Define the Market Need for Your New Business
If you’re thinking about starting a business, most likely you have dreamed of one that involves your interests. But, what does the market need or want? Do you know who is buying what and how much, or how, where and why they are buying those goods or services already?
Determining the marketability of your start-up business is typically done in the context of creating a business plan and performing an analysis of your competition. It requires research into areas of marketability, pike these:
- Consider whether the business offers a new solution to an old problem or complements an emerging trend. Untapped markets that are profitable are few and far between. They’re also riskier.
- Have a clear picture of your target market. These are the people and other companies that are likely to want or need what your business has to offer. “All restaurants” is a broader market than “fast food joints.” “All restaurant patrons” is a broader market than “young adults who eat out.” Look at customer demographics [who they are] and psychographics [how they live.]
- Understand the benefits that your product or service offers. Focus on ‘benefits’ [what your product or service does] not features [what your product or service is.] How much money/time/hassle might a customer save by buying from your company instead of someone else? Knowing these benefits will help you generate ideas for future promotions.
- Examine industry data that can confirm whether there is a sustained, growing demand for your product or service. Keep in mind this data is sales driven, not marketing driven. Have you tapped all likely sources of industry data, such as trade associations and government agencies?
- Identify the percentage of market share that it is realistic for you to capture. The more competition you have, the lower the margins will be.
- Consider how realistic your pricing is. How can you present your product or service to potential customers so that it appears to be a good value, while still affording you a healthy profit?
If you’re committed to creating a viable business and a good income, you need the answers to these questions. SCORE Lancaster can help. SCORE offers free and confidential business counseling, including business planning assistance. Call us at 717-397-3092, or find us online at www.scorelancaster.org