There is no substitute for some in depth research into your market and audience (customer segment).
Let us quickly look at two examples, a service and a ‘made at home’ business. Both based on real life stories.
A service market and audience
If this example we’ll look at a skilled trade – plastering.
- There is a national shortage of skilled trades in the order of 40% – there is unlikely to be a shortage of opportunity.
- In South Lincs, you can look in the local classified adverts, search the telephone directory and Yell.com to find out the number of competitive firms/people.
- A quick look at planning or asking people will reveal the number of housing developments which will be in the area – some 7000 new builds over 3-5 years.
- A chat with some kitchen designers and builders can provide a good idea of the amount of work and the potential delay rate of pay/charge for a plasterer and possibly some early opportunities.
- Calling some future competitors for an idea of when they could plaster your lounge may reveal that there is a 6 month wait for a slot for plasterers, electricians and plumbers.
So, 5 quick paper/online searches or chats reveals that South Lincs demand is higher than supply.
Also, you found a couple of firms who might hire you as a sub-contractor and an idea of how much you might expect to earn.
You’ve also identified 2 audiences – contractors who need self-employed plasterers and home owners.
Demand is not always easy to determine, market research is far more important and the audience selection and identification of a niche service time consuming.
In a busy market with many competitors, your Unique Selling Point – experience or brand etc is increasingly important.
A product market and customer base
Let’s think about cup cakes! – ‘made at home’.
All your friends say your cakes are fantastic and you’re asked to make them for private parties and club nights.
Market and audience
- Visit a few cafe owners if they make or buy-in cakes and hotels, that do events like weddings, and ask where they get cup cakes or treats from.
- Find out how much business buyers pay for ‘bulk’ cakes and the most popular flavours or styles.
- Try a few craft fairs and market trader events to see how much public pay for cup-cakes from a stall and if there are any tips.
- What outlets sell most cakes?
- Ask about age and gender of the customers (who buys) and perhaps if they had mobiles (younger people with mobiles could be a potential online sales channel).
- Do stalls or cafe sales sell out or is there much waste.
Work out how much cakes cost to make compared to what businesses and buyers pay.
If the difference will pay your ‘operating’ costs and some earnings then the business may be viable at the specialist and small quantity levels.
Will specialist cup-cakes make up the difference in market entry and cost per cake?
No matter what your business, it is important to know if the market is present and the type of audience will use your product or services.
The business planning course covers these topics in much greater depth when you’re ready, but…
In the next lesson we’ll look briefly and ‘route to market’, sales and marketing.
It is never early enough to protect your ideas or Brand and it helps with research.
Protecting yourself and your ideas!
One of the most important aspects of your business is ensuring you meet legal requirements and protect your ideas, designs and content.
Help is at hand on protecting your business ideas – at the Intellectual Property Office.!