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Don't Be Fooled by the "Big Numbers" Game!

Small-business-blog-numbersI can't tell you how many business plans I've reviewed that were built on the premise that the market for the product or service of the business was simply astronomical and that all that was necessary was simply capturing a miniscule percentage of that market. This is a great Excel exercise, but usually quite short of reality.

Just because you have market of x thousands (or millions) of potential customers means nothing unless you can show that you have realistic strategies and plans that specifically identify what their need is for your product or service, (typically that brings down the potential customer numbers pretty dramatically) and can convert them from prospects to customers. That is, how do you plan on capturing that miniscule market percentage?

The corollary caution to this mistake is when a company has a product or service that has potential application in both the corporate and consumer markets. While the corporate market will allow significantly higher price points, a more feature-rich product and a tighter focus, the numbers for "potential" for the consumer market seems just too good to pass up. And the company either focuses totally on the consumer market, or worse, on both.

What is missed under this scenario is that for any sales plan to succeed it has to identify potential customers, reach them to let them know who you are, learn why your product or service is good for them and then to convert them to customers. The cost to market a product or service to the consumer market invariably requires enormously deep pockets to create this awareness and interest, because it is so diffused and needs to be sustained to be effective.

Now, I'm not saying to avoid the markets where the potential is so huge, or to avoid the consumer market. Only to understand that to attack a large market requires a solid plan to capture share. The bigger the potential market, the more detailed the plan and the more capital required to sustain it. So don't focus on how big the market is, but how do I capture a rational share of it and what resources do I need to effectively do that.

The Entrepreneur's Yoda knows these things. He's been there. May success be with you!

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