Planning a business: Determine the market need
A common misconception among aspiring entrepreneurs is that if you have a good idea, the only thing keeping that idea from becoming a success is all the work and planning to turn it into a sustainable business. While this is sometimes the case, many ambitious individuals in their eagerness to see their vision take flight will determine several details—the target market, the cost of the starting the business, etc.—and fail to examine the idea itself. The words, market need often go unspoken in the planning process.
One of the first questions you should consider when planning a new venture is “Why does the market need this product or service?” No matter how brilliant your concept may seem when it first comes to mind, a good idea is not always a viable one. Consumers may share your ah-ha! moment when they learn about your product, but that does not mean they will buy it. In fact, many of the most successful entrepreneurs started their businesses in response to a recognized market need.
Let’s say that frozen yogurt shops have begun popping up in your local area and consumers are crazy about them. You might think it’s the perfect time to catch the wave by starting your own, but first consider whether the area really needs another frozen yogurt shop or if eventually only one will be left standing, especially once summer ends. On a similar token, you might decide that a juice bar would be a wise business to open because all local consumers have to choose from is ice cream. However, if the local demographic is not particularly health-conscious, you might be trying to create a solution for a problem that does not exist.
Doing your research is essential to understanding your target consumers and their motives. Often, before any real market research happens, you need to ask yourself, “What problem does this product or service solve?” The harder it is to answer that question, the riskier your concept.
Fortunately, marketing can go a long way to make up for imperfections in your business concept. Take the Snuggie, for example. Clothing and blankets were doing their job just fine before the Snuggie came along, but the novelty and humor associated with the product and conveyed through infomercials worked wonders in overshadowing the apparent lack of utility of the invention. If you have a risky product, use branding to add value to your concept.
When deciding if your product or service needs to exist, think about substitutes, consumer attitudes, and whether you’re addressing a dilemma. Don’t leave it up to your business plan writer to ask these questions. Make sure your good idea is also a smart one, and be open to ditching or adapting it. If you can think of one good idea, you can surely come up with another one that is worth your time.