As an entrepreneur, you obviously don’t have the luxury of time and money to pursue all the customers in an industry simultaneously. Hence, you need to choose a target market– the people you want to go after. But how many people really know how to do this? How do you pick a target market? From the pool of potential customers present in any industry, it is important to identify the ones you want to target, so as not to direct your resources towards the wrong audience. Here are a few factors to be focused on when picking a target market.
Identify the target market’s pain
Regardless of the solution your business offers, it isn’t for everyone! As a general rule, always identify the people who need the help your product or service offers. It is often easier to sell to folks who describe having a pain rather than having a desire. By and large, your actual target audience should be those who are in need of your product or service and not those who simply desire it. However, that is not to say people who desire your products are not to be considered too, but when you consider the bigger picture, you will realize that it is those who view your product as ‘needs’ that are the primary target. The greater the pain a market feels, the greater the solution it needs, and if your product or service is this solution, the higher the odds that you can convince people to buy.
What is the value of your solution to the target market?
Always opt for a market where your solution represents a complete remedy rather than a partial fix. As an entrepreneur, you need to understand that, irrespective of the solution you offer, not all markets are meant for you. Look around and be sure you are entering a market and targeting people who consider the solution you bring as what they genuinely need. The better your solution fits the target market’s pain, the greater your chances of success. It is the value of your solution that would determine how you fare in a market. Hence, in order to stay relevant, always target people who consider what you offer as a valuable commodity.
Research market histories
Business involves risk, we all know that. And we also know that with schemes like IVA, debtors can always settle their creditors without difficulty if they ever get cash strapped, which means that business owners can afford to take risks with debt financing. However, even if you have the backing of the best IVA companies, it is still very crucial that you check out the options available to you, before picking the right market for your investment. Look into the histories of different markets, find out who has failed and why, find out what it takes to thrive and make sure you get the best advice before going in. Don’t just go into a market risking all the funding you’ve obtained.
Is your solution better?
Often times, there are always some rival businesses existing in a market you want to delve into. So, it is vital for you to be sure that the solution you are bringing is better than what already exists in that market. If your solution isn’t better than what target customers are getting already, it is better to find another target market where you will be more relevant. Hence, as an entrepreneur, your goal should be a market where your solution is considered a unique commodity rather than a subsidiary or contemporary.
Do you have the right funding?
Financing is a very vital aspect of a business establishment. Why try to establish a betting company when you can only fund a betting shop? Irrespective of what your business ideas are, your financial capabilities determine who and what your target market is. Even if you have a valuable solution that is better than what already exists in a market, and you don’t meet the market financial requirements, it might be difficult to succeed in such market. In the event that you want to seek external financing, like debt-funding, always pick a market that would work well with whatever amount of funding you will qualify for. However, when sales and revenue drop and debt repayment becomes a major challenge, be sure to use any of the debt management strategies available to entrepreneurs before a debt collection agency like Moorcroft starts knocking on your door. One of the best strategies available to business owners is an IVA, which can be used whenever you need help with debt.
Can you make the sale?
After carefully conducting your market survey, do you think potential customers would buy from you at the moment if you present your solution? Here is where the reality sets in. If a target market is perfect for you, but you cannot seem to make the sale, it’s useless. Entrepreneurs need to think and act like realists and pursue markets they can succeed in.
Can the market be considered valuable?
You also need to consider the value of the market. Is the market big enough to be worth investing your time and money, or is it shrinking so fast it will be gone shortly? Could you make enough profits to repay your loans if you’ve used debt financing, or would your margins be razor thin? As a general rule, always pick a market that is large, fast-growing, and offer you, high-margin customers. That said, if you are, however, going into a market – that is known to be very valuable – at a time when the market is probably not on the rise, be sure to find out about a protected trust deed, so that you won’t have difficulties settling your creditors in case the market doesn’t rise as predicted .
Are there other options?
Remember, nobody sets up a business to run into bankruptcy. If the facts are stating that a market isn’t viable for you, opt out before going into it at all! Before you go all out and invest your funds in a target market, be sure to consider your options.
Is it worth the risk?
Going into a new market entails a lot of risks and unpredictability. Before picking a target market, entrepreneurs need to be certain that they are taking a calculated risk and not a good guess. You can’t just go about investing in a market whose risk-to-reward ratio isn’t worth the efforts.