Validate That Your Business Trends are Top Shelf

Now that you have a TAM to work with (if you don’t, go back to last week’s newsletter - Calculating Your TAM), it’s time to make sure that your market is poised for growth. Your second Female Maverick Must Do when it comes to prioritizing the right idea is to verify how the secular trends at play will support building a blockbuster business in a thriving market.

Generally, the better the trends, the bigger your TAM – not only your slice of the pie, but the whole pie. Competing on a bigger playing field gives you a larger potential revenue base to tap and is more forgiving of mistakes along the way, ultimately increasing your chance of success. On the other hand, choosing to compete in a smaller arena will put you under more pressure to capture a much larger share of the market if you want to generate meaningful revenue. This also makes the stakes for expected (and sometimes necessary) mistakes much higher.

That said, verifying good trends is inarguably the most critical component of TAM research. You need to be confident beyond a doubt that demand in your chosen market is booming, or even better, about to boom. Like world champion surfer Kelly Slater, you need to become a master at spotting and catching a wave before it crests.

So, let’s dive in.

Consult the best sources. Researching trends is painstaking work. There are a million potential sources to consult, and you’ll of course want to fire up your trusty AI, leverage your own favorite go-to tools and maybe even do a little primary or first-hand research like we did. Whichever way you plan to explore, be sure to add the following tried-and-true sources as part of your list. Our top five go-tos will turn up insights you can’t afford to miss.

1. Sell-side reports. Beg, borrow or steal initiation reports from ambitious research analysts at investment banks picking up new coverage of a company or an industry. This can be easier said than done. But getting your hands on one of these reports is like hiring nine or 10 brilliant MBA grads with an all-access pass to everything the web (and the dark web) has to offer, gratis. Research reports, particularly initiation reports, will give an overview of the market or industry, outline the competitive landscape, and often, identify the winners / losers from a competitor perspective.

2. Industry reports and market research. Same goes for industry reports. While research firms like Gartner, Nielsen or IBIS have free summaries, you need to find a friend with access to the full content. When all else fails, reach out to your industry’s trade association – their resources might be a bit more dated, but they are always free and can be goldmines of information.

3. Competitors websites. Now this is a more subtle analysis, but an important one. Find your best-performing competitors and figure out where they are investing. What types of skills are they hiring? What new products are they launching? How have they shifted their marketing strategy? Businesses that have been in the industry will have instincts you might not have developed yet, and making a point of noticing what they’re noticing is a good way to get up to speed fast.

4. Government and public data. We hear you making fun of us. But those census reports and stats from the Economic Bureau can be gold for revealing demographic shifts, consumer spending and small business investment insights that can contribute to your overall understanding of where your industry and market are heading.

5. Social media. We are going to go against the grain and say that most of what gets posted is too short-term oriented to be helpful. However, it’s less about content here, and more about tracking conversations and trending topics over a several week or month period to see what’s sticking.

Highlight the disruptors, both good and bad. When your research is complete, your list will be loooooong. Immediately discard anything that isn’t likely to be disruptive (think increase or decrease the industry TAM by more than 10 percent). Then organize the rest by positive or negative impact. Take a hard look at your TAM to make sure it can withstand any potential headwinds. If the list is mostly tailwinds, you are mostly there.

What’s Next?

Now you’re ready for the fun part: actually pitching your TAM to smart friends and contacts. No matter how assured you are of a winning hand, keep an open mind and be ready to consider additional questions, tweaks or even disruptions. Validation is good. But at this point, constructive feedback is even better, especially the kind that ultimately results in a stronger business idea.

We’ll walk you through the finer points next week!