Are you interested in starting your own business?
If so, it's important to not just think about what type of business might be best, but also about who will be purchasing your services or products.
Without a profitable market identified, your business does not have a good chance of succeeding.
Not all market niches are created equal so before you invest your energy in building a lifestyle-friendly business, take some time to think about which customers will give you the lifestyle-profitability mix that you desire. Here are four key questions to consider:
You'll spend far less time marketing your services if you target an "easy to find" group of customers. Customers who share a common meeting spot (i.e., clubs, organizations, associations, etc.), read the same publications, or listen to the same media, are much easier to target than clients with diverse interests and no common meeting spaces.
For example, one of my colleagues specializes in teaching job search strategies to college students. She speaks on college campuses, writes for publications targeted to college students and partners with companies who actively recruit graduating seniors. She knows exactly where she needs to go to find her audience, and in turn, they know where to reach her.
Another colleague specializes in writing resumes for attorneys. She frequents meetings of her local bar association, attends legal conferences and makes it a point to actively network with other attorneys. By serving a well-defined niche, both of these women have a relatively easy time both finding their ideal clients and closing sales.
I think we'd all agree that it is better to serve a market that has money than one that doesn't. But determining who will spend money can be trickier than it appears. Research shows that many people make purchasing decisions based on emotion, and then justify their actions with logic. That is why college students on limited budgets who dine on ramen noodles pay big bucks for concert tickets, extreme coupon savers pay thousands for a trip to Disneyworld, and women who earn minimum wage spend two hundred dollars to have their hair highlighted. Logical? Most of us would say no. But logical or not, it is how people buy.
Consequently, it's important not to make assumptions about spending based on income data alone. Research the buying habits of your target market before you invest in developing new products and services.
To identify those pain points, think about your market's greatest challenges and problems, and then find a way to help alleviate their worries. When you do, people will gladly part with their money for services and products to be relieved of their pain. The more intense the worry, the more money they are willing to spend, especially when the worry is so strong that it keeps them up at night.
If you can find a way to offer a service or product that removes pain, it will be easier to sell your services than if your offerings focus on prevention and planning alone.
Not every purchase revolves around problems and pain. People also make passion-driven purchases, often spending large amounts of money on items they want, but don't really need. That is why wine enthusiasts will spend $200 for a fine bottle of cabernet, sports fans will pay thousands for World Series tickets and car lovers will spend hundreds to have their cars detailed. The decisions may not be easy to understand, but people spend on what is important to them. Figure out what your market thinks is valuable -- and then cater your services and/or products accordingly.
When you do this kind of research and analysis before launching your business, you have a much greater probability of succeeding. And that will save you time and money as well as making you more successful.
Nancy Collamer, M.S., is a semi-retirement coach, speaker, and author of Second-Act Careers: 50+ Ways to Profit From Your Passions During Semi-Retirement. You can now download her free workbook called 25 Ways to Help You Identify Your Ideal Second Act on her website at MyLifestyleCareer.com (and you’ll also receive her free bi-monthly newsletter).