{{By Grace Mugabekazi,
Inkomoko Business Development}}
For the spirited, entrepreneurship opens new alternatives for when jobs are scarce. But many new entrepreneurs lack understanding of market needs and dynamics – which can often create challenges for their businesses. Statistics prove that 70% of businesses don’t make it past their first three years. One major factor to success is knowledge of the market.
“Market” is a term that is often used, but not well understood. In simple terms, the world is a market place; people survive through trade, always have. The forms of trade have evolved over the years, but the principles of trade remain the same: when you have a valuable offering and you find the people who are interested, then you deal. But knowing the details of your slice of the market – in that whole wide world – will allow you to make better choices for your company’s strategy.
Every single business has a particular market or client base. Understanding your market allows you to make smart and calculated decisions for your business.
Here are three market questions to work out as you seek to be a stronger businessperson:
1. WHO IS YOUR CUSTOMER: Many entrepreneurs assume they know what their customer wants. In fact, the best entrepreneurs take the time to learn insights from their target customer. Get to really know them – where do they live, what do they value, how do they choose to spend their money? When you have this information, then you can decide what to offer, how to price it, how to reach your client. This information about your market builds your confidence to design a product or service that your customer can’t live without.
2. WHAT IS YOUR MARKET SIZE: Most times when you are excited about a product or service, we begin with the assumption that the whole world is market. To be more objective, look at who you really can reach. How large is your current client base? How many people want what you are offering? Are you serving many people with a low price, or a few people at a high price? Are you focused just in Kigali, or across Rwanda, or across East Africa? The market size will be a key factor in projecting profitability.
3. UNDERSTAND YOUR INDUSTRY: Every business falls under an industry which has different players. Having an understanding of existing competitors and knowing those already in your market will allow you to determine how you can position yourself better. Is the industry at early stage or growth stage? In what ways will you need to be innovative? Who else is a player in the market (name the big and obvious players, but don’t forget the smaller players, too). Understand, how these players have evolved in the industry. Was is an easy shot, or a long and endured growth? Who is your direct competition? What is their offering? Will you compete on quality, price, or reliability?
Starting a business is a daring thing to do. Knowledge of the market allows the entrepreneur to be more confident, and most often leads to better decisions that will yield the results you want: sales, growth in revenues and business growth. As you think about investing your time and resources into a business, do your most important homework ahead: understand your market.
Grace Mugabekazi is the Director of New Initiatives at Inkomoko Business Development. This article is the first in a series of four articles about Rwandan entrepreneurship from Inkomoko. To learn more about Inkomoko, and how we can help you with market analysis and more, you can reach Grace directly at grace@inkomoko.com
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