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.

Ten Tips for Starting a Business -- Tip #3 -- Is There a Market?

There may be a need for your product or service, but is it a BIG need? In other words, how big is the market, and is it growing? You need to go out and do some research. The easy way is to do online research. But your public library can help, too, so can trade organizations in your industry.

Once you find out how big the market is, and if it's a growing market, then you need to find out how many competitors there are. Can you compete effectively? Again, you have to do research.

Maybe there is a small niche for your product, where you can fill a need that others can't.

One of my clients was a high-end fashion designer. Her creations were beautiful but very unusual. The market for unusual fashion design is small, and it is very crowded. Yet, she found a niche for her designs and was able to expand her sales by finding the boutiques that catered to the type of woman looking to make her own fashion statements.

Teroforma, which was just profiled in the New York Times Home Section, is in the crowded, large and growing market of tableware. But the company is positioned in the affordable luxury niche, which has virtually no competitors that can match Teroforma's quality or unique designs or sustainable and artisan-crafted manufacturing stories. Such stories resonate with consumers.

Remember:
How big is the market, and is it growing?
What is the competition like?
How are you different? Can you compete?