Are you looking at entering a new market, but you doubt your success. It’s a valid worry, but one in which Josh Kaufman, the author of the Personal MBA, explains can be mitigated:
”Rate each of the ten factors below on a scale of 0 to 10, where 0 is extremely unattractive, and ten is extremely attractive.”
From page 45 of the Personal MBA, I am listing the Kaufman’s Ten Ways to Evaluate a Market:
- Urgency. How badly do people want or need this right now?
- Market Size. How many people are actively purchasing things like this?
- Price Potential. What is the highest price a typical purchaser would be willing to spend for a solution?
- Cost of Customer Acquisition. How easy is it to acquire a new customer? On average, how much will it cost to generate a sale, in both money and effort?
- Cost of Value Delivery. How much would it cost to create and deliver the value offered, both in money and effort?
- Uniqueness of Offer. How unique is your offer versus competing offerings in the market, and how easy is it for potential competitors to copy you?
- Speed to Market. How quickly can you create something to sell?
- Up-Front Investment. How much will you have to invest before you’re ready to sell?
- Upsell Potential. Are there related secondary offers that you could also present to purchasing customers?
- Evergreen Potential. Once the initial offer has been created, how much additional work will you have to put into it in order to continue selling?
Now total the ten items.
If your score is below 50 then dump the idea, it is a poor use of your limited resources. If your score is above 75, it’s a good idea and time to commit serious resources to the venture.
If your idea is between 50 and 75, you might have a good idea, but the idea needs a bit more baking.
You want to run through this exercise before you set sail on your next idea. This activity allows you to kill ideas liberally while keeping the good ideas ready for prototyping.