The first step to setting up a new business is assessing the demand. You really must take “the build it and they will come” approach.

If nobody in your area wants the products or services you are planning to offer there really is no point in going to all of the trouble of pursuing that business model. Instead, it is better to save your energy and look for another idea.

Work out who your potential customers are

small business setup assess market demandThe first step is to note down the type of people who are likely to need your product or service. If it is only something the very elderly are likely to need and you live in an area with only a small number of such potential customers you know it should not be your main product or service.

There are a few exceptions to this rule. If you are planning to sell high profit items you may not need a huge pool of potential customers. For example, disability scooters have a high mark-up. Potentially, you only need to sell a few to make enough profit to pay the bills.

Is there an actual need for what I offer?

If you are planning to offer a new product or service you need to ask yourself if people are really going to want what you are planning to sell. There is no point in setting up a gutter cleaning service in an area where only a few homes have them installed. Even if they do have gutters if most of the properties are on one level and as you drive around you see very little evidence of neglected guttering you may find that there is no demand. This is because homeowners in your area feel perfectly happy cleaning their own gutters.

Do an online search for other local businesses

Goggling the service you are planning to offer is a good way to see if there is any demand. If there are other firms offering the service there is probably demand.

Do some local keyword research

You can also use Google´s keyword planner to see if there is any demand. If you key in “acupuncture Northampton” and get told that only 10 to 100 people search for that term every month you may want to try something else. When doing this remember to try using the names of nearby towns and areas to determine the true level of demand in your area.

Test the market

If you are considering setting up a business that has very low start up costs the best way to assess demand is to run a small marketing campaign. Spend a hundred buck or so on running some local adverts and see what happens.

Try to run a few different ads on various platforms. Some services sell well when advertised via Facebook while others are best advertised in local newspapers. If you can set up some sort of special offer that requires the person to quote a discount code. That way you can use a different code for each type of advert you decide to run. Do this even if you use free ways to advertise your service.