How To Start A Business Part 4-Determining the Demand
1. friends/relatives convince them that the business is profitable.
2. there's mushrooming of the types of business they want to go into.
3. have money will invest in business.
4. become rich
5. some friends are into business
5. they have a lot of time to spare
You bet, I did not include the reason why one should be into the business because there is demand and supply is not enough. This is what they call in marketing/economic parlance as DEMAND GAP. The difference between the supply and the demand.
The number two reason which is mushrooming of the businesses i.e. you found them every where like mushrooms does not indicate demand. It is mere copy cat phenomenon
which in the long run would cannibalize each market just to survive. Then sun sets
and only one or two remain standing when the sun rises.
So how do you know that you are in the market where there is still opportunity to
expand.
We take a look at the external and internal environments of the business.
We take the demographic profiles of the target clients/customers and assess
the companies which are currently in business. You guess it right, the COMPETITORS,
because this spells the SUPPLY.
Let me use the restaurant as example. I am going to use other businesses as I discuss
some other related topics.
How do you assess the market.
External?
Location. What's the population ? You do not take the whole population as a whole.
You have to restrict the number to your potential market in terms of age,
income bracket and lifestyle.
Arggggghhhh Butof course Virginia, the whole population of a state/province/city
is not your potential clients. With those numbers come the infants and the aged.
If your restaurant caters to young urban professionals, then by all means get
the statistics.
Lifestyle defines the type of restaurants that you are going to put up e.g.
kind of food, time to open and to close and the theme and design of the restaurant itself. You are not going to hang frames about dogs and cats, baloons and ribbons
if your target are those who have past their kiddie stage.
You are not going to close at 6:00 p.m. when your potential clients are just about
to start their happy hours.
So where do you get the numbers, honey. Ask me.
Geographic Location
This pertains to the place where the business is going to be located.
Strategically located ? How far is this from actions or activities of
the target market? It should not be necessarily at the footsteps of the offices or achools but it should not also be at the place where the customers have to take the "plane/the bus and the train" going to that nook of yours.
Who are the people in your neighborhood?
If the target market belongs to a certain bracket of income, the neighborhood of the restaurant should be a concern to the proponent.
Who would like to eat in the restaurant where "undesirables" can just walk in
or hang out outside the restaurant.
When the Jolibee, Daly City, California was in its first months of operation, the parking area became a hang out of young Filams which by the look of it belonged to gangs doing things that parents would not like to see. They may have been Filam youths who were studying in the school in the vicinity known for notoriety of the young people.
Next the SUPPLY and the DETERMINATION OF THE DEMAND GAP.
business plan,financing,franchise,demand,
supply,demand gap
posted by cathy at 5:40 AM
