Just Because You Build It, It Doesn’t Mean They Will Come! Is Your Market Really There?

Before you invest time or money, make sure the market for your idea really exists.

A good idea doesn’t automatically make a good business. Many startups don’t survive, not because the product is poor, but because there’s little or no demand for it.

If you are reading this before you start your business, then it’s a timely reminder not to make the mistake of doing so until you are sure your product or service is viable. Sadly, that happens, and we see it a lot. People go rushing ahead with a great idea for a business that turns out to be not so viable after all.

It’s a hard lesson, but it’s one that can be avoided.

If you are already in the first year, then hopefully you did the work towards ascertaining your viable market before you started your business. If you didn’t, then you could be in a position where you’re seeing the problem from the last paragraph. You could also be about to fall into one of the dangerous traps that lie in the first 12 months, and wondering if you should try to pivot. When you have a business that is not going so well, pivoting seems like a good idea, but it often isn’t if it is rushed and ill-conceived.

As tempting as it is to pivot or look at additional areas, it can be a very bad idea if you do it before you are ready.

Perhaps have a business that is ‘doing OK’ but isn’t quite where you want it to be. So, you make a big change to bring in more revenue. Again, it seems sensible, but done wrong, it can do a lot of damage.

Whatever the circumstances, these are a few safeguards and some rules to live by before starting, expanding, or pivoting your new business.

1. Test Your Idea, Don’t Assume

First, ask yourself if anyone previously has, or already is, paying for your product or service? What can you learn from that?

Can you test your idea with small-scale trials, pop-ups, or pilot services to gauge the level of interest? Early feedback will save you money and help refine your offer.

Most of all, don’t just rely on advice about your idea from your friends, your Uncle Steve or even your Mum! They want you to succeed and, usually at least, will know little or nothing about your sector.

What you need is feedback from buyers and customers. You will certainly need your supporters, but you also need real world, critical, informed assessment. Some people even now use AI to be highly critical of their idea as another option, and look for ways to improve through the feedback they get. The point is to get a realistic, critical, and honest assessment of your business, not just hopeful support for your dream.

Sadly, a great product doesn’t always guarantee success either. There are plenty of examples of great ideas that the public simply didn’t adopt.

Tip: Real validation comes from people buying what you are selling, not just saying they like your idea.

2. Know Your Customers

Define your target audience as precisely as possible. Who are they, where are they, and what problem are you solving for them? The better you understand their motivations, the easier it is to market effectively.

If you go onto Google and search 'customer avatar sheet' you will find plenty of free materials for you to download that will help you define your ideal customer.

Tip: Create a customer profile and tailor all marketing messages to their specific needs.

3. Research Your Competitors

Competition isn’t always a bad sign because it also means some demand exists. Study how others in your space operate, their pricing, strengths, and weaknesses. Then decide what makes you different and, more importantly, better.

There is a big question to ask… if you have competitors, why should a customer switch to you? If the only answer you have is ‘price’, then alarm bells should be ringing. Those competitors are in business by charging a price that works for them, so how can you be significantly cheaper for the same product?

If it isn’t the same product, then why is it so different that the buyers will switch from a perfect good solution to yours?

This is one of the most common factors for insolvency in new businesses. There was nothing wrong with the product or service, but there was already a market full of competitors that did it perfectly well, and they already had the customer base sewn up.

Tip: Use competitor insights to position yourself uniquely, not to copy what’s already out there.

4. Keep Testing After Launch

Market validation isn’t a one-time task. Keep listening to your customers and adjusting your offer as you grow. There is a very big difference between a full pivot and a small tweak for the market. Tweaking is often the key to survival, where a mistake with a full pivot has the potential to finish your business.

Tip: Treat feedback as an ongoing part of your business development process. 

Having a clear market that you can realistically sell your products or services into isn’t something you can gamble on. If it isn’t there, then you don’t have a business, you just have an idea. Similarly, if you are already in business and you throw all your resources and money at a new idea that isn’t viable, all you will do is bring about a financial crisis.  

Your market isn’t fixed, it isn’t forever, and it isn’t guaranteed that the best product will succeed, see Blockbuster, Woolworths and Betamax video for proof! In the first year of trade, you will need customers, and you will need them fast, so check your market is there, or you really don’t have a viable business.

Download our 'Surviving Your First Year' guide here.
If you want to know more about some of the problems that businesses can face or have specific questions/think you may be looking at insolvency, try our ‘help for directors’ section here.