Posts Tagged ‘market research’

The best sales associates, regardless of industry or length of sales cycle, are always cognizant of one reality when they begin their sales journey: time at their job is finite unless they continually meet their sales targets.

It’s worth reading previous posts in this series before continuing:

• Sales is Not Magic: Identifying Sales Triggers
• Sales Magic is Bogus: Understanding the 80/20 Rule & Trigger Points
• Sales is Not Magic: Understanding the Discipline of a Sales Connoisseur

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This is the last in a series of three on how to build and use economic models to determine the viability of your business idea. In the previous two entries, I discussed how market sizing and segmentation and competitive market research can help you, the entrepreneur, validate initial revenue and cost assumptions and build a more robust model that can be used to feed into the financial projections of your business plan. In this post we’ll explore how “reference businesses” can contribute to the economic modeling process.

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In my last blog entry, I posed one of the first questions an entrepreneur should ask themselves before moving forward with their endeavor, “Is my good idea a good business?”

I proposed that building an economic model can be a helpful tool in answering that question. Start simple using your existing knowledge of revenues and costs. Next, validate your initial assumptions through market research. I discussed how market sizing and segmentation can help forecast demand, which is used to calculate both revenue and variable costs. Below, I will discuss how researching your competition can contribute in building and/or supporting the economic model.

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Every business starts with an idea but not every idea is a viable business.

Whether you write a formal business plan or not, you, the entrepreneur, should look to answer the good idea vs. good business question as soon as possible. To begin, model the economics of your proposed business. Initially, this can be a back of the envelope calculation using revenue and cost assumptions to get an idea of potential returns. If the results of this exercise show promise, validate your initial assumptions through market research. Much of this research will focus on market sizing and segmentation, competition and reference businesses (i.e. businesses inside or outside the industry that employ a similar business model).

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