You have a great business idea. Did you tell it to someone? what does the person feel? You shouldn’t be so much worried about the security of your idea yet. When you have it all planned out, at that point, you should be weary of what you share with who. Now let’s look at business development of your business idea.
Who will buy your product or service?
First thing I want you to do is to look around you and list 10 people you feel will buy your product or pay for your service. These could be your neighbour, your friend, your family, anyone at all.
Secondly, ask yourself why you think these people will be willing to buy your product or pay for your service. Perhaps they have a similar product they are using already, what value proposition puts you at an advantage. Also, ask yourself why they might not buy your product or pay for your service. Treat all the 10 people on your list individually. If possible, talk to them and ask them their opinion. This exercise will be the first test of feasibility to your business idea and will expose you to other intricasies.
By performing the exercise above, you have already started market research. However, you will need to go much deeper. Profile your competitors. Depending on your business sector, come up with a list of competing factors. In order to get this, ask yourself what people complain about in the industry. Then rate your proposition against your competitors to determine your competitive and unfair advantage. In the food industry for instance, people complain about hygiene, freshness, nutrition, price, ambience, customer service etc. All these are your competiting factors to determine your competitive advantage.
If your idea is really a great one, at this stage you must really be more excited because you can already see what makes your business unique.
Next thing to do is to look at the industry more intensely. Answer the following questions properly
- What is the Total Market Size?
- Who are the target customers and what is the Total Addressable Market Size?
- What external factors such as regulation, government policies, industry dynamics, technology and so on might affect the business.
Using toothpaste as an example. Almost every Nigerian uses toothpaste. If the average amount spent on toothpaste is say N100, Then the total market size can is 170,000,000 Nigerians x N100. However, if you are making toothpaste for children only not more than 10 years old and you are looking to distribute in Lagos and Ogun. These factors and others you may come up with will reduce your Total Addressable Market a fraction of the Total Market Size.
Finally under market research, do a SWOT (Strenght, Weakness, Opportunity, Threat) analysis.
In the next post, we will look at SWOT analysis in more detail and then look to disect your product or service offering in more detail as we continue the process of your business development.
In the meantime, you can check out the links below for further reading.