In this episode of Ask Codelation, we answer the question “Is my target market too small?”
I’ll challenge you right off the bat by saying that if you don’t think your target market is too small, it’s actually probably too big. You want a market that is approachable, meaning a market that allows you to get in front of as many real people as you possibly can.
So let’s say that your original target market is 25 to 35-year-old men that are into the outdoors. How many of those are across the U.S.? How are you going to reach them? Do you know enough of them? If you’re targeting a product that retails for, let’s say, $10 a month and you want to grow this to into a million dollar business, quick math says that you need to serve a lot of customers to be able to hit that.
One million dollars a year is about $86,000 a month, so you need 8,600 paying customers every single month to get to a one million dollar business.
Now let’s take it the other direction. Let’s say that you have a more niche product and you can charge a premium because there aren’t as many people in that market satisfying that need.
Let’s say you could charge a hundred dollars for that product. That would make your number of buyers required to earn one million dollars way, way lower. Now you may be thinking to yourself, “Well that’s great, I can get to a million dollars, but what happens when I cap out of that?”
You can go very vertical within your niche, and when you’ve proven that niche, you can move onto the next one. This starts to flatten out your business a little bit. But start very, very vertical to make sure that you have enough users, meaning real traction in your market and real revenues.
So, that’s this week’s #AskCodelation. Come back next week to hear more!