The NxLevel Educational Foundation defines Industry Profile as: “Pertinent information about a specific industry, such as its size, trends, growth potential and history.” Now the question is, “What industry are you in?” You might be tempted to say that you are in the Diving Industry. Sorry, there is no such industry. At least in the eyes of our government. The U.S. Government has set up a series of codes that identify businesses and groups them together. These codes are called NAICS, formally SICS. Examples of the main groups are (11) Agriculture, Forestry, Fishing and Hunting, (21) Mining, (22) Utilities, (23) Construction, (31-33) Manufacturing), (42) Wholesale Trade, (44-45) Retail Trade, (48-49) Transportation and Warehousing, (51) Information, (52) Finance and Insurance, (53) Real Estate and Rental and Leasing, (54) Professional, Scientific, and Technical Services, (61) Educational Services, and (72) Accommodation and Food Services. A complete list can be found at http://www.census.gov/epcd/naics02/naicode02.txt NAICS identifies what groups our businesses belong in. As a business owner interested in growing your business, your first responsibility is to find out as much about other businesses in your NAICS classification and learn from them. If you want to learn about Travel Agents you don’t go to businesses in the “Diving Industry”, you go to NAICS 561510 – Travel Agencies. Here are a few more examples that relate to companies in our business: 339920 Sporting and Athletic Goods Manufacturing, 451110 Sporting Goods Stores, 611620 Sports and Recreation Instruction, 561510 Travel Agencies, and 561520 Tour Operators. We study these businesses and learn what niches they specialize in and what customer markets they target.

Target Marketing is when we look at a large group of potential customers and narrow the selection down to meet our core competencies and our marketing budget. A manufacturer looks at the products it produces and matches them up with the customer base most likely to purchase them. So when we look at Industry trends and analysis, we are really looking at the industry in which we belong and the sector of the industry our customers have chosen to do business in. Hence, “The Diving Industry.”

Before you started to work on your Business Plan, you hopefully conducted a Feasibility Study first, to see if your idea about going into business for yourself was a good one. When you start your research, you first identify the NAICS that your business belongs in. Then you narrow your focus to the specialization of your choice and to whom you are going to target as your potential customer base. You are looking to see if this group is large enough to allow you to sell a sufficient number of profitable products and services to a sufficient number of qualified customers. If the answer is “No”, then it’s time to re-evaluate your idea. If the answer is yes, you can move from the feasibility study phase to actually working on your Business Plan.
Background Industry Information: Show the reader that you understand what industry you are in and how you arrived at your decision to specialize in the products and services you sell. Remember, the industry you are in depends on what you produce or sell and not to whom you sell them to. You may want to talk about how old the industry is and where it fits in with other industries.

Size and Growth Trends: How big is the industry you are in? What percentage of the gross domestic product does your industry represent? How about some information about the sub-categories and niches of your industry. Do you know how big your niche is in relationship to the other categories? Has your category been growing or declining in the past ten years? By what percent? Find out if there will come a day when you will have to either broaden your niche or specialize further. A critical decision for you might be whether to expand into other water sports like swimming and snorkeling or specialize further into rebreather and technical training and equipment. Understanding this section will open up new options for you and your business.

Current and Future Trends: Where is your Industry going? The future of your business depends on how well you understand trends and what you plan on doing about them. Did the buggy whip companies understand what ramifications the automobile would have on their businesses? Now is the time to think about what could possibly affect the growth and very existence of our industry. Knowing about current and future trends helps us to maintain that competitive edge. Understanding where the market will go next year enables us to position ourselves for increased opportunities.

Maturity of Industry: Even industries have a life cycle. Is yours in Introduction, Growth, Maturity or Decline? Sophisticated businesses understand when to invest and when to get out of certain industries. As industries mature, changes occur. Will our industry consolidate with others? Will we become more specialized? Different stages of growth affect our customer base and the types of customers we attract. Look at the type of customers we attracted in the 50’s, 60’s and 70’s. Can you see how the market has changed since then? Are you targeting the new market?

Business “Fit “in the Industry: Start with the largest classification your business fits into and then narrow the field down until you have reached your desired niche. You’ll recognize your niche because you will be very passionate about it. It’s what you do! Understanding your niche not only clarifies your choice, it gives you two directions to grow in. If your business is doing well and you are spending too much time and effort with products and customers you don’t enjoy, you have the opportunity to specialize further down the chain. If your business is not doing well, maybe your degree of specialization is limiting your growth and success. It may be time to expand into a broader category.

Vulnerability to Economic Factors: How will the economy affect your business? We all know that it will, but more importantly is how we will plan to maximize the opportunities and minimize the negative effects of fluctuations in the economy. What will happen to your business if your local economy is booming? Will it bring you more customers or will your market be too busy to take diving lessons and travel? When the national economy takes a downturn, how quickly will it affect your business? Economic trends are easy to understand and follow. Knowing how to respond to them takes practice.

Seasonal Factors: Seasonality is a key word in our industry. There is a specific seasonality curve to the manufacturing process, which affects the supply of hard goods to our retail stores. The travel portion of our business is all about seasons. In fact we base our prices and travel plans on peak season, off season, and even hurricane season. The sale of goods and services is also affected by season, and the seasons vary from one territory to another. Instruction also has a seasonality curve to itself. In your business plan, show that you understand seasonal factors and how they affect your business.

Supply and Distribution: A major part of any industry is how the supply of goods and services flow. Understanding the supply chain and the demand chain is important to every business. A person starting a new business may find the identification and selection of a new vendor to be a little intimidating at first, but rest assured it is an important skill to perfect. Our industry succeeds and fails by our channel of distribution. We are all in the business of buying and selling. Welcome aboard!

Editor’s note: Gene Muchanski is President of the Dive Industry Association, Inc., a member of the Board of Directors of the Dive Industry Foundation and a Consultant for The University of Houston’s Small Business Development Center Network. Gene can be reached at gene@diveindustry.org or at 281-554-2025.