The biggest reason new businesses fail is lack of market need.
When it comes to building a viable entrepreneurial business strategy, the number one thing you need to do is identify a gap in the market. But how do you spot a gap in the market as quickly as possible, before you start dedicating valuable time and resources?
A gap in the market is either something completely new, something which already exists and could be improved, and/or something which exists but could be re-directed to a new customer market.
There are several ways to identify a gap, and they rest on identifying unmet needs, which you can reframe as problems, or pain points associated with a particular market. There are basic needs, such as food, shelter, safety or security. You can also have psychological needs, which are focused on relationships and belonging, along with self-esteem needs, where people are motivated by feeling good about themselves and their accomplishments.
The top tier of needs has a vast amount of room for innovation; self-fulfilment needs. This is an area concerned with fulfilling your potential, including creativity. There are plenty of areas in this sphere where people are looking for products and services that can improve their lives at work, enhance their leisure time and nurture their interests.
Utilising the latest technology and being acutely aware of current affairs, trends and lifestyle choices can help you to tap into the next big thing – or adapt something that already exists to be even more appealing to the current audience.
Keeping up to date on changes in the environment or with legislation can also be a good way to identify potential new markets. Industries can go through major changes when new legislation comes into play. For example, the GDPR data protection legislation that came into force in May 2018 led to a major shakeup for organisations throughout Europe and in turn was the catalyst for several innovative solutions which helped companies streamline their response and ensure compliance.
Validation is a really important step, because no matter how much potential you personally see in your new product or service – you must back this up with evidence in the form of market research.
Identifying the key customer segment you are targeting, and discovering more about how your customer sees the world and the problems within it for them is crucial to you understanding how you will serve them.
One of the frameworks which the University of Bath’s Entrepreneurship Management and Innovation online MSc covers is the ‘fail fast’ technique. It promotes the idea of understanding your customer segment not only through customer discovery techniques, such as market and competitor research, alongside customer interviews, focus groups, commissioned research, data and statistical analysis, but also through testing early formulations of your prototype on your audience, and observing how they react.
Through gaining a close understanding of your audience’s customer journey, you can instantly make incremental optimisations to your prototype.
Establishing a gap in the market and validating your products with customer research is just one part of a successful entrepreneurial journey. Making your business idea a reality is dependent on a variety of skills and a wealth of knowledge that enables you to take an idea through from conception to a viable business. Bath School of Management’s Entrepreneurship Management and Innovation online MSc is a masters providing students with a holistic understanding of each of the components necessary to create a fully-fledged business. From marketing, to finance, to operations, the online MSc will prepare you to push the boundaries of what is possible, validate your ideas and successfully manage a business or venture.
To find out more visit www.bath.ac.uk