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Market access
Market access is one of the most challenging battles for start-ups.
Many entrepreneurs dream of expanding their business into new markets but having
success in one market does not guarantee success in others. Consumers, competition, and market conditions are unique and nuanced to each geography, and founders need to be aware of and address these differences to be successful in their expansion initiatives.
Luckily, it has never been a better time for entrepreneurs to successfully enter new
markets. In our hyper-connected world, entrepreneurs can easily access data on consumer preferences, industry trends, and market behaviors for a variety of countries
and conduct thorough research for their expansion.
Moreover, social media provides brands with opportunities to connect with new markets before fully committing to expansion.
Social media has created opportunities for businesses to connect with target demographics in new markets and gauge the general
reception to and interest in their brand.
Equipped with this data and global access, start-ups can better prepare and decide if
the timing is right for their market expansion.
Regulation
How can you easily predict the trajectory of an industry?
By staying up-to-date with current and forecasted regulation changes.
Regulations set the boundaries and benchmarks for many industries and are often a fairly strong indicator of the general public’s values and interests.
Over the past few years, as regulations around renewable energies have emerged
across the globe, automotive brands have simultaneously been launching fleets of hybrid and electric vehicles.
This timing is not by chance.
Automotive companies saw that their market was changing and reacted quickly to not be left behind. Incumbent brands like Ford and Dodge quickly adopted and expanded their product offerings to meet the growing interest in electric vehicles and to compete with companies like Tesla and Polestar who emerged in response to these market and regulatory shifts.
Taking note of regulations coming down the pipeline can help companies define the
emerging social and political climate and understand where their business fits in our
ever-evolving world. These insights can also help business owners and entrepreneurs
optimize timelines and growth strategies so they can remain innovative and aligned with
the market trajectory.
Finally, these insights can also act as an indicator of where future blue oceans will
emerge. They can help identify opportunities for where businesses can become a first-mover and disrupt existing industries or create new ones.
Costs
When trying to determine if the timing is right for your start-up, one major factor to
consider is cost.
Entrepreneurs should be thinking about the evolution of their industry and how that will impact their production costs and pricing strategies.
Specifically for tech companies, technology tends to get cheaper over time. As
manufacturing evolves, technology becomes more affordable to produce. And as
product innovation slows, companies begin to compete and differentiate on price,
making products cheaper for the end-consumer. Consequently, profit margins decrease as prices and production costs fall.
Many FinTech’s have found success in the past few years by offering lower operating
fees and increased convenience than traditional financial intuitions. However, as the market has matured and more FinTech’s have emerged, price has become a major point of differentiation among FinTech’s, and profit margins have dwindled. FinTech’s are now having to find new ways to scale and compete to stay relevant.
To ensure the success of your start-up, understanding the phase of maturity your
industry is in and how that relates to future cost fluctuations will be important for long-term success. Business models should be developed that protect your business against price competition so that your profits can continually grow and progress with your
company.
User adoption
People do not like change.
If your start-up requires consumers to modify their behavior or do something differently, you need to be sure they are ready to accept this change.
Timing is everything.
With over two billion global downloads, Tik Tok is one of the most popular social media
platforms. Users are excited by the app and are eagerly sharing seconds-long video
content with their followers. But Tik Tok is not the first platform to focus on micro-
content. In 2013, Vine hit the market with a very similar social offering. A mere three
years later, however, Vine was shut down.
Why?
Users were not using the app enough to make it a profitable venture. People just weren’t willing or interested in adopting micro-video content.
Fast-forward a couple of years, and behaviors have changed. Social media users are familiar with and using micro-content, and Tik Tok is thriving.
Understanding who your users are, their behaviors, and their aptitude for change, is
critical for start-up founders.
No matter how great your offering is, if consumers are unwilling to change, their
adoption will be slow, tedious, and potentially detrimental to your business.
Properly timing your market entry to align with consumers’ wants, needs, and aptitude
for change allows you to better position your business for success.
Challengers
When it comes to business, you can easily have too much of a good thing.
Many markets are over-saturated with multiple businesses competing to sell consumers identical offerings. With no differentiation, profits are thinly spread across all competitors
and growth opportunities are limited.
To improve the chances of your start-up’s success, stay away from these saturated
markets and look for the blue ocean – an entirely new market or one that is emerging and growing.
By finding your blue ocean and acting as a challenger, you will be able to create clear
differentiation, capitalize on untapped demand, and maximize your profits.
iTunes found it’s blue ocean in the music streaming business. For years, music-listeners
had limited options when it came to finding music online. It was challenging, expensive,
and offered few opportunities for customization.
When iTunes came on the scene, they changed everything.
By allowing listeners to easily find and access music online, download individual songs,
and do so for no more than $0.99, iTunes capitalized on the timing of the emerging music streaming market and positioned itself as the industry leader. A title they have yet
to lose.
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