This little piggy
This is about the first and fourth little piggies. I am sure you all have had all five piggies counted, pulled, wiggled and tickled to that familiar poem we all heard as kids. You remember don't you?

This little piggy went to market,
This little piggy stayed at home,
This little piggy had roast beef,
This little piggy had none,
This little piggy cried,
"Wee-wee-wee!" All the way home.

As startup piggies you want to make sure we are like the first piggy as you go To Market and not be like the fourth piggy who Had None. All too often, we get that big idea and rush to market before we take time to define and measure the market that we are planning to dive in. Rush to market too quickly and you might find yourself in the wrong market or worse yet, find that literally your little startup piggy that went to market ended up as pork chops, ham hocks, hot dogs or sausage or the other pig by products. When that happens that leaves entrepreneurs just like the fourth piggy; left with none.

Let's take a look at industry and market more closely.

Make sure there are an industry and a market for your big idea. If there is a known industry, then do your market research on the market potential for your idea and when a market already exists it is much easier to predict and share so that others will believe how big the market really is. The Internet, trade associations, the Small Business Administration (SBA), Department of Labor, local business groups, county and state economic development organizations, the library, government reports, market research firms, and market-specific consulting firms are some of the readily available sources of data. Market intelligence, metrics and market segmentation, and support information can help define and quantify the market for your big idea. Your local chamber of commerce and the U.S. Chamber of Commerce are valuable sources of market intelligence. When you go out promoting your big idea you want to be received as a well informed expert in your space.

If you believe that you must create the market for your startup you will find that effort much more demanding of your time and resources.

You want your big idea to have a very big potential. The bigger the market potential the better it is.

Netscape founder, Mark Andreessen once put it this way: “I’ll assert that market is the most important factor in a start-up’s success or failure.”

Netscape was a first big Internet search idea targeted at a market in which there were already big players ready to protect their market presence and offer similar product services as those being pioneered by Netscape. This did not prevent Netscape getting immediate traction in that market space but it did have a bearing on the ultimate outcome on Netscape. While Netscape was not the ultimate winner of the “browser wars” it understood the market and was a huge success for its founder and early investors.

It is one thing to start, support and grow a company and make a name for your product or service, but it is an entirely different thing to create a new market. Markets evolve over time. Whether it is a broad market segment or a niche market that you plan to penetrate, make sure the market exists at all. Consider the impact from market segments that might closely overlap with the market you are addressing. Otherwise your message will be lost or easily duplicated by an established player in the direct market segment or in neighboring markets. Product and service positioning are shaped by the markets in which they are operating. Understanding the market will shape all the early business decisions for your startup. Once you are successful in the market you and your company will shape the decision process of future startups looking to jump into your market. But by then, you will be a market leader.

Not all market industries are equal. Consequently, not all industries offer the same potential for start-ups and small businesses. Certain industries present better promise than others.

The magazine Start-Up (Summer 2009) provided insight into better and poorer performing industries. They listed the ten best- and worst-performing small businesses (with annual revenue growth of $15 million) by sales growth over the most recent twelve-month period. The best-performing industries were:

-Religious organizations (25.1%)
-Farm products, raw material merchant wholesalers (20.6%)
-Gasoline stations (15.2%)
-Support activities for agriculture forestry (14.2%)
-Direct sales establishments (12.5%)
-Accounting tax preparation, bookkeeping /payroll services (10.9%)
-Computer system design/computer related services (9.8%)
-Offices of other health practitioners (9.5%)
-Industrial machinery and manufacturing (9.2%)
Schools and instruction (8.4%)

The worst-performing industries were:

-Offices of real estate agents/brokers (-12.8%)
-Home furnishing stores (-10.7%)
-Lumber and other construction materials/ merchant wholesalers (-8.4%)
-Automobile dealerships/merchant sellers (-7.3%)
-Activities related to credit disinter-mediation (-7.3%)
-Wood products/manufacturing (-6.9%)
-Motor vehicle dealers (-6.6%)
-Cement and concrete product manufacturing (-5.7%)
-Clothing stores (-5.7%)
-Furniture stores (-5.5%)

It comes as no surprise why these industries are aligned as they are, given the overall economy during the measured period. With the housing-credit market implosion, the financial market collapses, and the disasters in the auto industry markets, the worst performing small businesses would come as no surprise to anyone running a business this last year. With gasoline prices seemingly quoted by the hour, worries about personal and professional finances, layoffs and the need for career changes and the like, it was a great period to be pumping gas, retraining America’s workforce, and trying to put your arms around financial investments. Given that the best performing industry was religious organizations, we can all agree that the recent economy has had everyone worried and on their knees.

What is interesting, however, is exactly how quickly those good and bad industry segments realigned. Until recently there were always market warning signs and time to react to industry shifts and changes. Today, small businesses have to be prepared to see their industry change dramatically and react to that change with appropriate operational business swiftness. Additionally, we have learned just how dependent on one another many of the market segments have become. When the housing market declines, so does home furnishings, real estate brokers, wood, concrete, and other building materials providers, furniture stores, and financial mortgage providers.

Even looking at the venture investment market, where current investments are made to market segments designed to have a five-to-ten-year investment horizon, the overall number and total dollars of investments were substantially down from prior recent years. The following industries were still identified in Entrepreneur magazine identified the following market segments as still having favor in the venture capital investment market. Their March 2009 magazine gave us this list:

-Software
-Biotechnology
-Media and entertainment
-Industrial/energy
-Semiconductors
-Information technologies
-Network and equipment and...

...Business products and services, computers and peripherals, consumer products and services, electronics and instrumentation, financial services, healthcare services and retail and distribution were closely grouped together.

So let's try that little verse again:

This little piggy went to market - Make sure you understand it and that you can be successful in it.

This little piggy stayed home - It can be an Internet home based startup but it still needs to be in the right market at the right time.

This little piggy ate roast beef - Watch cash flows and have enough to feed your startup. Being in the wrong market or having to create a market will chew up all your "roast beef" (funds).

This little piggy had none - Avoid being in the wrong market or even worse yet being in the wrong market at the wrong time.

And this little piggy cried, "Wee, wee, wee", all the way home - Be in the right market at the right time and you survive and you will likely be crying out your success all the way home.

Want to read more. There's more in my book at:

http://www.amazon.com/50-Ways-Love-Your-Startup/dp/1456308025/ref=sr_1_1?ie=UTF8&qid=1307565848&sr=8-1