Thursday, January 22, 2015

6 Ways to Evaluate a New Market

By Geraud Staton

Congratulations! You have decided to get off your duff and put your product or service out there into the world. Good for you! That step alone has put you further than almost everyone you know. You are an entrepreneur, in it's most basic sense. 

  1. a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.

  2. synonyms: businessman/businesswoman, enterpriser, speculator, tycoon, magnate

  3. This is your new reality. Unfortunately, there is still some work to do. Just because you have a product or service to put out there doesn't mean that the world wants it. 

First, a word of caution: take this lightly. Don't let anyone tell you your dream isn't worth it. That includes your friends, family and even professionals like me. If you created a revolutionary stethoscope that you think the world must have, then you better do whatever it takes to give it to the world! 

But, to ease your pain, and to perhaps give you a little more of a solid foundation, here are six things to look for when you have a new product. 

1. How many people are buying the type of products you want to sell? 
People hate market research. I hated market research for a long time. But, it is vital to one's business. If you hate it, hire someone else to do it. Just get it done.

What you want to know is: how many people buy things like what you're selling. This is not the time to get all proud and yell, "No one is making anything like what I'm making!" If you have a new stethoscope, then look at the existing stethoscope market. How many are getting bought? Scale of 1 to 10, where is your product? If you are selling a new tooth brush, nearly everyone buys that. That's a 10. If you are selling books about how to sew your own tuxedo out of recycled rubber tires you probably are only at a 1.

2. How much can you sell it for?
I just heard your blood pressure shoot up. Don't worry! I'm not asking you to price your product yet. I'm only asking you to take a guess as to the price of the type of product you sell. Athletic shoes are $50-200. Tooth brushes are $3-10. 

A 10 in this area is probably a weapon's satellite with lasers or something. A 1 is something small, like butterscotch candies. Yummy.

3. How much will it cost you to get a client?
This is important! If you are selling a weapon's satellite you not only have to build it, which will be expensive, but you are going to have to do a lot of work to sell one. Testing and events and the procuring of contracts. This is massive. If you sell art, maybe you just need to put something on your Facebook page.

That's weapon's satellite is a 1 in this case. It's costly to sell. A 10, on the other hand, is something like a baby-sitting service where you need no overhead and marketing can be word-of-mouth.

4. How many people are doing the same thing?
There are, supposedly, no new ideas under the sun. But, just how many people are doing what you do? How much competition do you actually have?

Let's say you want to sell ink pens. If you sell a pen that writes blue, but you think that it's the ink that really matters. So, your pens have a special blue ink that really writes smoothly and it's organic and it's made from easily acquired materials like grass and blue daisies. As cool as this might be, it's still only about a 3 in the originality department. There are plenty of blue pens that write smoothly.

But, if you sell a pen that also squirts floral scent into the air while you write, you are probably at a 7 or 8. I have never heard of a pen that squirts the smell of lavender while I write with it. There you go. One idea for free. Be sure to send me one when you create it!

5. How soon can you put this out into the world?
This one is easy. You have an idea. You want the world to have it. How long will it take you? I am an oil painter. I can put a painting into the world in about a week. If I want to write a new book, it might take me months, not including the time I have to look for a publisher. If I want to put a cancer drug out into the world, that will take years! 

How soon can you do what you do? If you can do it within a couple minutes, then you're at a 10. If it will take you 5 or 10 years then you are at a 1.

6. Can you keep making money at it once you've sold it?
Anyone who knows me is aware that I am an oil painter. I have been a painter for many years. For a long time I worked in portraiture exclusively. Let's just say that once I sold a painting to a client, I never saw them again. They may have sent me referrals, which is great, but not many people want two portraits of themselves!

Then, I decided to paint whatever the hell I wanted and if people wanted to buy them, great! This moved me further along in regards to this line of questioning. People might only purchase a single portrait, but I have many clients who own multiple works of art by me. I even have a few collectors. This is much better. 

Check out my work, if you'd like.

I have even dabbled in the print market. This would be the best by far! Now only can I sell a painting or two to the same client, but I can also sell them multiples as gifts. And it gets even better if I sold my work on mugs and t-shirts and calendars. Someone could have their entire apartment furnished with Geraud Staton artwork!

If you sell portraits, odds are good you sell one item and then need to produce another one in order to make any more money. This puts you at a 1. Almost all service businesses are in this category. If you sell a fancy pen that smells like lavender, and also have a dozen other scents, and you also sell the scent refills AND the ink refills, then you are probably at a 9 or 10. 

Your Score:
Your score is arbitrary. I will not tell you that you must have a score of at least 50 out of 60 in order to be a success. There are plenty of successes who were at 10! But, the higher you are up this ladder, the more ease you will have in selling your product. If there are ways that you can improve in a particular area before you release your product, even better. 

But, also, don't spend too much time on this. I'm a firm believer in the "fail fast, fail often, fail cheaply" school of business. Put it out there and don't spend 3 years developing  THE PERFECT pen that smells like lavender. Someone else will beat you to the market. Then, you'll have wasted a ton of money and a lot of your time.

Besides, I really want that pen ASAP. 

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