On the Importance of Marketability Evaluation
A marketability evaluation is a critical step in the process of starting a business. A marketability evaluation will provide you with key information about your product, such as whether or not there are any other businesses that are selling similar products and how profitable those businesses might be. As a small business owner, it is important to know this information before you invest in your idea because it could make or break the success of your venture.
This post will discuss what a marketability evaluation entails, as well as some of the benefits and challenges associated with doing one for yourself.
What is a Marketability Evaluation?
A marketability evaluation determines the viability of your product in the marketplace. It does this by investigating three main areas:
This type of evaluation is most often done before you begin developing your product, but it can also be used to examine an existing product.
Taking on a Marketability Evaluation Project
Although other people might be able to help with parts of a marketability evaluation, you will likely find yourself doing most or all of the work yourself. This is because only you have hands-on knowledge about your business idea, which makes it possible for you to do market research and run necessary calculations on your own. You may also need to handle research and analysis that can't be performed by others.
The biggest challenge of taking on a marketability evaluation is learning how to do the necessary calculations yourself. This is because these calculations are complex and involve other information, such as the expected sales of your product, that you might not know about before the project begins. However, if you follow these steps, you will increase your chances of success:
1. Develop a plan
A marketability evaluation plan (MEP) needs to include all of the necessary information for the evaluator to be able to complete their analysis. The MEP should include:
2. Do all of the research
After you have developed your MEP, you will need to do all of the necessary research, which involves gathering information from a variety of sources. This might include:
3. Compile and analyze the information
Once you have all of your research compiled, you will need to analyze it and organize it into a format that can be easily understood. This step is most often the most difficult part of completing any marketability evaluation because it involves mathematical calculations and statistical analysis that may be unfamiliar to you. To make this step easier, use these tips:
4. Make a recommendation
After you have compiled and analyzed your research, you will need to make a recommendation about the success of your product. To do this, you need to determine the potential market size, which will tell you how many units of your product might be sold a year. You will also want to calculate the profit per unit sold, which tells you how profitable your business might be overall.
Your recommendation should contain any necessary caveats about your product's profitability. For example, if due to high manufacturing costs or low sales volume it does not seem feasible for a business to be profitable at this time, then it is advised that whether or not to pursue the venture is considered carefully.
5. Make a recommendation to your team
The last step of the evaluation is for you to make the recommendation to your team. This involves combining your analysis with their input, so that they will be able to understand what has been discovered and how it should be handled moving forward.
6. Follow up
After you have completed a marketability evaluation, it is important that you follow up with your results very frequently in order to monitor whether or not anything has changed since the original evaluation took place. For example, if after the first evaluation you determined that your product was not feasible to sell at this time, then your team should contact you to follow up with any changes in the situation. The person who is doing the evaluation should gauge how serious they are about that change and then act accordingly.
What are the Benefits of Doing a Marketability Evaluation?
After completing a marketability evaluation, you will have evidence of whether or not your business idea is feasible or not. This will allow you to make better business decisions moving forward. It can also help you determine what kind of marketing plan is necessary for achieving your sales goals and what kind of company financials would need to be in place in order for those plans to be successful.