When deciding to start a new business most people immediately think “what can I sell?”, this is wrong, the most important thing is “who can I sell to?”.
Just think about it for a second, it doesn't matter what your product might be, how terrific it is or how much of a bargain it might be if no one wants it then you won't be able to sell it. The quintessential point for any business is there must be a market for the product or if no market currently exists then you need to create one.
Now it is possible to create a market look at apple with the i-pod, but the initial cost is massive, the promotion involved in creating a market for a product is a huge undertaking and is just not practical for a startup business.
Therefore we are left with the option of finding an existing market that is not being serviced, or finding some new method of delivering what that markets needs. This requires research into your possible market niche. What is a market niche? Broadly speaking it is a section or group within the overall population who are looking for a particular product or service.
I'll try and give an example, most of us know that golf is a very popular sport amongst a group of the population – therefore making golfers a niche market. This could be broken down even further though, for instance how about left-handed golfers? Only about 10-14% of golfers are likely to be left-handed since that is approximately the distribution of left-handed people in the general population. Now you have found a highly specific niche market, so how about doing some research online to find out what left-handed golfers look for on the Internet?
There are many excellent resources available for carrying out this type of research many of them free or at low cost. All you need to do is make use of them, to find out what your niche market wants.
So let us assume you have done some research on your left-handed golfers and discovered they have a problem getting left-handed golfing gloves – could you supply their want? Could you manufacture, left-handed golfing gloves or find someone who could manufacture them for you?
You have just found a market and found a way to supply that market, you're well on the way to setting up your business, but don't rush ahead too quickly there is still a few things you need to consider before you're up and running.
The next article in this series will look at the different business models you might consider and some of their good and bad points.