The Market Potential and Viability of Your Business Concept
The ability of your business to succeed and thrive depends on upon your market potential or how many people—or businesses—have the problem you solve. The more prospective customers, in general, the more viable your business could be. More prospects often equate to more sales. When prospects are aware of their need and are in solution identification mode, your business increases the probability of success.
While you need a large enough pool of potential customers for your business/idea to be viable, it doesn’t mean you have to go after the largest market segment. Many businesses succeed by targeting a small segment and capturing more of the market (market share).
Not Too Big, Not Too Small — Just Right to Build Success
Ideally, the market opportunity you are looking for is large enough for you to have enough potential customers for your business to thrive, but not so many prospects that you can’t afford to reach them. You are looking for an opportunity that balances the market segment size with your ability (efficiency and cost-effectiveness) to pursue them. I have worked with several client companies developing new technologies, and as they were seeking investors for expansion, they would hear, “There isn’t enough market potential: The group with the problem is too small.”
Well, these clients proved that having a relatively small market (a few million) versus a larger market (tens of millions) can work. Instead of spending to capture a fractional share of a large market, they were able to capture a majority share of the smaller market segment. The revenues and profits from their market share of the smaller segment have far surpassed estimates of their potential in pursuing a larger market segment.
Identify an Unserved or Under-served Market Opportunity
So in looking for your market opportunity, evaluate the marketplace and look for the people not being served, the underserved, or the ones who can’t afford current solutions as starting points. Dig into the details and understand the various ways the market can be divided. Find a starting point; even a small segment can give you a foundation to demonstrate your concept, start generating sales and build your reputation (credibility) as a business and for your solution.
Do Your Market Research!
Take time to survey what the product and service offerings are currently for the problem you address. Talk to existing customers of would-be competitors and learn what they want from a product, why they purchased the solution, and understand your market. Then begin to narrow your focus. Find one segment to pursue and generate some sales. When you have demonstrated success, you can take on another market segment that is adjacent or similar to your first targets.
The more you know about your market, the segmentation, and the customers, the better your chance of success. Look for an opportunity where you “get” the customer. Start there and then build your business model and develop your value proposition is your CORE message.