Step 1 — Understand Your Market and Competition

A big mistake that many small business owners make is to latch on to a cool product or service without first understanding the market and what it wants (not what it needs). If you try to sell something that people don’t want, they won’t buy it.

 

It’s that simple.

 

A profitable market consists of people who have dire wants that are being unmet, so much so that they will jump to buy your solution (product or service). A profitable market can be compared to a lake with thousands of starving fish. All you need to do is throw in the bait and it turns into a feeding frenzy.

 

To get an understanding of your market you should ask yourself questions like:

 

• Are there segments in my market that are being underserved?

 

• Are the segments of my market for my product or service big enough to make money?

 

• How much of a share of that market do I need to capture, to just break even?

 

• Is there too much competition in the segment of my market to be competitive?

 

• What are the weaknesses in my competition’s offering that I can capitalize on?

 

• Does my market want or value my unique competitive offering?