Post under “business foundations”

When you are thinking of starting a new venture, the assumption is that you’ll succeed. No one goes into business anticipating it will go down. Not only are you optimistic of your chances of making it in the market… you are confident enough to risk plunking down your hard earned capital to jump start your venture.

By now, you probably have an idea what market niche you intend to fill. You might have conducted some preliminary market studies, and sized up your competitors or scoped out your target audience. You might even be talking to potential investors on web chat and convincing them to support your venture.

Nonetheless, before you go ahead and put up the “Open for Business” sign, there are a couple of questions that can help you narrow down your choice of market, or perhaps cause you to switch market categories altogether.

Consider asking yourself these three before you put up a venture.

Is it a totally new market, or one with few entrants?

Back in the 1950′s, the head of International Business Machines, or IBM as it later came to be known, estimated that there was very limited market in the world for computers. Just three, in fact.

Just a few decades later, there was a revolution in chip manufacturing technology, and personal computing started to take off. The move from vacuum transistors to silicon chips made computers smaller, cheaper and easier to manufacture and own for everyone with a power outlet.

IBM might have thought there was limited market for their products, but by sticking with it, they were the first to the cater to the market.

The best venture, and also the riskiest, is if you cater to a totally new market, or one with very little competitors. Usually, these are very specialized fields where demand is few, but the products are priced enough to earn the company profit just by selling a few products. Examples of such markets are supercar makers, defense contractors, or luxury item producers.

If you have the specialized skills or knowledge, or you are confident that you can offer very high quality, then you can consider using this as your business focus.

Can you do it better than the other guy?

It could also be that you plan to enter an existing market, one already crowded by competing companies. Before you enter such a market, ask yourself: what can you bring to the table that will set you apart from all the other guys?

The answer is: you should be able to do something better.

It could be a ground-breaking innovation in the product. Apple was not the first to produce an MP3 player; Samsung and a host of other companies already had players on the market before then. But it was the iPod that changed everything and made the market popular, because of its design, user interface and simplicity.

Or perhaps its in the manufacturing process. Contrary to popular conception, Henry Ford was not the first to produce automobiles in the US. It was his mass-production assembly, however, that made automobile manufacturing faster and easier, and thus cheaper for the ordinary American.

If you think you have something new to offer, or you can improve upon an existing idea, that’s when you can truly say you can enter the market.