everything consistent and lender-ready, many entrepreneurs start with a professionally structured template from BPlanMaker and then plug their market research findings into the pre-written sections.

Turn Your Market Research into a Complete, Lender-Ready Business Plan

If you want to skip the blank-page struggle, BPlanMaker’s industry-specific business plan templates come with pre-structured Market Analysis and Marketing Strategy sections — plus built-in 3-year financial forecasts you can customize to match your research.

Choose the template that best fits your concept and plug in your own local data, competitor research, and demand estimates:

• Retail & specialty: Archery Pro Shop, Bakery & Pastry Shop, Cell Phone Store
• Local services: Air Duct Cleaning and Apartment Cleaning Service
• Medical & wellness: 3D/4D Ultrasound Studio
• Creative & digital: App Developer Service and Antique Furniture Restoration

Each plan is written and formatted for U.S. lenders and SBA-style reviews, so your market research and financials line up with what decision-makers expect to see.

Frequently Asked Questions About Market Research for Business Plans