Good market descriptions are rare. I write that as entrepreneur, consultant, and angel investor. I read more than business 100 plans, and watch 3-4 dozen business pitches, every year. Most of the market definitions I see are useless. So I really appreciate a good one. So I’m offering some tips on how to define a market right.
For example, I have a real case: HavePresence.com, a social media service one of my daughters operates. It’s market-defining story is this …
Terry loves her business, puts heart and soul into it, and is making it work. Sales are growing, customers are happy, the employees get it. Social media makes Terry nervous, though, because it feels like it’s important for growing the business, but, in Terry’s words, “who has time to run a business and mind social media too?” And that’s where Eugene Social comes comes in: we make time so Terry makes money. We don’t tell people what to do, or how to do it, because that’s really not hard. What we do is the part that is hard: we do the updates, the tweets, the retweets, the content curation, strategically and respectfully, so Terry can focus on the core of the business while the brand is building, traffic is generating, and somebody is taking the time to watch the amplified word of mouth going on in the social media.
The story defines the market several ways:
Do you see what I mean by communicates? The real market isn’t some number, it’s that collection of people. Sure, the number is nice, once you know the people, but first you have to feel like these people actually exist, and the reason to buy exists, and that the people and the reason match up.
The statement “this is a $43 billion market” without a market-defining story means nothing to me. The story drills down to the nitty gritty or the number just annoys me. And I don’t think it’s just me. I’m often with groups of fellow investors, or groups of business plan competition judges, and I don’t think I’ve even met one who cares about the market number without a market-defiining story.
So, business owners, here’s your assignment: immerse yourself in your market-defining story.
And furthermore, if you’re going to be pitching to investors, make it good.