Tracking the trends

The most fundamental driver of business opportunity is demand and supply. It is very hard to go wrong if you are always in a situation where you can satisfy demand where demand exceeds supply. Unless you control a rare commodity or a unique source of information or skill which is needed to satisfy a never ending demand, you are going to have to develop a business strategy which seeks out markets where there is excess demand.

Effectively, what you are looking for are pockets of unmet demand, perhaps overlooked by the larger corporations. This is where you can gain a foothold and drive growth in your business.

One of the advantages of smaller businesses is that they can service a niche market which would be too small for a large corporation to bother with. Larger businesses like to have the same range of products across their market territories. This provides them with economies of scale but also allow them to standardise their processes. This leave gaps in the market for specialised applications or unusual designs, tastes, sizes and so on. It is these gaps which can provide a growth base for smaller firms. But you have to watch out for them.

When new products come onto the market, they typically aim for the broadest possible reach. That is, they seek to satisfy the wishes of the majority. This always leaves the minority with a less than satisfactory solution or sometimes, no solution at all. If you are a large, tiny or very slim person you will know exactly what this means. If you track new products and services within your sector, you can isolate these unmet needs and develop solutions which pick up demand which is neglected by the larger companies.

Another way of approaching this problem of unmet niche markets is to look out for major and minor trends within your sector. The major trends will be associated with major economic or demographic changes, like economic cycles, aging population, immigration rates and so on. Other trends interact with these, such as, the increasing use of the internet, concern over obesity, and so on.

At the intersection of these trends are niche markets. For example, what are we providing for older obese adults who want to undertake adventure tours? The major travel companies can’t be bothered with such niche markets but there are a lot of baby boomers now sitting on considerable wealth who don’t wish to be denied the opportunity of participating.

You can project a series of trends into the future and see where the intersections will occur. Providing this is a smaller niche market, the chances are that the large corporations won’t be interested. The important factors then are whether the niche is big enough to bother with, will it have the spending power and will you have the capacity and capability to develop new products or services with a competitive advantage.

Firms which secure premium prices often do so by being early in a market when demand exceeds supply. What they need to do, however, is make that an on-going strategy rather than a one-off opportunity.

Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the former Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia.