If you’re thinking about starting a new business or expanding an existing business into a new market, do some research first. Here are ten ways to identify the attractiveness of a potential market. Rate each factor on a scale of 0 to 10, where 0 is extremely unattractive and 10 is extremely attractive.
- Urgency – How badly to people want or need this right now?
- Market Size – How many people are actively buying things like this?
- Pricing Potential – What’s the highest price a typical buyer would be willing to pay for a solution?
- Cost of Customer Acquisition – How easy is it to acquire a new customer? How much will it cost to generate a sale, in both money and effort?
- Cost of Value Delivery – How much would it cost to create and deliver the value offered, in both money and effort?
- Uniqueness of Offer – How unique is your offer compared to other offers in the market? How easy is it for potential competitors to copy you?
- Speed to Market – How quickly can you create something to sell?
- Up-Front Investment – How much will you need to invest before you’re ready to sell?
- Up-Sell Potential – Are there related secondary offers that you could present to paying customers?
- Evergreen Potential – Once the initial offer has been created, how much extra work will you need to put into it in order to continue selling?
After you’ve rated each factor, add up your score. If the total is 50 or below, move on to another idea – there are better places to invest your resources. A score between 51 and 74 might pay the bills, but won’t be successful without a huge investment of resources, so plan accordingly. If the total is 75 or above, you have a very promising idea – go ahead and move forward.
To learn more about the ten ways to evaluate a market, check out The Personal MBA by Josh Kaufman.
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