Post from: EveryJoe

Monday Media Marketing Minute: Biggest Marketing Plan Mistake

“The mobile industry will be worth $50 billion in 5 years!”

“Advertising online is going to be worth $100 trillion by 2010!”

You can get this sort of data all over the place. Analysts put out reports all the time expounding the growing size of various markets.

The result is that many startups take this approach:

“If we only get 1% of that market, our company will be doing $5 million in sales, easily. And we’re being conservative. Just 1%.

I used to think that way. Part of me still does because it sounds so damn tempting and easy. But it’s the wrong way to think, and it’s the wrong approach for your business plan and pitch.

Let’s debunk the 1% Market Share Myth:

1. Market numbers are nonsense. At the rate things change in so many industries (and particularly technology) it’s almost impossible to really get a handle on the size and growth possibilities of various markets. Plus, when analysts talk about markets it’s often in vague terms, bunching things together that don’t necessarily belong, or certainly including companies and product offerings that wouldn’t compete against what you’re doing. “The online collaboration market is growing at 1000% per year!” Um…what the heck is the “online collaboration market” and what does it include?
2. You’re selling yourself short. Sure, 1% of a huge market could be a lot, but 1% is a piddly number. There’s a difference between being conservative (which is smart) and lowering expectations. Promoting the concept of 1% is lowering expectations and setting the bar way, way down.
3. VCs hate hearing this. If you’re going after funding, you’ll need a business plan. At minimum you’ll need a pitch. And that pitch is going to include sales estimates, market sizes, etc. Basically, you’ll throw a bunch of numbers into your pitch that will show VCs how much money you’re going to make for them. Truth is, they know the numbers are BS, but they have to be there anyway. What VCs hate is the “1% of market” argument. So if you’re looking for funding, don’t pitch it that way.
4. Getting 1% of any market is damn hard. The big fallacy about nabbing 1% of a market is that startup companies think it’s easy. “How hard can it be to grab 1% of a market? Plus, when we show that 1% of a market is worth so much money, it’s a no-brainer!” Grabbing any amount of a market is hard. Closing a single deal is hard. If it was really easy everyone would be doing it, and there goes your competitive advantage!

If you’re starting a new business don’t think about 1% of the market. It’s bad business in so many ways.

Post from: EveryJoe

The 1% Market Share Myth Debunked