A Successful New Business Idea Needs a Small Market and Competition
After getting a new business idea, how will you know if it is something that can work? First thing is to define and analyze the market. Next is to identify any competition, or any way that the need is being fulfilled today, then asking why your way is better. Then stretch your idea into something that is unique and better than the competition.
The market is the group of people that can become customers. If the market is everyone, then it is not a viable business idea.
The best ideas have a very narrowly defined set of potential customers that are their ideal targets. If the ideal target can be serviced well, then subsequently the product of service can be altered to broaden the market appeal. But is it best to go for the most likely customers first.
A market that I am a customer for is youth sports. I have three girls that are gymnasts and a boy that is a soccer player, and they are all in club sports. The costs for these sports is more than I care to add up every month. But those costs make me an ideal target for products and services that can help improve my kids’s chances of success.
One of the most innovative products I have purchased is an audio course that is supposed to improve mental toughness for youth sports. It is a good product, and if it can help my kids to get the extra edge they need to win, it is worth it. The interesting thing about the course is that there is one for each individual sport as well. I believe the owner started with gymnastics or figure skating, and once he saw there was interest, expanded it to all other youth sports as well. I love seeing success like that!
The next thing look for is competition. If there is already a way that the need is being fulfilled, that is good! That means customers see value in the product or service and are willing to pay money for it. It is much easier to better serve an existing need than to try to try to convince people to buy something they are not already spending money on. The need is always being addressed in one way or another. If you can come up with a way to service a small part of the market better by being more innovative, focused, or persistent, you can succeed.
There was already a way for youths to get better at the mental aspect of sports. There were coaches that would help and inspire children. There were psychiatrists that could help people think more positively about themselves. There was definitely a need, and what was even better was that the need was being imperfectly addressed, with either a lack of availability or a price that was too high.
The great thing about the Internet is that it allows for addressing markets that are not just local. It could be difficult to be a mental toughness coach for elite youth sports in just one city because there might not be enough customers. It also difficult to scale beyond the consulting limits of what one person can accomplish in a day. However, by taking that experience and encapsulating it into a different format, it creates a new product. All of a sudden, a new market opens up.
The more you know about something, the more complex it seems, and the less you know about something, the simpler it appears. The truth is, everything is complicated. That’s why it is best to stick to something that you know well, and have learned about in the thousands of hours of life experience you have put into it. Don’t start a business in an area you know nothing about, because it really makes it hard to succeed. Take a fresh look at the way things are being done in your industry, and come up with at way to make a portion of it better. Analyze that portion well, and if it makes sense, then build a business plan around it.
For those of you that have asked, the youth sports mental toughness program I used as an example is called Competitive Advantage by Dr. Alan Goldberg.
Author: Rolf Versluis
Published at Priority Queue