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10 Tips On How to Assess a Market Opportunity

Guest post by: Jess Wells

Article Overview: The saving grace of small businesses in tough times may be their ability to be nimble but that doesn't mean you can act on a whim. There's due-diligence necessary before you change product lines, expand into new markets, or launch new offers to improve your business. Here are 10 questions to ask before deciding on a new direction:

10 Tips On How to Assess a Market Opportunity

The saving grace of small businesses in tough times may be their ability to be nimble but that doesn't mean you can act on a whim. There's due-diligence necessary before you change product lines, expand into new markets, or launch new offers to improve your business. How do you correctly assess an opportunity? Here are 10 questions to ask before deciding on a new direction:

1. What is the current margin on the products or services in this new space? Is it better than the profitability of your current endeavor? When margins are tight, look for a space where the margins are traditionally fatter. Volume won't make up for slim margins.

2. Could you use established procedures for the new product, or the new market? Starting from scratch involves a lot of learning, which costs a lot of time and money.

3. Can you use current employees to fulfill the new market demand? If you need to train or source new employees, you'll have a delay in implementation, increased costs and all the growing pains of bringing on staff.

4. Are your current vendors capable of providing the products and services you need? Established vendors that you trust can help guide you, give you tips on materials, let you know whether they see success in the product line by the amount of inventory they move, and may be more willing than a new vendor to allow you to dabble.

5. Will you be selling to customers who are the same or similar to your current customers? Do you know how to speak to them? Do you know their pains and desires?

6. Is the new product or service perceived as a luxury? Consumers are being very frugal now: is the new product a luxury, or less expensive than the alternative?

7. Is it a market niche in which you currently have a visible name? Does your standing in your current marketplace translate well in the new space? You want to take your reputation with you, not have to start from scratch.

8. Will the new product line enhance the look of your web site, your catalog? Introducing a high-end line to an existing product suite may actually bolster the reputation of the entire line. Adding an economical alternative may also keep you competitive. Expanding your existing line-up is easier, faster, and more efficient than having to devise a whole new logo, web site etc.

9. Is the new market one you would like to serve when the economy improves? While providing a "recession special" of reduced pricing might be a short-term win, developing a market space that will be even more lucrative when the economy picks up again makes better long-term sense.

10. Are you passionate about doing it? Having a new venture that gives you a sense of wonder and excitement can make all the difference in making it through a tough economy. Remember when building your business was fun? What would you give for that feeling again?

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Article Tags: market opportunity, small business



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