Each month, more than half of million new businesses launch. However, it has been reported that 50 percent of those will fail in the first year and 95 percent will close doors before reaching its fifth.
A wide spectrum of these collapses are the result of entrepreneurs being fixated on delivering a solution that is applicable for all rather than finding a niche for a few. Although the correlation between the size of a target market and the profitability of success may seem more advantageous, narrowing an idea within a specific bazaar has proven to establish a more viable framework. This lucrative avenue can help determine the sales potential for your solution, build a framework of your product strategy and define opportunities to evolve as a marketplace trailblazer.
Once you’ve determined your niche, what’s next? For those looking to solidify their entrepreneurial status within a narrowed marketplace, it becomes vital to keep business buoyant using these five essential building blocks for success.
1. Determining Growth Potential
Launching a business is an incredibly challenging feat. Fortunately, there are ways to prepare for the laborious road ahead.
The success potential exceeds tremendously when you first analyze the marketplace to ensure your intended industry is filled with deep pockets of rapid growth.
During analysis, look for indicators that highlight a market’s stability and potential development. For example, the beauty industry has a $20 million marketplace and is known to be resistant to economic downturns – even faring well during the Great Recession of 2008. These types of signs may unveil that your venture choice will yield a favorable investment return.
2. Analyzing Target Audiences
To become your niche’s leading authority, you must first conduct effective qualitative and quantitative research on your target audience. Although gathering meticulous details on buyers may seem harrowing, this process has the potential to reveal new and unexpected insights that could pivot a new business in a positive way. Without this data, unexpected blindsides could trigger an ill-fated downfall.
Kick off this process with secondary research, as it is more cost-efficient and less time-consuming. The substantial amount of existing resources available will provide notable intuitions on the industry, market and competition. If you’re unable to find secondary data that directly target your needs, consider executing primary research. Conducting surveys, interviews or even focus groups are all commodious ways to gather constructive analysis. Although this endeavor may be associated with a hefty price tag, the return will be substantial, as it will render answers to any questions specific to your new venture.
3. Assembling an Effective Team
Hiring a core squad of avengers can deliver miracles in business infrastructures. Although every team of journeymen boasts a wide spectrum of expertise within organizations, the values to cultivate a stable foundation – such as transparency and interdependency – traverses across all industries.
Nevertheless, one of the biggest mistakes team leaders can make is failing to delegate. Focusing on all tasks at hand can result in prioritizing very little, which can lead to higher turnover and lower productivity. Instead, think of a small business or startup as a football or basketball team – a unit that must work harmoniously to be effective. First, look at your team’s limitations. Then, insert individuals in roles who have the strengths to handle specific enterprises successfully and make them accountable for final outcomes. This explicit approach will instill trust, establish respect and lead to an increase in productivity.
4. Listening to End Users
From the development phase onward, it is vital to explore the challenges faced through the eyes of an end user. First, when creating the product vision, start with customers in mind. Considering different perspectives could divulge insights that help boast a more dynamic and robust product. In addition, it could also reveal what makes the solutions worth the investment. Once launched, provide channels to gather feedback from end users. These insights could introduce opportunities to evolve the product and stay aligned with the ever-moving technological advancements and customer demands.
5. Understanding Personal Limits
Starting a business can be very demanding. As the leader, you’ll be expected to be present 100 percent of the time, while juggling all other segments of life. Rather than trying to grow your niche business to serve a combination of sub-segments too rapidly, look toward business goals instead. By remaining parallel with the current mission, a business will be able to remain efficient and productive while slowly implanting prospects for growth.
Chad Hankinson is the founder of Indianapolis-based Stylie.