How to Plan a Business – Seven Steps to Finding Your Market Opportunity

Why Do You Need a Market Opportunity?

It’s not easy to plan a business. And, it is a waste of time to plan a business around an idea that has no chance of success. You need to find a market opportunity that can support a business. So, instead of rushing in to plan your business, step back and first evaluate that business idea and see if it is worth pursuing.

A market opportunity with sales potential exists when there is a critical mass of customers with unmet needs who will spend significant sums to satisfy those needs. When the sales revenues generated by these customers is sufficient to support a business, you have discovered a market opportunity with profit potential.

The focus of a market opportunity evaluation is on sales. While expenses are also a determining factor in projecting business profits, they are generally easier to estimate and they often depend on sales estimates. Therefore, it makes sense to develop a sound estimate of sales before investing time in estimating expenses. And, it certainly makes sense to develop a sound estimate of sales before planning out your business.

The Seven Steps to Finding a Market Opportunity

So, how do you find a market opportunity with sales potential?

Simple, it takes some time, access to the Internet, and knowing what to do. Here are the seven steps to complete.

  1. Become familiar with your industry, its current situation concerning growth and the trends to expect in the future.
  2. Choose a target customer to serve and market area where you will first pursue that customer. (Your choice doesn’t have to be the perfect choice. It just has to be one you are willing to spend your time evaluating.
  3. Analyze the nature and strength of the competition in your market.
  4. Analyze the needs and motivations of your customer. Identify their core needs and desired experiences.
  5. Design an offering that will deliver features that address core needs and desired experiences.
  6. Market test your offering with a sample from your target market group to evaluate the strength of demand.
  7. Develop a sales projection based on your market test and evaluate whether or not revenues are likely to be sufficient to cover costs and leave a profit for your business.

While this type of evaluation is still a lot of work, it avoids the work involved in preparing detailed estimates of expenses, cash flows, and engaging in other types of planning activities that make sense only if you are confident that your idea will succeed.

Adapted from Finding Your Market Opportunity, copyright 2009 Business Concept Evaluations, LLC.

Why Social Media is Not For Business – Seven Reasons

One of the business fads of today is to use social media sites, directly or indirectly, to advertise, boost link numbers and PageRank, and increase sales. I’m not here to argue that businesses have no place on social media sites, but there are reasons to avoid them if used to generate business.

(1) Most of the sites are opposed in policy and practice to business promotion. Imagine how you feel when you get a sales call in the middle of dinner conversation, or worse, when someone crashes your dinner time to try to sell you something. It is the same with social media chats that are interrupted by sales pitches.

(2) Your viewers’ demographics often make most of them improbable candidates for what you want to promote. If visits to your site rarely translate into subscriptions and sales, this may be why. People use social media sites for their own agendas, and these are not related to your business … unless in individual cases you find your business can solve their problem.

(3) The social media chat topics usually have no relevance to your business and conversely (save for certain types of businesses, perhaps such as dating services).

(4) Traffic generated may be fadish or sensation-driven. Once the fad or sensation is over, traffic stops. And if the sensation is largely irrelevant to your business, probably the traffic is largely unqualified for your business.

(5) Using social media sites effectively takes a lot of work consistently. If you are to engage in conversations and develop relationships properly, most of the time and energy spent will probably be on matters irrelevant to your business. And you can easily lose parties in whom you have invested time and energy, whether you say something offensive once or they leave for reasons entirely their own.

(6) Search engines do not value links to your site from social media sites.

(7) Depending on the drift of conversation, you may run out of ideas and things to say. And you have no control over what complainers and hecklers say.

Of course, there are success stories of business people who have done well using social media for business, but this is because they

have solved or minimized the difficulties,
are gifted in the task,
put in the work developing relationships, and/or
uniquely provide what a lot of people want.

And some businesses lend themselves to social media more than others.

In any event, businesses seeking to use social media for business purposes would do well to keep the above warnings in mind. There are other forms of forms of online marketing that may be tackled first.

8 Ways to Get C-Levels and Gov’t Execs to Start Spending in This Depression

Right now corporate and government officials are keeping spending and capital investments to minimum. Even if government projects are funded and have nothing to do with budgets, they are still being put on hold. Why, because it’s not right to spend now. It looks badly and ultimately the fear factor. Although capital spending is just what the economy needs. It creates jobs and has a direct impact on moral.

In a year or two this depression will be a memory and greater than 98% of all businesses and 99% of all government agencies will still be doing business as usual. So between now and then they still have to produce. And this is your opportunity. If you find out what’s really important to their survival, you’ll know what they will spend money on. If they are smart, they will invest now to have a leading position against competition when the depression is over.

So here is what to do to get them to open their wallets.

1. Network to key executives and decision makers to find out what’s important now for survival. Ask them, (a) what are their issues and concerns right now, (b) pepper them with other concerns you think they should have to see if they agree, and (c) ask what you and your company could possibly do to help them with it – even if it isn’t in your direct solution portfolio. You’ll get them thinking. Frame it around the idea that they wouldn’t even have to spend a dime. That will get them thinking even more. And this is what you want. They are so mired in miserly thinking that they can’t think straight.

2. Open your thinking. They may tell you things that you can’t help with, but if you open up your mind, you may see new opportunities that extend your solution portfolio. For example and architect friend was confronted with a scrapbook problem of his wife and kids. Business was slow for him, so he used his creative juices to design castle stamps based on designs of castles integrated into letters and numbers.

Now you don’t have to do anything if you can’t figure out a way to participate. However, you will establish yourself as a concerned vendor, and possibly a resource that these execs can call as they think of other things. This is the essence of a professional relationship – something you want to always develop and maintain.

3. Wave their magic wands. Ask them to creatively and openly think about what they would spend money on now if there was no depression, or they had tons of capital available to them – things that would help them now and/or once the economy is bustling again. This is different than the questions asked above. Somehow the magic wands release ideas that point to future actions.

4. Be creative yourself. If they can’t think of anything, or only mention a few, throw-out ideas you feel they should be thinking about and see if they feel the same as you. What you’re trying to do is understand their path to success. This is the arena you’ll eventually have to play in. It makes for great conversation which again goes to establishing relationships. And then you’ll be able to start structuring your approach around these ideas. These are what they will pursue as soon as they feel it’s safe to start spending. You want to be positioned as the valued resource who helped them prepare for it.

5. Up and out is my motto. Be sure to do the above with all the key staffers and executives. The more key executives you talk with the more you’ll learn. It’s not just the direct, functional manager. Talk with the sales manager, the HR manager, the CFO, operations, etc. Use your contacts or the previous person you interviewed to network you to the next person.

6. Get to the profit-center leader (PCL) or the ultimate funds releaser for government – and it’s not the CFO or comptroller. Be sure you conduct the above meetings with the execs before approaching the PCL. You’ll need their insights and information base of needs and ideas because if they are doing their jobs, they’ve already had conversations with PCL about them. Besides they will have to support any proposals or suggestions you’ll eventually offer to the PCL. Build you base before you go to the top. You’ll understand the PCL better and be able to converse at a higher level. Besides the more supporters the better.

Conduct the interview in the same manor as above similar questions about concerns, what would s/he do, magic wand, etc.

7. Wrap-up all your conversations with your appreciation of their time spent with you and that you’ve got a lot of information that’s creating lots of ideas and you’d like to review it with other experts in your organization and network and put together an information piece for you to present and them to review. Ask if s/he would be interested. If yes, set up a date to get back or for the review. This is where you’ll start enticing them to start spending. There is nothing like knowing what people want and then showing how they can get it if they spend a little money. Unfortunately it’s a process. You can’t assume you know what they want, offer it up and they buy. They have to go through their own process of buying also – hopefully with your help.

If the say “Not at this time”, ask in these words, “You don’t seem interested, please explain how come?” What ever s/he says, don’t argue or rebut. Accept it and thank her for her candor and then say, “What would you recommend I do?” Thank her again. Then decide if you want to do it or not, but sleep on it before you make your final decision.

If she says something about the timings not right or not now, this is a put-off. In other words, she’s not interested and wants to be polite. So push back a little and say something to the effect, “Please, it seems you’re not interested and if so, don’t spare my feelings, what about this doesn’t interest you?” This will take a little courage and you’ll have to practice saying it in front of a mirror to pull it off. But if you do, you’ll be so rewarded with valuable insights. You can call and thank me.

If appropriate, leave it with her that you will call in a few days about accepting her recommendation. If she tells you there is nothing you can do. Drop it for now and just keep her on you 2-3 month follow-up. However, this is only one person and it’s today. Be sure to keep interviewing others. If three tell you “no interest” then drop it and move to another client for now.

It’s amazing the metamorphous of 2-3 months regarding actions. But if you’ve done the above, you’ll know their desire and paths to get them – and these don’t easily change over time.

8. Do this process with your best customers. Even if you met with someone last week, set up a new meeting to do the above interview. Be sure to go up and out. Otherwise you’ll be getting only one perspective and it may be off a little or stilted to that person’s motivation. The more people you interview, the more you’ll see the real story evolve and this is what will show you the path to their pocketbook.

And now I invite you to learn more.