The Benchmarks tab of your LivePlan account gives you useful insights into how your forecast compares with the average performance of similar-size companies in your industry. These metrics help you make sure that your business plan is realistic. While the Benchmarks are extremely useful and can be used as industry research, they aren't meant to function as market research. Here are some reasons why:
Company data vs. customer data
Our Benchmarks data comes from our partner company Abrigo (formerly Sageworks). They compile financial data for a wide spectrum of businesses, remove any identifying information, and then aggregates that data. You can learn more about this process by reading About our Benchmarks data.
So Benchmarks data will give you a window into similar companies to yours. Market research, on the other hand, helps you learn about your customers. The more you can learn about who your business serves, and what problems your product or service solves for those customers, the stronger your business plan can be.
Getting specific about your market
The Benchmarks data is categorized according to the North American Industry Classification System (NAICS), which is a standardized system used by U.S. federal statistical agencies. This standardization is helpful for organizing a massive amount of data, but the classifications can be quite general, and in the case of a business operating in a niche market, there may not be enough data available to register in the Benchmarks at all.
This is where market research makes a big difference - it helps you understand crucial details like how many potential customers there are for your business, and what their locations and needs are, in a way that the Benchmarks data can't provide.
Market research helps you write your plan
If you've looked at the questions presented in both the Pitch and the Plan tabs of LivePlan, you may notice that many of them relate specifically to these same subjects: who your customers are, where they are, what they need, and how you'll provide it. This is why doing your own market research is so important - the data you discover is the foundation of your business plan.
If you're not sure where to begin with your market research, here are some very helpful articles: