By Ed McLaughlin and Wyn Lydecker
How will you assess the market opportunity for your new business? Success stories like Nike, Apple, and Tesla show that the greatest opportunities lie in industry sectors that are growing and changing. You, too, will benefit from knowing your market, fully understanding the business you are in, and evaluating and quantifying your market opportunity.
Know Your Market
Look beyond the market that seems self-evident. Consider the advent of the iPhone. Apple realized they weren’t just in the mobile communications business; they were on the cutting edge of the mobile lifestyle business – serving customers that were less defined by geography and more defined by versatility. The iPhone wasn’t just a cool new device; it served the changing lifestyles of its users.
When you think about your market opportunity, move beyond the boundaries of straightforward, basic assumptions. Enlarge the way you assess the world in which your future customers exist so you can understand the call of the market, how your product or service will influence it, and the fullness of your potential opportunity.
8 Questions to Demonstrate Your Market Opportunity
The answers to the following key questions will give you a solid understanding of your real market opportunity. Your answers will also enable you to quantify the size of the total market and the specific sector you will enter. This information will be critical for your own business planning and for sharing with potential investors.
- What industry is your business in?
- What sector of the industry are you targeting?
- What changes are taking place?
- How does your product address the changes?
- How can your product create change?
- What is the size of the market and your target sector?
- What is the growth rate of the target sector?
- What trends will impact the rate of growth?
When you research the answers to these questions, remember that it is important to stay at a high level. You don’t want to get mired in minutia. All of your answers should be available to you through online sources, industry groups, libraries, competitors, and business owners in the same sector.
If you start your business with your eyes wide open to a full understanding of your market and the opportunity it offers, you will give yourself firm footing in this vital aspect of business planning before you launch.
Ed McLaughlin is the founder & CEO of Blue Sunsets LLC, a real estate and angel investment firm based in Darien, CT. Previously, McLaughlin founded and served as chairman & CEO of United Systems Integrators (USI) Corporation, a corporate real estate outsourcing firm, sold to Johnson Controls (JCI) in 2005. In 2001, he earned Entrepreneur of the Year honors from Ernst & Young, and USI was named to the Inc. 500 list of America’s fastest growing companies.
A member of the Board of Governors for Tufts Medical Center, McLaughlin founded its David E. Wazer Breast Cancer Research Fund. He graduated from the College of the Holy Cross, where he is a member of the Board of Trustees. Active in philanthropy, McLaughlin lives with his wife in Connecticut and has three adult children.
Wyn Lydecker is the founder of Upstart Business Planning, where she works with entrepreneurs to develop plans that answer the questions investors ask most often. Previously, she was Managing Director of Business Plans International in New York and Co-Director of the Small Business Resource Center at Norwalk Community College.
Lydecker has an MBA in finance and marketing from the Wharton School of the University of Pennsylvania and a BA in economics from the University of California at Santa Barbara. She serves on the board of a local nonprofit she helped found, At Home In Darien. She lives in Connecticut with her husband and has two adult children.
Their book, The Purpose Is Profit: The Truth about Starting and Building Your Own Business is available for purchase on Amazon and other booksellers.
Learn more at www.ThePurposeIsProfit.com and connect with them via LinkedIn and Twitter.