Market potential
| 10 September 2009
Thinking of starting a new small Business? I would start with looking at the market for your idea.
Plans are nothing; planning is everything.
-Dwight D. Eisenhower
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How viable is my business?
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What can my business achieve long-term and short-term?
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Who is succeeding in the market I intend to enter and why?
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Where will I find customers?
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Who are my customers likely to be and why will they buy from me, rather than my competitors?
Whatever business you start up, it will only be successful if you have enough customers.
Once you have a customer, you're no longer spending money on attracting or securing that customer, they are yours, so long as you take good care of them. So your costs can be kept down by getting the right customers (those who'll remain loyal).
Getting it together:
Define your product/service and understand its core benefits. What advantages or perks does it have over other products/services in the market? What makes it stand out from the rest? Is it quicker, cheaper, better quality? Will it save people time or money? Improve their hair or make their life easier?
Uncover customer characteristics and the level of demand for what you are offering so that you can work out the potential size of the market and your potential share of it. Ascertain your own market place position and market share. How large and accessible is the market? How much of a chunk of the market pie will you be able to establish? How much good competition is out there?
Determine what customer preferences are and uncover their spending and buying habits. Source and identify prospective customers and learn other core needs and wants. What problems can your business ultimately solve for them? And what level of service, quality and price are they likely to expect?
Work out how much those customers are likely to pay and buy - how often and why so? Figure out how long it will take you to market and sell your products and how many you are likely to sell by when. This can only be an estimate when starting out and will need tweaking as sales and results come in.
Understand how you'll communicate to these people and through what means you will reach them.
Discover opportunities and threats. Is the market growing, declining or static? What are the recent and forecasted trends for the market?
Choose the right location for your business if footfall is a factor.
Find out prices, whether men, women, adults or children need your product and what you might need to include with your product when distributing. Will instructions be required?
Figure out what expenditure you are likely to need and whether you'll require outside funding.
By doing market research you are arming yourself with crucial information so that you can make informed business decisions. You will be able to find out about your competition, how successful they are, what they do and don't offer, how you might be able to fill a gap in their offering, all to give your own business competitive advantage. And if there's little competition around now, there probably soon will be. Unique ideas don't stay unique for long in business.
Furthermore, based on your research, you'll be able to forecast your approximate sales and expenditure more accurately, rather than stabbing in the dark with guesswork about what you'll make. You'll discover your target audience's core wants and needs, and the reasons they buy, so that you can satisfy those needs and keep doing so as they change. If you aren't aware of those needs and desires, you'll have a very difficult time selling to them.
Your task now is to find out as much as you can about the market you will operate in, who already exists in the marketplace and where you might position your business amongst them.
What is being offered at the moment and by whom? What actually sells at the moment? How are these products being sold? Where and from whom do customers buy? What do customers think of their existing suppliers and products/services? What would encourage them to switch? Is this something you can provide? Where is the pulse of the industry? Are large corporations planning similar ideas in your area?
This is a start on market research. If you want your small business to be viable you need to start here.
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