I not so sure I believe in “creating” customers or changing their behavior. Having been an entrepreneur for over 20 years, I prefer creating a niche business in a space that is already large and profitable or that I believe will experience explosive growth. By focusing on creating a buisness that has the serious potential to be a market leader in well-identified market segments – I find I’m more likely to have meaningful success – both as an entrepreneur and as an investor. Here are some questions to ask yourself as you evaluate a concept for it’s real opportunities:
- How long do you think it will it take for the business to generate $100 million in annual sales?
- What market share will the buisness have to obtain to achieve those levels of sales?
- What size organization will have to be built to achieve these sales levels (meaning: is this a scalable business model)?
- At what stage does the business breakeven (how many sales)?
- When will it become profitable?
- Who are the key competitors?
- How will these key competitors react when you enter the market? (Example: will they cut prices to drive you out of business?)
- How is the new company going to effectively compete with incumbents and other new entrants?