When you have big goals for your business, you don’t want to stay in a small pond. Ambitious entrepreneurs are continuously on the search for deeper waters and vast oceans of opportunity. And when you start to reach the limits of the waters where you’re swimming, you may begin to feel tapped out. But one of the most exciting things about being an entrepreneur is that you can always find ways to tap in to new opportunities and venture into exciting new revenue streams.
But how do you know when the time is right to veer from the path you’re on — serving the customers you currently serve — into the unknown territory of a new market?
In marketing, the term “market” refers to the group of customers or potential customers that may be interested in your product or service, that also have the means, ability and freedom to purchase what you are offering.
As a small business owner, it is important to become clear on which market segments you are best suited to serve, based on geographic, demographic, psychographic and behavioral characteristics:
- Geographic characteristics to consider include neighborhood, population density, regional trends and more.
- Demographics include age, gender, social class, education and other factors.
- Psychographics refer to characteristics such as values, interests, and opinions;
- Behavioral characteristics that factor into your market segmentation analysis could be a consumer’s readiness to buy or how often they buy and use a product or service like yours.
Your “target” market is the segment of your overall qualified market that you choose to serve.
It’s who you aim to reach with all of your marketing activities. So when we’re talking about tapping into a new market, we’re referring to finding and going after a new “target” market. You will need to take all of the market’s characteristics into consideration to best understand your new target market and determine whether or not it would be a good fit for your company.
Last month, we provided 6 tips to help you tap into a new market; and now, we want to help you understand how to know when it is time to do just that.
Let’s start by going back to business basics. Skipping the crucial step of doing a proper market analysis before endeavoring into a new market can cost you valuable time, money and confidence as a business owner. So hold your horses, and take a seat in ‘Marketing 101’ before racing into what you perceive as a hot new opportunity.
One simple yet tried and true way to figure out if it’s time to tap into a new market is by doing a SWOT Analysis. It’s only boring if you allow it to be; so make this exercise fun and gather your team or trusted business advisors to join the party. Use big sheets of paper with colorful markers, put on your thinking caps and brainstorm together. (Tip: Give the introverts plenty of notice to prepare some thoughts in advance.)
As a refresher, SWOT stands for Strengths, Weaknesses, Opportunities and Threats. When you are deciding whether or not it’s time to go after a new market, SWOT is a useful framework for understanding where you stand and what steps to take.
Start by considering your strengths as a business to determine whether you’re as prepared to tackle the new market as you hope. What special skills, talents and advantages do you have that set you apart from other providers in the proposed new market? What standout benefits to you offer? What do you do better than everyone, including your potential new competition? What is your existing Unique Selling Proposition, and will that USP translate well into the new market, or do you need to create one that’s more applicable? Knowing your strengths will give the confidence to take the next step and reach for bigger goals.
Next, get honest about your weaknesses. Entrepreneurs tend to be an optimistic and confident crew, but the most successful business owners make an effort to recognize and acknowledge weaknesses so you can best work within and around them. Step away from the glare of the shiny new market and take a raw, unfiltered look at yourself in the mirror. Is your product or service really a contender, or does it need some serious improvement or adjustment for a new type of customer? Are you truly knowledgeable about the trials and pitfalls of the potential market, or do you have skill gaps or potential blind spots that will make you seem foolish and ill-prepared when entering the market? You want to avoid wasting your time and be able to put your best effort in the right direction, so knowing your weaknesses is essential.
The right opportunities for your business are what you’re after. The whole point of heading into a new market is to seize ripe opportunities, so get clear on what they are. Be on the lookout for missing links, gaping holes, tiny cracks or fresh new ways to service a new market. If you notice a certain industry has grown stale from ‘business as usual’ maybe your business can kick up dust and liven things up. Opportunities arise from changes in technology, the economy, government regulations, population demographics and shifts in attitudes, beliefs and behaviors. Get good at spotting change and you’ll get good at spotting opportunities. Your ticket into a new market can be found in positioning yourself to capitalize on the right opportunities.
Finally, ask yourself what threats you might face if you attempt to tap into a new market. Tapping into a new market carries with it enhanced risk. Do you have sufficient resources in place to keep your business afloat while you pursue the unknown, or could the stability of your company be under threat? One of the biggest threats many business owners face, without thinking about it, is allowing themselves to get too distracted from servicing their existing revenue base while fishing in uncharted waters. Could the industry be shaky? Is the potential market really all you think it’s cracked up to be? Maybe they are cash strapped, difficult to work with or hampered by regulations. Could new laws come into play that throw your operations into a tailspin? Might changes in technology or trends render your offer obsolete? Investment in new pursuits without properly considering threats on the horizon could spell trouble. Without carefully assessing your threats, what looks like a golden opportunity could be nothing more than fool’s gold.
Matching your strengths with opportunities and weighing your weaknesses along with your threats are the first big steps toward determining if the time is right to pursue a particular new market.
If you have already captured as much of your market share as you can, and you want your business to continue to grow, it’s time to move beyond the borders of your current playground.
Maybe you’re already the market leader in your niche, or your current market may be steeped in competition. Oftentimes competition is a positive force that motivates you to step up your game, but savvy entrepreneurs have developed a knack for recognizing when a market has reached a saturation point.
Perhaps you’ve recognized that your product or service can be used in fresh and innovative ways, and you want to get the jump on your competition and reach out to new customers.
Or the case may be that you’ve developed a curiosity, caught wind of possibility, or simply have a hunch that a new market is the way to go.
Whatever the reason you are feeling pulled in the direction of pursuing something new, be sure to take the time to carefully consider whether pursuit of that new market is worth your time, effort and resources. A simple analysis can save you a ton of heartache.
If you are thinking of tapping into a new market, contact Solamar today for support in creating your strategic marketing plan and materials.