Amid the excitement of founding a new startup in today’s financial climate, there’s always a nagging doubt: how can I introduce, maintain and grow my new business? Avoid business failure with market analysis and planning, focused on these areas:
Determine your target market: Who do you want to reach? Will you target a specific underserved niche to create a smaller, lifestyle-supporting business for yourself and your family? Or will you build a scalable business to reach a large audience, requiring serious investors to back you? Estimate your TAM (total addressable market) to be sure your business idea is viable and get startup funding that matches your market’s size.
Identify who is currently successful in your market: Is there room for your new business in the marketplace? Is your intended business sector dominated by 1 or 2 big players? Or are there many options for customers in your market, all fighting it out to become dominant? How will you stand out within the current market to claim your space?
Consider what market leaders are doing right and wrong: How could market leaders respond to your new service/product? Would they bother trying to compete? Could they successfully duplicate your service and put you out of business, because they’re already a well-known brand? Or is your startup so much better for customers that big, clumsy brands could never catch up and take over? Do you bring a formerly elite product/service to a less affluent (and larger) audience? If you can do it better and cheaper, you can beat out well-known brands.
Evaluate the costs of customer acquisition: How much money and time will you need to spend to capture each new customer in your chosen market? Is this less than what you can charge for the product/service? Can you instead (or also) make money through selling advertising. Or will you make your profits as a middleman, able to take fees from both sellers and buyers using your service? Will you have to offer part of your service for free, or at a cost lower than most in your market charge, to get your market share? Can you afford to do this and still profit?
For resourceful entrepreneurs, failure is not an option. Use these market analysis and business planning tips to prepare your new company–and you’ll stay the course to startup success!
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