After you put an idea or a prototype out there using any of the testing and research methods, you need to check if it’s working or not. This is the market assessment. Some people call it checking for traction — are you onto something and can you (should you) move forward.
Do you have traction?
- If you created a survey and thousands of people have responded, you’re onto something. If three, six, twelve people filled it out positively… that’s not enough market traction.
- If you created a waitlist and it’s growing through word-of-mouth, you’re onto something.
- If people so excited about getting rid of their pain-point that very few have asked about pricing, you’re onto something.
- Could you sell these people an e-book on how to solve or treat or deal with the problem you tackle? If you can, and if they’re buying it while they wait for your main offering, you’re onto something.
- There are 5.86 billion people on the internet. Worldwide there are 4 to 8 hundred million businesses. Twenty, forty, eighty is nothing — it is right at zero.
Can you reach a large enough market to make the business viable?
This isn’t just about market size, which you try to figure out during the market research step. This is about what is the size of market that you can reach (specifically you with your capabilities) using the product idea, messages, and brand you’re developing.
Recalculate your serviceable obtainable market (SOM) that you estimated during market research to check what you’ve achieved:
SOM = Average number of sales per month x Average sale price x 12 months/year = Annual revenue (projected).
If using a sales team, the average number of sales per month = Sales reps x Average deals per month per rep. But you also need to look at each rep’s individual numbers to identify if your number of sales per month is driven by one or a few high-performing individuals compared to the the rest of the team, or if most of the team is hitting similar numbers but a few low-performing individuals are dragging down the average.
If selling online, look at the numbers at each step of your sales route to see if any steps are experience a significant drop-off in customers passing through, that you might need to improve.
Compass
Back to connect with the target audience.
Continue to product development.
Back to top – steps to start a new business.