Often aspiring entrepreneurs come up with new revolutionary ideas for starting a business. But most of them fail in the first couple of months after launch. Therefore, before opening a company, you need to analyze the market and assess whether consumers are ready for your product. In this article, we will cover 5 steps for niche analysis.
Determine Who You Are Taking Money From
If you don’t have an answer to the question “Who are people paying for this kind of service now,” your business may not survive. At best, you can sell your new unexplored product to a couple of acquaintances, and after that, the company will close.
If you have no one to compete with, this means that there is no money in this niche at all, customers do not need such a product.
Gather Data on Similar Businesses
If you have analyzed the market and realized that you have competitors, watch them. Let’s say you want to open a cafe in the city centre – visit a couple of cafes that already work there. Pay attention to how many clients they have and what is the average check, so you can calculate their approximate income and understand how much you will earn when you establish a business here.
This also applies to opening a company online. Perhaps you want to establish a new online gambling platform similar to Woo Casino and in this case you need to take into account all the intricacies of this industry.
This approach will not give you a 100% guarantee, but you will have a general understanding of how successful the business can be.
Start Selling a Product Before It Even Appears
You can start advertising a product even before you open a business, so you will study the demand.
Many aspiring entrepreneurs make the mistake of trying to figure out if their product will be in demand: they only ask friends and family for their opinion on it. Naturally, close people, in order not to spoil relations with you, will say that the idea is brilliant and will bring you a lot of money. But that way you won’t have an accurate idea of how many customers you’ll get when you start the company.
To find out exactly whether the audience agrees to buy your product or service, create a website on the Internet, place an ad on social networks, make an advertising mailing list with a specific offer that people can respond to. Only when people are willing to give you money for your product is it worth releasing to the market.
Remove Metrics From an Existing Similar Company
No one will tell the first person they meet how much their company earns, but there is a way to find out on your own. In America, to find out how much money, for example, the restaurant business brings in, you can go to a site where companies are for sale, find a broker who sells restaurants and act as a buyer. You will be given an income statement, show the balance sheet and talk in detail about the profitability of the company. So you will have accurate numbers in your hands, and you will have an idea of how much this business needs to spend on staff, advertising, service provision, etc.
If that’s not possible, try working with franchises. Potential franchisees are also given data on the income and expenses of the business. But such figures need to be trusted less; when selling franchises, information can be embellished. However, even with such data, you will understand the structure of income and expenses in this niche. And if that’s not enough, get to know other franchisees who already work with this company and know exactly how much money can be made. This way you will receive invaluable information that many entrepreneurs learn only in the third year of work.
Join Business Clubs
There are many communities of entrepreneurs. They include business owners from various fields who have experience, both positive and unsuccessful, and they share all this at meetings, quite openly. Communicate with those who have had a business like yours, ask them questions, be interested in what successful and unsuccessful actions they performed. This will allow you to see the weak points in your business plan before you spend money on its implementation.
To understand whether your business idea will bring money, test it before starting a business. In this you need to consider 5 steps:
- Identify competitors;
- Collect data on similar businesses;
- Start selling the product before it appears;
- Remove metrics from an already existing similar company;
- Join business clubs.