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In order to succeed in business long-term, choose a market with room to grow, and consider these 5 things to look for when choosing your market.
Ryan Levesque recently landed on Inc.’s list of 500 fastest growing companies, and his company just passed the $10 million mark for annual revenue. He admits that he has made a lot of mistakes along the way and learned a lot as well.
Finding a niche
Ryan said many business owners and entrepreneurs make the common mistake of following conventional wisdom in the early days of the venture. They focus on what they will sell or create rather than focusing on who they will serve. Who is your market? Who is your niche?
He has engaged in more than 23 niche markets, from making jewelry out of Scrabble tiles to weight loss and satellite television. Through the process, he has learned the importance of focusing on people rather than things. He points to choosing the right market as the most important factor of all.
You can be the most charismatic salesperson with the best closer, but if you have chosen a bad market, none of that will matter.
Wrong product and people
I’ve personally made the mistake of trying to sell the wrong product to the wrong people. I discovered a product that I liked and I thought other people would like it, too. But it didn’t make money because it wasn’t a good fit. There wasn’t a market for it.
Ryan outlines the indicators you should look for in his book, Choose. He said though, that writing a book invites communication from two different camps: those who love what they read and those who claim it didn’t work. He said it leaves you wondering whether you gave bad information.
In his first book, Ask, Ryan revealed the methodology he used to successfully enter niche markets. They figured out how to warm up prospects and how to determine what people want. It includes a specific set of questions designed to help you understand your audience at a deep emotional level so you can better sell and serve.
In an online environment, you ask questions on your website so you can funnel people into different “buckets” based on their situations.
Ryan focused on uncovering commonalities. For example, what did the people who didn’t succeed have in common? What were they doing wrong? He discovered that he didn’t teach people how he chose the 23 markets he engaged with. Of the millions of niche markets a business could engage with, what did these 23 have in common?
He engaged in what he called the biggest research project of his life. He sought to figure out why the 23 markets had succeeded where others had not. Then he looked at his most successful clients and tried to figure out what separates the successful ones from the unsuccessful ones. He uncovered seven factors that will make or break your business’ success.
The seven factors that Ryan uncovered are universal, foundational pieces that will help you find green markets, or those markets that are a “go” versus yellow which aren’t quite ready and red, which you should stay away from.
Consider the following study in contrasts on the topic of evergreen markets, which are relevant now and will still be relevant 20 years from now.
Ryan engaged in the Scrabble tile jewelry market about the time Etsy was coming online. Jewelry combining Scrabble tiles and origami paper was extremely popular at the same time he and his family were living in Asia.
They discovered a woman who was teaching people how to make the jewelry on Etsy and making about $10,000 a month selling the tutorials. There was no overhead, and her homemade version of a tutorial was selling like crazy.
Ryan and his wife decided to make a go of it, so she learned to make the jewelry while he worked on selling it. They built a better mousetrap, and before they knew it they were picking up steam. Before they knew it they were making $10,000 a month.
The ending wasn’t a happy one. The jewelry was completely a fad so sales dropped off almost overnight. Ryan had quit his job and his wife was in grad school so she wasn’t making any money. Avoid fad markets as you’re choosing your niche.
Ryan then engaged in the oldest hobby in America: gardening. He researched niches within the gardening market and he discovered orchid care. He started a business teaching people how to care for orchids and they took the business from zero to $25,000 a month. The tiny little niche business still pays their mortgage and living expenses.
Consider the example of fidget spinners and bitcoin as a study in evergreen markets.
The enthusiast market is in contrast with a problem solution market. The problem solution market involves solving problems for the people around you. Once you’ve solved the problem, people move on with their lives. Consider the example of flood removal. If your basement floods, once the water is removed, you never engage with them again. You won’t sign up for newsletters or Facebook groups.
If you own a dog, you will be a consumer in that market for years and years. Look for a market where you can generate a customer once and then sell to that customer over and over again. Chasing after new customers constantly is the hardest thing in the world to do.
Those two markets aren’t enough on their own. You must have an urgent problem in the context of the enthusiast market. Many people will consider selling dog coffee mugs or Christmas ornaments. But none of those items address an urgent problem.
Urgent problems are those that keep people up at night. People talk about a $1,000 problem, but a $10,000 problem is 10 times bigger than that. An example from the dog market is the issue of peeing and pooping on the carpet. The issue becomes a $10,000 problem when you’re planning to travel across the company with a dog that still pees and poops everywhere. Now the problem is urgent. Now you’re not shopping around to find a 10 percent discount off a potty training solution.
You’re looking for the urgent problem within the enthusiast, evergreen market.
Imagine you come to me with that problem and I help you solve it. Now, I’ve become your trusted advisor in the market. So now, when you have the next big problem, you’ll come back to me. Whether it’s biting or barking or pulling on the leash, you’ll trust me to help you with it.
Seek a market in which, after you’ve solved the initial problem, the success of solving that problem leads to another problem. Imagine helping people negotiate a better salary. If you help your customer negotiate a $10,000 raise, you’ve created a new problem. Now he doesn’t know what to do with the extra money.
You’ve created a new problem for your customer.
Begin by choosing the right market for you. Once you’ve chosen, figure out what your market wants by asking. The next problem might be that they need to hire a first employee. Then the customer might need to establish processes and systems.
This gives you the opportunity to serve that customer for years and years.
Players with money
Don’t sell to broke people. If someone can’t put a roof over their head or food on their table, it doesn’t matter how good your product or service is. They just can’t afford it.
Make sure you’re in a market that has a high concentration of players with money. The term comes from Gary Halbert, one of the all-time great direct response copywriters. It means that you don’t necessarily need millionaires or billionaires, but people who spend a disproportionate amount of money in that area of their lives.
We all know people who have a crazy hobby or obsession or some part of life where they spend a lot of money. Dog owners are a perfect example because of all the crazy stuff they spend money on, like pet insurance and operations and vacations.
On the other hand, Ryan launched a business in the memory improvement market, but because it targeted students who didn’t have a lot of money, he learned the lesson about people with money the hard way. He learned that you can’t build a big business around broke people.
Whatever you’re pursuing, the business doesn’t have to be perfect. It just needs to start. Don’t allow perfection paralysis take you over. Better to execute at a B+ level today and then improve moving forward.
“How to ‘Warm Up’ Your Prospects With Trust Before You Pitch” episode resources
Ryan is offering TSE listeners a free hard copy of his new book, Choose. All you have to do is pay a few dollars in shipping and handling. In addition, he’s providing $200 in free bonuses, including the audiobook. He has mindset training about some of the topics addressed here. Visit choosethebook.com/tse to take advantage of the offer.
Connect with me at firstname.lastname@example.org.
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