Question: Have you ever had that “billion-dollar idea,” and, if so, did you make it happen? Did someone else?
Market analysis is arguable the most important thing an entrepreneur should focus on when trying to start a new business, and yet it is often done half-assed or not at all until it’s too late. The explanation for these polar opposites is painfully simple: People only think about themselves.
Now I don’t mean the above statement literally, and I’m not a pessimist (far from it!), but the truth of the matter is that this is how we’ve evolved to look after ourselves and survive. So when someone wants to start a new business, they are often thinking “I have the BEST idea!” or “Oooh wouldn’t such-and-such product be AWESOME?!” The problem is that this is what YOU think, but you will need to find other people who think that as well if you want your business to survive.
This is not to say that this is impossible: Steve Jobs convinced millions of people (myself included) that they needed a computer in their pocket, when few people even considered this a possibility at the time. So it can be done, absolutely, but it’s much easier to go about it another way… Instead of falling in love with a product or service that you want to provide, just take interest in an industry—a market.
If you pick an industry that interests you, you should have enough motivation to work on any innovation that will help it. Then, if you go out and start asking questions about what is causing people in this industry pain, and what their true desires are, you will have guaranteed customers for a product. Of course, you’ll still need to consider the viability of the other 3 P’s—promotion, pricing, and placement—but you’ve made it over the first hurdle.
The main areas to cover in a market analysis are 1) the customers, 2) the competitors, and 3) regulations or barriers to entry. The great news is, once you know the industry’s desires, you understand your customers, and you understand what your competitors are doing wrong. Don’t forget about regulations, but they should be an even playing field.
With the internet at our fingertips, we can do tons of market research, but also get out there and talk to people. What do they want? What do they hate? If you can fill a gap, then you’ll snag that portion of the market.
Looking at it from an economic point of view, it’s easier to create supply than demand. Just remember to focus on your customer, not yourself.