One of the principal reasons new businesses fail is a lack of market opportunity. To prevent this, simply define that opportunity and position your product or service accordingly.
Except, of course, that it is not a simple task. While the exercise itself is a straightforward one, fulfilling it is complicated as it requires a business owner to view the world outside of his or her company.
A common thread you will find in all my writing and work is that a company is best served by viewing the client in the context of the client. Not within the context of your owncompany. The better you understand your client as a whole, the better you can serve.
How to define your Market Opportunity
Coming back to Market Opportunity: in a nutshell this means determining that there are people willing to buy, for a sustainable price, what it is you have to sell. You do this by describing
- who you are serving,
- what you are providing,
- why you are doing so – what sets you apart,
- and how it will be sold.
“I sell shoes and everybody needs shoes” is not a good answer.
This brings me to one of my favorite strategic exercises. The first draft of the above is best done without mentioning your product, industry or direct target market.
For example, if your business sells shoes, try to answer the above questions without using the words “shoe” and any synonyms, or “feet”, “insole”, even “heel”. If you sell a B2B email software to CIOs, then do the same without using the words “email”, “CIO”, or any related jargon like “authentication”, “SMTP”, “tagging” or “labeling”, etc.
It may be difficult at first, but once you get started it will allow you to see your product in a new light. You are forcing yourself to describe what you do in lay-terms, which itself forces you to describe why you do it and for whom.
Once you understand what the market needs – as well as what it wants and people’s concerns (we will have a future post on Business / Technical / Personal needs); what the best solution to these needs is; why that is the best solution; and how people are willing to access and purchase it, then voilà: your market opportunity is defined.