1. Know your strengths and weeknesses

The most controllable risks you'll face are internal. Honestly assessing your core competencies and shortcomings will allow you to hone your unique value proposition—the "special something" that sets you apart from your competitors—and make corrections to the weaker elements of your business plan.

Consider:

• How might my current skills be put to use and/or satisfy a need in a different market?
• What unique value do I bring to this market? What do my competitors do better?
• What about my current operations are successful? What could I improve?
• If I am already operating in my target market, why am I successful/unsuccessful?

2. Perform market analysis

If you want to be successful in a new market, then extensive research is required. You should understand who your target customers are, what pain points they struggle with, and how your services can fill existing gaps. You also want to research external risks such as forecasted growth rates, demand, and main competitors. Find a way to turn your strengths from your current market into strengths in this new market too.

Consider:

• What is the current size and growth potential of my current market?
• Will we compete in every segment of this market or a select few?
• Who are my competitors in this market? What services do they offer?
• What external risks might prevent my success in this market and how do I mitigate them?
• What services do people pay for in this market? What margins should I expect?

3. Generate demand with your target audience

Before you enter a new market with an idea of what service you could offer, make sure that service actually meets existing demands. New markets often have a "first past the post" mentality, but if you rush a half-baked product you risk being beaten out by competitors who improved upon an existing service or filled a gap.

Consider:

• Who is my target audience? Where do I find my target audience?
• Are there unmet needs in this market that I can solve?
• What unique value would bring customers to me instead of my competitors?
• What are the buying habits of this market?
• Will my product sell in this target market? Can I create a new product that will?

4. Enter with a strategy

When entering any new market, it's important to have a business plan with clearly defined goals. You should know why you're in that market, why you might excel in that market, and what constitutes a success in that market.

Consider:

• What is my business plan going into this new market?
• Should I use a joint venture, a partnership, or an acquisition to enter this new market?
• What assets do I have going into this new market?
• Do I have existing sales channels/relationships in this new market?

5. Stay adaptable and re-assess the market

While your business strategy should rely on your core competencies, you need to stay nimble if you want to survive in a new market. Adapt to your audience's demands and don't be so set on your approach that you can't change tact when you feel the market begin to shift.

Consider:

• Is this market still growing? Am I still targeting the same audience?
• Have I kept up with changing compliance laws?
• What developing trends are on the horizon in this market? How can I tap into them?
• What new risks have surfaced in this market? What strategies do I have to deal with them?
• Is this market still profitable? Do I have an escape strategy if it's not?

Where to go from here

Market assessment is an important part of business growth. Once you've identified the risks of your new market, you'll be able to prepare for those challenges in your business plan and gain a stronger foothold in the industry. Also, by asking the right questions upfront, you can better seize opportunities as they arise. 

Business insurance from Towergate

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About the author

Mike Stephens FCII is a respected senior industry professional and Fellow of the Chartered Insurance Institute (CII) with well over 40 years’ varied experience in the commercial insurance sector as a director, underwriter, and operational improvement manager.