Bookworm Capitalist

Market potential: number of hearts and minds your entrepreneurial idea can conquer

noreply@blogger.com (Bookworm Capitalist) — Mon, 03 Nov 2008 06:36:00 +0000

What is market potential?

Modern business is synonymous to war. In business, however, instead of conquering lands and territories, you conquer people’s hearts and minds. This is the essence of modern strategic marketing. The one who conquers the most number of hearts and minds leads the game. That is why we have market leaders in different industries. Some of these market leaders have become powerful enough to lead the hearts and minds of the consumers to more innovative products the market has never known before.

What then is market potential? Market potential is the number of hearts and minds that your idea may conquer. By measuring market potential, you, as an entrepreneur would know up to what extent your idea can reach—how many people.

Market potential and sustainability of an idea

Well, not so many people see the importance of measuring the market potential of their idea. The common notion is, if the idea sells, then why bother to deal with these figures? Ask yourself again, why bother? The answer is, you measure market potential so you would know the limit. And when you know the limit, you would know whether you are limiting yourself and if you could push things further.

Knowing the market potential of your idea means that you know the potential number of hearts and minds that you can conquer. After you know this, you can see how many hearts and minds actually demands your idea—that is, how many hearts and minds have the willingness and ability to turn their wants into demands. When you know the current level of demand, this is the starting point of analysis.

The next questions will be, these people who actually demand my idea, what percentage are they of the whole market potential? Is it a small proportion, which means my idea is new and can further be pushed—that there is a lot of room for growth? If it is a huge proportion, then why is it huge? Perhaps other people have introduced them to the idea? Perhaps I would be facing a lot of competitors?

Key questions in determining the market potential

While a lot of marketing experts can offer different sophisticated ways to measure market potential, for an entrepreneur, it could be deduced through logic. These are the key questions to determining a hypothetical market potential:

 How many people are likely to use/utilize my idea? This question explores how many people will likely use your idea. Say, if your entrepreneurial idea for example, is to offer a solution to the absence of an accessible food store within your neighborhood—you ask yourself how many people will likely to patronize such a store? Perhaps you may count the number of people in the neighborhood, and the people in the nearby neighborhood. Remember, this is not a matter of who have the ability to buy, and who have the willingness to buy. Those two questions we will explore later. The key is, you have an idea of who and how many will benefit with the idea.

 How many people have the ability to pay for my idea? After determining the number of people who will benefit from your idea, you can determine who among those have the ability to pay for the idea. Let’s go back to the food store example. Well, basically all the people in your neighborhood can afford the food store, except if your idea is an upscale gourmet one which will require you to classify who will be able to afford, perhaps according to income or purchasing power. The key is you have an idea of those who will have money to put your idea on their budget and spend for it. This is usually a percentage of the figure in the first question.

 How many people are willing to pay for my idea? Out of these people who are likely to benefit from the idea, who have the ability to pay for the idea—you now ask, how many are willing? Of course, even if people will likely benefit from your idea, and they have the money they pay for it, if they are not willing to pay for it—your idea will not turn into sales. After all, you wish to turn your idea into cash right?

 How much are they willing to pay given a certain period? The final item that you need to know is how much these people can allocate for your idea. Which is, given a certain period, how much are they willing to pay?

Market potential and marketing research

In the previous section, we say we are measuring the hypothetical market potential. This is because, as entrepreneurs we do not have access to information that is at least scientifically gathered through marketing research. Not that we do not have access, but this kind of information costs a lot for us to offset the benefit that we can get. However, this should not limit us to measure the market potential of our idea.

Large companies can afford to hire market research firms to gather figures for them. This is because, the benefits to gather such information offsets the costs. The benefit, that is to lessen the uncertainty and risk of loss for the big business. Well, but those big companies also started small. So, just doing some bit of scientific guesses and some logical estimates will do in our case.

Wrapping up

Measuring the market potential is crucial even for us entrepreneurs who are starting it small. While the availability of hard data will cost a lot, scientific guesses and some logical estimates can do in our case. Marketing research is very important for any business, as information is power during these times. But, doing our own research may not require us to spend thousands of dollars at first. A little bit of observation is research too, and would cost us a little.

Sustainability of an idea: will your product succeed?

noreply@blogger.com (Bookworm Capitalist) — Sun, 02 Nov 2008 08:59:00 +0000

The major reason why many entrepreneurs’ ideas fail

Right. You now get a wonderful idea. You’ve done your observation and have seen an opportunity disguised in the form of your problems, disappointments and dissatisfaction. You’ve muster enough confidence to make you act on it. But the starting point is, you ask, will my idea succeed?

The reason why many entrepreneurs fail is that they back their ideas with a definite product or service in mind at the conception of the problem. This could be a result of cultivating their creativity, that somehow out of the blue, they have found a solution to a problem. But when entrepreneurs start to focus on the product and make it so specific without consulting the market; they start to lose focus of the other factors—the customers.

Remember Trap-Ease America, the mouse trap? It was a very good idea, but why has it failed? Surely, there is a need—a need to trap mice? There are a lot of incredible products in the market and at first they start as a good idea to solve a problem. However, as entrepreneur develops the product, it usually becomes different from the one which is intended to solve a problem.

When products become so great that they become so specific, sometimes they solve problems so specific that they only cater to a smaller set of people. Or, as the product develops, the entrepreneur adds unnecessary features about the products, but fails to put in mind one thing: BENEFITS to consumers. This is one of the major reasons why most of entrepreneurs fail.

Sustainability of an idea: measure of potential success?

The success of an idea lies in the fact that it supports a need: it is a solution to a problem; it offers some benefit. As long as an idea supports a need, we can safely say, as an opportunity it is sustainable.
An idea can be a perceived opportunity because it is timely: this happens to fads. But as time passes by, and tastes and trends change, making the fad obsolete—what happens? The idea vanishes, and is replaced by another fad. As long as the entrepreneur can find a need that is associated with his idea, he or she will have less trouble in selling products out of that idea.

Wrapping up

An idea is sustainable if it supports a need. Before an entrepreneur creates a product to back up his or her idea, he or she needs to first know the benefits the customers want. Chances are greater that the idea will be sustainable over a longer period of time, thus becomes a successful one if the entrepreneur offers the exact benefits the customers require to meet their needs.

One major mistake many entrepreneurs make when starting up, is they begin by focusing on the product that they offer. They usually increase the feature, not knowing if these features are desired or needed by the target consumers. Only by listening to consumers first in order to properly tailor the entrepreneur’s idea to their needs, will offer the chance for success.

Don’t be like the other amazing products in the market which no one wants to buy. When you’ve got an idea, ask first what your customers’ needs are, then create a product. You see, the global giants would not stand a period of 20, 30, and 50 or more than a hundred years, if they have not listened to their customers first, then back their ideas with the benefits these customers want.

The Entrepreneur’s Great Idea

noreply@blogger.com (Bookworm Capitalist) — Sat, 01 Nov 2008 06:18:00 +0000

Creativity and the idea

Three o’clock in the morning. You’re wide awake but your eyes are shut from sleep. Suddenly your head feels an intensifying heat. Then thoughts come rushing and suddenly there is a flurry of ideas. You’re greatly inspired. At last, you get an answer, ideas. You want to get up and write it all up.

While a lot of people I know have happened to experience such a scenario, usually after “sleeping on a problem,” in order for them to come up with solution, let’s admit it—not all the entrepreneurs come up with an idea from such an overwhelmingly sensational experience. On the contrary, most of us have more limited access to our subconscious where we draw our creative hunches.

But when it comes to an entrepreneurial idea, it can take simpler steps than that one. All it takes are some observation among your surroundings, a bit of imagination and creativity, and some level of confidence.

Ideas should represent opportunities

An entrepreneurial idea is not like any other form of ideas. An entrepreneurial idea should represent an opportunity. An opportunity, in the simplest of sense is a combination of favorable circumstances. But how would you know if a certain circumstance is favorable to you?

The answer is, well, you should know what you are looking for. You should know what you want first. From there you can gauge if a circumstance is favorable to you or not. But then, you may ask, for an entrepreneurial idea, what opportunities should be represented? Obviously, those are opportunities to make money.The answer is, well, you should know what you are looking for. You should know what you want first. From there you can gauge if a circumstance is favorable to you or not. But then, you may ask, for an entrepreneurial idea, what opportunities should be represented? Obviously, those are opportunities to make money.

Where do you find opportunities

Once you have decided about what you want, in this case, money—plenty of opportunities come to appear. But where will you find these opportunities?

The best opportunities are the ones that are disguised—maybe in the form of disappointment, failure, complaints, etc. Look at yourself and observe your surroundings. What disappoints you? What dissatisfies you?

Maybe, instead of complaining about something—you could do something about it. If it is a problem to be solved, surely there is a way you could solve it. And perhaps, more people are having the same complaint as you do. And then again, maybe you could solve those complaints for them too.

The largest businesses come from an idea, a representation of an opportunity which is grounded on dissatisfaction. The owner of the opportunity acts instead of complains about a disappointment or dissatisfaction. When he or she finds out there are a lot more people experiencing the problem as he or she does, he or she offers the solution for something in exchange. That is how the greatest entrepreneurial ventures started.

How to know if it is a gold mine

Now, what to do? You may ask, If I am no creative genius who receives hunches in three in the morning, what to do? You get it right. Observe.

It may be helpful if you try to list down all the things that disappoint you—be it a service, a sloppy product, or some need that you could not see a solution which could meet it. Then you may try to rank the gravity of disappointment; afterwards you ask yourself what causes those disappointments. Is it a lack of a solution to meet it, or some other causes?

If it is a lack, you may ask yourself, is it only me who gets disappointed in this? Try to observe your surroundings. You may not know, there are a lot of people who might also be experiencing such disappointment. Once you know you are not alone—try to ask yourself about these questions:

What can I do to solve it? If this requires great effort, would the benefit of sharing the solution to other outweigh the costs to coming up with a solution to it?

You see, you may solve it. But if many people have the same experience of disappointment, it may be possible that to solve it requires a lot of costs for an individual to do it. With costs, we are not just talking about money; this involves mind energy and physical effort, time, opportunity to do some other things aside from it. If the benefits of coming up with the solution to such disappointment, then sharing it with other people who experience it will outweigh the costs—the idea may be a good, that is, a profitable and useful one.

Finally, if you are confident about it—it can be a starting point of a great enterprise. You may start acting on it. Now you get to depend both on you guts and your confidence to do it.

Wrapping up

An entrepreneur does not have to be a creative genius who receives hunches at three in the morning. But in order to come up with an idea, an entrepreneur has to be very observant. This quality enables an entrepreneur to look for opportunities which will be represented in his ideas, from where he or she can act upon.

Becoming an entrepreneur, as they say, is not for everyone. As I have come to learn, there are a lot of mental preparations for a person who has not been geared to becoming an entrepreneur from the start. But the entrepreneurial spirit can always be learned, although it may take a lot of time, perseverance and patience on the part of a person. Good books like Before you quit your job and Rich Dad Poor Dad, both by Robert Kiyosaki, One Minute Entrepreneur by Ken Blanchard, Don Hutson, and Ethan Willis emphasize a shift in mental paradigm, cultivation of some personal qualities and change in general attitude toward money and business before anyone can become a successful entrepreneur.

Next up, we shall see how an entrepreneurial idea can be given body to become a business venture through business theories that have been applied by the most successful businesses around the world. In my next articles, I will offer some chewable tidbits of theories I have distilled and made easier to deal with from leading academicians through my background in business research.

Contact

noreply@blogger.com (Bookworm Capitalist) — Fri, 31 Oct 2008 03:06:00 +0000

About

noreply@blogger.com (Bookworm Capitalist) — Fri, 31 Oct 2008 03:03:00 +0000

Bookworm Capitalist shares the knowledge he has taken the pain to learn in order to finish his Business degree. From this, and his experience as a business researcher and consultant, he has encountered theories from business literature that he has deduced into chewable bits to put structure and serve as guide to his entrepreneurial spirit. He hopes those chewable bits help his fellow entrepreneurs alike.

Bookworm Capitalist, with this blog, hopes to help create a better world where obliviousness and ignorance will not be used as excuses for sloppy products and services, as well as for business injustice and malpractices. That better world where businesses are socially-responsible citizens; where products and services are excellent, not mediocre; and where business environments are fair to employees, investors and other stakeholders.