5 Tips To Assess The Market Potential For A Start-Up Idea
Australia is a hotspot for owning a small business given its huge mixed market economy which generates a trillion-dollar GDP annually. The country boasts of great labour freedom, financial growth, trade freedom and political stability. As you would expect, many Australians are starry-eyed about the idea of becoming entrepreneurs. Most of them imagine themselves as the next Jeff Bezos or Bill Gates. Well, there is no harm in being ambitious, and a brilliant start-up idea can undoubtedly make you a millionaire!
However, before you invest your energy and money into launching a company or purchasing a profitable business for sale in Australia, you must evaluate the viability of your idea. You need to assess the market for all the risks and rewards that will come your way when you tread the path of entrepreneurship. It becomes all the more vital because a lot of small businesses fail within five years of their establishment. Here are five simple tips that can help you assess the market for your start-up idea.
1. Product Need
You need to identify whether your idea can be turned into a bankable product. For this, you will have to undertake market research to figure out the need for the product among the target audience. Usually, a business idea stems from the need to fill a gap in the market. However, you need to test if it matches the aspirations of your audience or not. The digital age has reduced the leg work to a great extent, and you no longer have to knock on doors to gather public opinion.
You can conduct surveys with focus groups to get feedback about the product or follow groups on social media which are interested in similar businesses and discuss your idea with them. You can also create a crowdfunding page. It will help you to get advice, recommendations, and observations from people from a similar background.
Plus, you also stand the chance of getting funding for your business. Another easy way to test the waters before taking the plunge is to use the Google Adwords Keyword tool to find out how many people are searching for the product which you will be offering. It will let you know about the intensity of the demand by checking the local and global monthly searches.
2. Differentiation Analysis
After you have evaluated the marketplace for the need for the product, you must find out how much competition you are going to face. If the market is already cluttered with comparable products, you will have to create a differentiating factor to set your offering apart in the eyes of the customers. You will have to study the past work done by the competitors and their marketing methodology to gain valuable insights about consumer preferences and what has worked with the audience.
You can learn about businesses which failed while attempting to obtain the market share and what was the reason behind their collapse. A review of your competitor’s goods and services will help you to identify the uniqueness of your product or develop a better version of it.
Most successful businesses present their customers with a unique selling proposition that helps in positioning the brand and creating customer loyalty. Thus all this information will help you to create a product which can beat the competition.
3. Market Share
Firstly, you need to explore the size of your target market and the segments you are going to target. You need to find out the exact size and then examine how quickly the market is expanding or contracting? Also, if you have a small target group of people such as high net-worth individuals living in Melbourne and Sydney, then you need highly targeted marketing which will need a lot of funds. You must take the market share occupied by the competition into consideration when analysing the trends.
If the share left for you is too small, then you may have to look for other options to sustain a profitable business. It will take too long to make your presence felt in an already saturated market, and it will need a lot more capital to keep the venture afloat till you generate profits. For example, a start-up cosmetic brand will have a hard time convincing women about the benefits of its products when the marketplace is already flooded with a plethora of brands. You will have to contemplate whether it is worth taking the risk or not.
4. Financial Risk
When you are evaluating the market risks, you need to check how much capital will be required to get your start-up off the ground. You will have to assess your own savings while keeping in mind your family obligations. You will have to create a budget plan which will elaborate on the funding sources and how much money can you acquire from them. While small business loans can be acquired from banks, you need to bear in mind that you will have to pay the premiums even when there will be no profits.
You can rely on a combination of personal funds, bank loans, loans from family or friends, and funding from angel investors or venture capitalists. However, you will have to convince the angel investors about the success of your idea in order to secure the funding. To get the required funds, you must design a detailed business plan which will describe the mission, goals, budget and financial projections for the first three years.
5. Finding The Right Team
You may have everything planned and in place, but you cannot execute the idea until you have the right team by your side. You can deliver what you have promised to your customers only when you are able to maintain quality and value. It can be achieved by organising a team of talented and passionate individuals who can support you in creating a brilliant product that fulfils the market needs and is marketed effectively to reach its right audience.
Your staff must have the same vision and work towards the goal with zeal and determination. In return, you must employ the best human resource practices in your organisation to find the best talent.
While millions of people dream of launching a flourishing enterprise, only a few are able to give shape to their ideas. Lack of planning and judgment becomes an impediment in their road to success. Thus when you are looking for business opportunities in Australia, make sure to weigh the market for all the risk factors and then go ahead.