Q: How can I identify a good market?
Oct 14 2009
Answered by: Marc Barber Ask a question
The ideal market to base your business in is one that:
• is growing or is large
• is supplied by businesses that are not efficient or are outdated
• has a niche or sector that you can exploit
• is not heavily dependent on price to help consumers select one product rather than another
• is not already supplied by products that are heavily branded; that is, there is not considerable customer loyalty to products from one or more businesses
• is not dominated by two or three very large suppliers but instead has a number of smaller would-be competitors
In practice, there is only a remote chance of finding such a market; and, if you did, so would many other businesses, which would make it very competitive. But it would be unwise to base your business in a market that does not come up with some of these positive indicators. The moral is, do not be afraid of competitors; they prove that there is business out there to get.
A recession might seem the worst time to start a business but, even when the economy as a whole is shrinking, there are sill individual markets that present opportunities. For example, in a recession: people still eat but may buy smaller, affordable luxuries, such as chocolate and mini-break holidays; they may go out less so that home and garden become more important spending areas; firms may cut back on expensive permanent staff but this may increase demand for freelancers and consultants; and for some industries, such as debt collection, recessions are a boom time. Similarly, when the pound is low against other currencies, this can give a big boost to businesses with a high proportion of overseas customers.
It is difficult to enter a market if you have none of the technical skills or industry knowledge necessary. In particular, if you need to raise money, the decision-makers will want to see some, if not considerable, knowledge and experience in that market. If you do not have it, you have to concentrate instead on demonstrating your all-round business skills and experience, the strength offered by your character and abilities, and the research you have undertaken into your chosen market.
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