Now we all make mistakes
Sometimes they are small, sometimes they are significant, sometimes they are, in effect, terminal.
As someone once said, the person who never made a mistake, never made a decision. Danny Iny put it well, “If we don't take risks, then we stagnate. And stagnation is the beginning of the end.”
In business, the usual risk we take is when we seek to grow our business, both in turnover and, more importantly, in profitability.
That risk may be in introducing a new product, or product line, in diversifying, or in location.
In my client’s case, it was the latter - location. She wanted to get in front of more people, a bigger market. She operated a small, specialised retail business with a street frontage in a general shopping area – all other small and varied retailers. People had to know she was there, foot traffic was, for want of a better word, average.
The opportunity came up to take a vacant shop in a shopping mall, right beside a major supermarket operated by one of the majors. Sure, the rent was much higher, but the passing foot traffic was huge. What could go wrong?
But go wrong it did. The move was a disaster, a failure the costs of which continue to dog her to this day.
The problem – my client was in the wrong market. Just because there are a lot of people around. Doesn’t necessarily mean there’s a market for you. If they are not interested or seeking the type of product or service you are offering, then the numbers mean little.
So what is a market? Here’s a somewhat boring definition. The term market refers to the group of consumers or organisations that is interested in the product, has the resources to purchase the product, and is permitted by law and other regulations to acquire the product. The market definition begins with the total population and progressively narrows to many different niches.
From your perspective, you need to have the right product at right place at the right time if you are to make the sale. And there needs to be enough of such buyers for you to make sufficient sales, and earn sufficient profits, to have a sustainable business.
It is frequently said that selling is a numbers game and the more people you get in front of, the more sales you will make. And that was my client’s plan. The supermarket would put many more people past her door than she could ever get in her street.
But let’s think about it a bit more deeply. While my client might have had the “right product” she certainly did not have it at the “right place” or the “right time”. Those people going to the supermarket were certainly not “qualified prospects”. They were there to do their grocery shopping.
You’re probably the same. Grocery shopping is mission intensive. You are focused on one thing, your shopping list, how to complete it as quickly as possible, and get out. Grocery shopping is not the time for window shopping, for wandering around looking for ideas for gifts or whatever. You don’t need ideas, you have a list.
But there may be other ways of looking at a market. Not all markets are created equal. Some are bigger, better and more lucrative than others. Knowing how to evaluate a market is like knowing where to go fishing for a great catch.
David Cameron Gikand has developed a checklist of 11 market characteristics to help you evaluate your target market so that you can take your business where there are the highest chances of success. A rising tide floats all boats; a great market lifts everyone up.
Take it away David!
Use these 11 characteristics to evaluate any market with ease
To evaluate your market, get a pen and piece of paper and go out and research the following 11 characteristics. Rate how well that market scores, on a scale of 1 to 10, on each of these characteristics, and then see if the total score makes you happy.
Here we go:
1. Size. The bigger the market size, the better.
2. Urgency. The more urgently people need the products in that market, the better. For example, pet rocks have no urgency, but medication does.
3. Speed to market. The faster you can go from getting the initial idea to beginning to make sales, the better.
4. High pricing potential. The higher you can charge per product, the better.
5. Low cost of acquiring new customers. The easier and cheaper it is to get new customers, the better.
6. Low cost and ease of delivering. The cheaper and easier it is to deliver your product, the better.
7. Uniqueness. The more unique your product is (or how you deliver it, or how you package it), the better.
8. Low upfront investment. The less resources you need to test the market, build the business and get started, the better.
9. Back-end and up-sell potential. The more related products you can sell to your existing clients, the better. You don’t want to go into business whereby you can only sell one product one time to each customer and then that’s it. There is now growth potential there. You need to be able to repeatedly sell the same customer.
10. Evergreen potential. The easier it is to continue selling and selling once in business, the better. For example, a product that can be sold for ever, like toilet paper or cooking oil, is better than one that is sold just once, like pet rocks.
11. Addressability. The easier it is to reach and communicate with your market, the better. For example, does your market congregate in “pools” like mailing lists or radio stations or places you can get access to?
Thanks David – that’ a useful list.
Are you in the right Market?
When clients approach me for coaching, so often, they are not getting the clients they need, the right clients. Eight times out of ten this comes down to not knowing what is working, and what is not working, and why it is not working.
For more than 28 years I’ve been helping small business owners plug the profit leaks in their business and restoring their cash flows by assisting them understand where there profits really come from, where they’re leaving money on the table, and where their sales are costing them profits.
If you would like to discuss with me how you might do that, book a Strategy Consult here.
© Copyright 2017 Adam Gordon, The Profits Leak Detective