Even if you think you have a brilliant, revolutionary idea, if you launch your small business only to find that there’s no one to buy or utilize your product or service, then, well, you’re going to have a bad time. There’s a good reason (or many good reasons) why companies strategically plan before they “go live,” ensuring that there’s an established path to success before stepping foot into the unknown. If you’re at a point in small business development where you’re excited and just about ready to set things in motion, stop for a second and consider the following: do you know who your target market is, and how much demand there will be for what your product or service is? That’s a tough question to accurately answer, but it is our topic of focus in today’s blog from The Commercial Finance Group.
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When it comes to successfully launching a small business on your own, doing so can be…well daunting, to say the least. From core business development to procurement to hiring to marketing and advertising to cash flow and working capital management and a whole other host of considerations, trying to do everything on your own as the sole founder and owner is just too much — and it’s unrealistic. Fortunately, that’s why there are companies like The Commercial Finance Group who can save you from having your head spin out of control!
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Below, we’re going to cover some practical ways to help generate an accurate sense of market demand. Let’s begin.
Know Your Business
First things first: know your business. Who knows your own business better than…well, you? No one (hopefully). We probably sound like a broken record about this point, having emphasized the notion of “knowing your business” multiple times in our previous blog posts, but it’s an extremely valid point and one worth repeating.
Statistical data is always a resource worth consulting, but your intuition is also something that you shouldn’t neglect. If you’ve been in business for a little while, with an established history of sales, you’ll begin to gain more insight into your customers, your clients, and your target market in general. Over time, you should be able to make more educated guesses about when it’s going to be a busy day, or what makes people warmly receive your business.
Speaking from a high level, you’re going to get some of the best results in the way of forecasting market demand when you leverage a combination of data, analytics, and customer awareness.
Demand Forecasting Is Not Static. Constantly Refine!
As an ever-evolving practice, you should readjust and reassess your demand forecasting efforts as your business evolves over time. Assuming that you don’t just crash and burn right out of the gate (it can and does happen), evaluating market demand during every possible stage of your business is a smart move. From before you even launch your business’ website to the point where your demand far exceeds your supply — a stressful but fairly ideal situation from a job security standpoint — market demand will shift and fluctuate as your business continues to grow, stagnate, or shrink.
Understanding Key Indicators
Key indicators essentially refer to the “why” behind your customer’s demand. These can include various demographic and environmental factors including (but not limited to) things like age, gender, location, or other identifying characteristics. Having a good sense of what your target market’s key indicators are will significantly help narrow the data pool in the way of determining an accurate (or as accurate as can be) demand forecast.
What Is Your Lead Time Like?
Lead time, or the amount of time it takes between initiating an order and actually delivering a product or service to the customer or client, is a vital aspect of accurately generating your demand. Primarily, you should know exactly how fast you can make your product or deliver your service, thereby meeting demand in a realistic amount of time. Largely, this is in the interest of the customers or clients that you’re serving.
What kind of raw materials or components are involved in your business, if relevant? How long does it take to produce something until it’s ready for packaging in its final form? How do these times differ from one product to another? Answering these questions depends on what you do and who you’re serving, but they’re important thoughts to keep in mind.
Research Your Industry
Paying attention to your competitors, as well as the collective industry that you’re competing in, is always worth your time as a small business owner. You’ll want to stay up-to-date on the latest industry-specific market trends, changing best practices, innovative ways to get ahead of your competition, and absorb other insights that may help you propel your business forward. Sure, doing so will require a fair amount of tedious labor and a careful attention to detail, but for the sake of your company, it’s worth it — we promise.
Adjusting For Variables
This day and age, with our technology-driven society, there are more variables to take into account than ever before. First off, acknowledge that these variables exist. Then, identify what these specific variables are as they pertain to whatever product or service you’re selling. For starters — just to get your mind going — consider the following:
- Your location or service area
- Your target demographic, and any foreseeable changes within that demographic
- Climactic or weather-based patterns (if your business targets the outdoors)
- Suppliers and vendors
- Customer or client needs
- Anything else that can change
If you aren’t capturing and collecting information about these kinds of variables, you won’t have a clue as to why there’s a sudden spike or drop in customer activity. Of course, not everything is predictable and quantifiable, even in the context of business, but ample research leads to foresight, which ultimately leads to answers. As a busy and stressed out (we use the “W-word” lightly) small business owner, trust us when we say that you’re going to want answers.
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There are a near-overwhelming amount of challenges and considerations as it is when it comes to owning a small business. Why let your cash flow and working capital problems be a part of your troubles? Our small business loan providers in Los Angeles and Atlanta can help thanks to our unique, flexible approach to lending. Discover how The Commercial Finance Group can help your business flourish by contacting our small business loan providers today!
