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What Is a Business Trend Analysis?

Factors such as increased marketplace competition can affect business trend analysis.
A business trend analysis may indicate that the business will fare well in the upcoming economic situation, or indicate that some changes will be necessary.
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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 07 November 2014
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A business trend analysis is a type of management tool that is used to assess the past history of the business in terms of business volume and revenue generation, evaluate the current economic status of the company, and use this data to project the future of the business in terms of how the economy is likely to move in the months and years ahead. The idea of the analysis is to provide business owners with some idea of what to expect if the business continues on utilizing its current product line, marketing strategies, and other resources in a manner similar to the past. A business trend analysis may indicate that the business will fare well in the upcoming economic situation, or indicate that some changes will be necessary if the company is to survive.

When analyzing trends as part of the business trend analysis, the process will usually address a number of different concerns. Factors such as increased competition in the marketplace, changes in technology, and even shifts in consumer demand based on changes in the economy will be taken into consideration. Even issues such as the age of manufacturing facilities and equipment or upcoming changes in employment laws and regulations may also have some impact on the analysis, especially if those factors are highly relevant to the current policies and procedures of the business under scrutiny.

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The purpose of the business trend analysis is to accurately project what type of challenges the company will face in the months and years ahead, and attempt to discern what will happen to the company if the current business model is maintained. While making ample use of historical data and considering information collected from reliable sources in terms of the general state of the market in which the company operates as well as the anticipated economic climate, there is an element of subjectivity in the analysis. Those who are conducting the analysis have the task of determining the level of impact each of the considered elements are likely to exert, then using those determinations to frame the projection. When well balanced, the resulting projection can be extremely helpful.

It is important to note that a business trend analysis projects what is likely to occur with a company under a specific set of circumstances. When the outcome of the analysis is not to the liking of business owners, identifying potential changes to the operation, such as reducing costs or changing products in some manner, can be incorporated into the analysis to project an alternative outcome. By using this business tool effectively, company owners can decide what changes to make and what elements of the business model to maintain in order to keep the company viable and possibly even allow the operation to thrive during an upcoming economic shift.

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