Friday, June 5, 2009

Startup Tips - How Big is Your Potential Market?

I always get a chuckle out of the startup presentations that talk about a multi-billion dollar market potential. Inventors or entrepreneurs who think they've created a product for everyone think that their potential market is every person in the United States. Sorry. That's just not feasible.

Investors (private, angel and VC) look for entrepreneurs who have truly figured out what their relevant market is. These savvy business owners know how to narrow the market and focus on the people who are most likely to purchase their product. They narrow by behavior, demographics and geographics.

A typical woman who is over 65 is in all likelyhood not going to be looking at heavy duty razors. Those are aimed at youngish males. Youngish males are not going to be looking for skin care that makes you look younger. How about power toools? Who will be buying them? Who will be buying your new smart phone app or educational service? If you have a service business, will you start out regionally?

Once you've got the relevant market nailed down, then you need to estimate how large it is. How many people? What do they spend on similar products annually? What are the trends? To get this information, you can ask a librarian at the local public library to help you. Or you can do Internet searches, using Bing, Yahoo! and Google. There are government data, industry associations, newspaper and magazine articles, Wikipedia (but be careful with this) and company websites.

All can help you with your research.

Want help doing the research? Contact me at upstartwyn@gmail.com. I've been doing such market research for over 15 years. Read more about me at www.upstartbusinessplanning.com.
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