Want to enter a new market? Here’s what to consider first

Whether you’re starting your business or trying to grow an existing one, you’ll need to weigh the cost to enter a new market with the potential returns.

Your easiest growth potential is to take a successful business model you’ve developed and duplicate it in another area.

A new market can be:

• A new customer type you’ve never targeted before in your current region.
• The same type of customer in a new area.

Research the market’s viability

It’s important to determine if you should invest time and resources to obtain a share of a new market.

Assessing growth potential in new markets requires common sense, critical thinking and analysis.

Here are some things you’ll need to review:

• Existing business information like demand compared to the population. This will help you assess market size (what it is currently and whether there’s future potential).
• Any competitors in the new market. Spend time researching if they’re growing, which is a positive sign.
• If you’ll need to amend or adapt your product or service for the new market.
• Your possible market share and how much you estimate you can obtain.
• Identify the market segments. If there are multiple segments, consider whether you plan to compete in all of them.
• The profit margins you expect.

You can move ahead once you determine that there’s a demand and you can make a profit from the new market.

Understand your market potential

One of the main factors to consider is the market’s potential for continued growth.

You could enter a new market temporarily to take advantage of a demand with a specific timeframe. But it’s typically better to seek longevity for sustainable business growth.

Try to determine:

• If there’s an urgency to the demand or if people will continue to need it in the future.
• If you’re occupying a specific niche. If so, is it time-specific, or will it endure?
• How quickly you can bring your product or service to market.
• The effort it will take to continue selling.
• If you have the necessary support for customers after the sale.

Test the market

It’s always good to trial your products and services in a new market before investing time and money into a commitment.

Here are some ways you can do this:

Exhibit at relevant trade shows

You’ll get an idea of demand. And you can collect customer feedback. Use that feedback to help you finetune your product or service before you enter a new market.

Visit customers in the new market

Find out what prospective customers want in your industry.

Conduct a trial or pilot

Start small and start trading in the new market. Limit your risk by short-term leases, small production runs and limited products or services. Once you know the demand is there, you can scale up.

Sell online

Selling online can also help you test demand.

Follow industry and market trends

Future consumer, economic and social trends can significantly impact businesses of every size. And change can happen quickly.

Pay close attention to any economic, social and industrial changes that could impact your business.

You can do this by:

• Reading local, national and international news and subscribing to news sources for your industry.
• Following thought leaders, expert opinions and perspectives to deepen your understanding of the business environment.

Today’s greater global awareness has prompted a growing market of people and organizations that make buying decisions based on social, political or environmental factors.

Concerns about climate change mean more consumers seek eco-friendly solutions.

Knowing about these trends can help you determine whether they’ll limit or expand your business’ growth potential.

Final thought

Each industry and market have a lifecycle. So, it pays to understand the state of your industry and market and the factors that can influence your business.

Generally, the fewer competitors you have, the more viable your business is. But a lack of competitors could also indicate:

• A declining market for your product.
• An opportunity to develop a niche. Maybe it no longer pays for a large company to be in that market. But it’s ideal for your business.