Loads of people have been asking me how I went about choosing my market and how I got to physical therapy practice owners.
Choosing the right market for can make or break your situation.
Yet many people overlook it completely and grasp at markets they’ve heard of others doing or just guess.
You can build an amazing product that solves a real problem… But if you choose the wrong market there could be:
– Not enough people to sell it to
– The market could not have enough money to pay for it
– Or you could build the product and eventually self-sabotage because you are not really interested in the market.
In this post I’ll show you how I chose my market and I’ll share a few different resources I used to learn more (including how you can use a franchise business to give you all the info you need).
Make a list of market ideas
There are 2 ways of going about this.
The first, is to list off industries you are interested in or that you think could be a good fit, then cut down your list by running them through the criteria.
The second is to start with a list that includes the data you need already and cut it down, then go from there.
Option one gives you a smaller more manageable list and probably takes less time. Option two takes more work but opens your eyes to more options. Either choice is fine.
Here are a few resources you can use to build your list. First Research Industry Profiles, IbisWorld Industry Reports, sbdcnet.org and Hoovers.com.
Those are just examples… The key is just to look for any type of structured data that you can use to learn more about your market. Here’s an example of how you can estimate a market size on facebook in 2 minutes. http://www.youtube.com/watch?v=FGvuzIh_Q3s – Note this video is kind of lengthy… Skip to the 4 min mark. There are other videos out there that show you how to do it… Might do my own soon.
Once you have a list the next step is to cut the list down to make sure it’s big enough and can be profitable enough to support you.
Is the market big enough to support you?
First – Cut out everything that has less than 10K businesses. Some say 5K is enough… But I wanted to make it easy on myself and frankly, had a hard time cutting my list down, so I used 10K businesses in the US alone as my criteria.
Is the market profit driven?
This is kind of an arbitrary condition… But it’s not super hard… Just think about which businesses want to grow and make money and which ones care less about that… The later are ones you want to avoid…
Also consider if the industry is growing or not. There are a lot of different ways to figure this out… Many of the lists I gave you above simply tell you if they are growing or not. But you can take it a step further by going to different job boards, like indeed.com, to see if they are hiring. If there are a lot of job posts by the market, its a good sign it’s doing well. Use this to cut your list further.
Remove all industries that don’t interest you
Take a look at the list and cut out any of the industries you are not interested in. Or ones you are less interested in than the rest. I found it’s just easier to think about it this way first in order to cut down my list. Repeat this step until you are down to a list of 10 or so industries.
Once you have a manageable list, it’s time to gather more detailed data to make your decision.
Throw them up in a spreadsheet and list out the answers to the following questions next to them to help support your decision.
Do they make enough money to buy software?
At the Foundation we like to shoot for at least businesses that make at least 100K in revenue. To answer this question I turned to bizben.com. Bizben lists a lot of businesses for sale and in doing that they also often list how much revenue those companies make. It’s PERFECT for figuring out how much your market makes.
Another thing you can do to learn a LOTS about your market in general is if your market has franchise businesses. Contact them and tell them you are interested in learning about opening a location. Setup a call with them and you can ask them loads of questions and they have the answers to them all…
How big is the market? Who are your competitors? How much does the average franchise make? Do you provide software? etc. etc. etc. This is a goldmine of info.
Do they currently use software?
This one is easy. Search for your industry + software in google and see what comes up. It’s pretty easy to tell if there are businesses selling software in your market. Check them out and see how many they are. Seeing them is a GOOD sign. This means people are paying for software in the market and they could buy yours too.
Can you get a decision maker on the phone?
This one is least important. The question should really be… How hard is it to get to the decision maker. With this one you can just speculate and test. Some markets like Real Estate Agents are easy whereas others like Dentists are really hard. It’s not to say that Dentists are a bad market. Once you get through to them they it could be a great market and pay off. It’s more about what you want and the kind of person you want to deal with day to day… Which brings me to the last and most important point…
Making the choice
The last criteria is to choose who you really want to work with. To do that ask yourself questions like:
Which industries do you believe in? Which ones would you love to help? Which ones would you be happy to talk to every. single. day. ???
You are gonna be in business with these people so you really have to love it.
If you don’t you may get bored and self-sabotage any success you have.
Using these questions I narrowed it to my top 3 and put those through more serious tests to find out.
Reach out to your market and have a few conversations.
The next thing you want to do is reach out to speak to a few people. I did this with 2 markets I was really interested in and met all the criteria above (Physical Therapy and Home Health).
For me, after just a couple conversations, I knew who I wanted to work with. I had a lot in common with PTs and PT practice owners and REALLY liked talking to them. It was a no brainer. So from there I went all out to contact the Physical Therapy market.
In the next post I’ll tell you how I went about contacting the market.
Get after it!