Target market analysis for small businesses

By Samantha Garner | February 16, 2019

find your target market

Many entrepreneurs are so excited about their idea that they think everyone else will be too. However, that’s just not the case. Don’t fall into the trap of thinking “Everyone will buy my product!” or “I’ll find my clients as I go along!” This can spell failure for a new business.

Finding your target market

Does a market for your product or service even exist? Is it big enough and sustainable enough that your business becomes profitable? Small, scattered, unpredictable or unstable sales spell early doom for many small businesses. There’s a lot to know and understand about your potential customers. The better you know them, the better you can meet their needs and solve their problems.

What’s covered in a target market analysis?

  • Customer demographics – Characteristics of a population, likes gender, age, income and education for consumer markets; or sales, number of employees, sales territory, and industry size for industrial markets.
  • Customer psychographics – Information about your customer’s lifestyle, as well as on their attitudes, interests, opinions and reasons for buying products or services similar to yours.
  • Customer behaviours – What do your customers buy now? Why? How will they benefit by switching to your product or service?
  • Customer geographics – Where are your customers located? What city, region or country? How will that affect your potential business?
  • Market size – How many people or organizations would buy your product or service? How much would they buy, and how often?
  • Market need – Does your product solve a problem or fill a need?
  • Volume – How much of your product or service would they purchase and when?
  • Market communication – What is the best way to reach your target market? Print ads, social media, newsletters?
  • Competitive evaluation – Which competitive products or services do they currently use, and what do they like or dislike about each?
  • Prototype feedback – If you are able to develop a prototype, how did customers react to your new idea?

This critical information can be gathered with primary or secondary market research methods. Secondary methods are less costly and less time-consuming, but primary methods often give you more accurate information.

Questions and thoughts to define your target market

  • Define your customer. Complete one definition for each of the market segments you can identify.
  • Define your customers in terms of type (consumer or business), demographics, psychographics, behaviours, and geographic location.
  • Estimate the market size. How many of each of these target market customers would be in the area(s) where you wish to sell?
  • What are the unsatisfied needs of this market that your product or service would satisfy?
  • Why would customers buy your product instead of a competitor’s?
  • How much would they pay for your product or service? How much would they buy?

Once you’ve got a fairly good idea of who your customers are, narrow down your list into customer segments. Then, pick one segment you can catch and forget all the others until you’ve got that initial target in the bag. Don’t waste your time and money chasing customers randomly and frantically. It takes time, but focused customer research is a worthy investment for your business!

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Dragons’ Den 2019 auditions are nearly here!

By Samantha Garner | February 9, 2019

Dragons' Den Audition

Dragons’ Den auditions are starting soon! Beginning in Toronto on March 2, the audition tour will be open to the public, as producers hit the road visiting Canadian cities coast-to-coast in search of the country’s best business ideas in need of a Dragon investment. Check out all the dates and cities here and get some useful audition tips here.

A Canadian favourite, Dragons’ Den gives aspiring entrepreneurs the opportunity to pitch their businesses to a panel of wealthy Canadian business moguls – the Dragons. Successful pitchers will have a chance to earn real investment – from the Dragons’ own pockets!

Good luck, and we hope to see you on TV soon!

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Should you call it quits in your small business?

By Samantha Garner | February 2, 2019

should you quit your small business

At GoForth Institute, we’re all entrepreneurs too, and most of us have been business owners more than once. Entrepreneurship is a rewarding journey, but it’s also got its fair share of failures and struggles.

Obviously, we want you to love what you do, but like the song says – sometimes love just ain’t enough. If you’ve been getting that nagging feeling that maybe this particular stage of your entrepreneurship journey is at an end, one or more of these signs might sound familiar to you:

  • You’re losing money at a rapid pace. It can take up to three years for a small business to turn a profit, but if you’ve tried everything and still see your money slipping away faster than it’s coming in, it’s not good. Lack of cash flow is the number one cause of business failure.
  • Your relationships are suffering. If you’re so stressed that you’re taking it out on your loved ones, or work so much that you never see them, it could also be an indication that it’s time to close up shop. However, it could also be an sign that you need to hire some help!
  • You’re bored. When you started your small business, you were thrilled by it and spent every waking hour dreaming and planning. But what if you have no more ideas and are just running on fumes? Could you benefit from seeking outside help with planning or networking?
  • You dread your workdays. If the thought of another day as a small business owner makes you feel miserable, that’s not a good sign. Analyze this feeling. Would a new direction for the business help? Some new employees to take the load off? Think about what it would take to make you love your small business again, and plan out all options.
  • Your health is taking a turn for the worse. If the pressure and stress you’re feeling about your small business is taking a toll on your health, then something’s not right.

Is it time to close your business?

If you answered ‘yes’ to one or two of these things, you may have a problem. It might be a sign that it’s time to think of an exit strategy. However, it could also be a sign of a problem that can be solved in a different way – a staff member to take the load off, for example.

As we said above, most businesses don’t become profitable until about the third year of business, so we usually don’t advise throwing in the towel after, say, 14 months. However, if you’re starting to feel like maybe you want out, take it seriously. Take time to analyze all options available to you, to make very sure this is the best course of action. If you do decide to close up shop, regroup, reflect, and plan for your next small business!

We should also mention here that skills training can make the difference when it comes to entrepreneurship success. No matter what stage of business you’re in, small business education, like the kind offered by us at GoForth Institute, may help you tip the balance from “What do I do?” to “I have a plan!” Knowledge is power!

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Small business blog posts we liked this week

By Samantha Garner | January 26, 2019

business-plan

From setting goals to innovative technology, here are some of the small business blog posts and articles we’ve enjoyed lately. Have you read anything you’d like to share? Let us know in the comments!

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Get out of the building – get to know your customers

By Samantha Garner | January 19, 2019

lean start-up customer feedback

When we last talked about Lean Start-up, we discussed how you’ll need to create a minimum viable product, or MVP – a basic version of your product that early customers can give feedback on. Then, you develop based on measurement and learning.

So now, it’s time to talk about getting that feedback, and what to do when you get it!

Customer feedback and a product or service hypothesis

Here’s what you’ll need to do:

1. Identify potential customers who could give you feedback on your product or service ideas.

2. Develop testable hypotheses around metrics (market test results) that will give you enough information to pivot or persevere with your idea, such as the number of sales or sign-ups for example.

For example, you believe that running an ad campaign will be a cost-effective way to gain customers, but you don’t have the data to prove it. That’s okay! You should still run the campaign, but when you use Lean Start-up methodology, you’ll do it within the structure of a hypothesis. The goal of Lean Start-up methodology is to help you move quickly, iterate rapidly, improve your product (or service) and your company. You shouldn’t spend your time inventing a new way to write hypotheses.

The basic structure is this:

I believe [target market] will [do this action / use this solution] for [this reason].

There are three parts:

  • The belief
  • The target market
  • The measurement

It’s all too easy to write a hypothesis and say, “well, it hasn’t been proven one way or the other yet, let’s just give it more time.” Instead, your hypothesis should be time-bound and short-term. Creating a great hypothesis is an excellent first step, but it won’t help anyone if you don’t keep track of it. There are many ways to do this, but the easiest one is to create a simple, shared spreadsheet that people can enter their hypotheses into. Not only will tracking your hypotheses make it easier to organize your experiments, but it will also help you refine your assumptions and see if there are patterns. If you see 10 hypotheses in a row with similar assumptions all proven false, you can see an area where you need to rethink your approach to the problem. Without tracking, you won’t be able to see those patterns.

Want to learn more? Check out our online small business training for this and dozens of other entrepreneurship skills.

 

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Topics: Entrepreneurial Inspiration, GoForth Institute Small Business Training, Small Business Tips and Advice | No Comments »

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