Guideline No. 5 Does the Potential Market Fit My Vision or Capabilities
If you are a residential concrete contractor with a focus on patios, driveways, and sidewalks then you need to think long and hard about moving into the commercial flatwork business. Not that this transition hasn't been done by contractors in the past, but many contractors have failed miserably because they really didn't understand the differences between working with home owners versus commercial-minded decision makers. If you have a clear vision about what you want to pursue then stay the course. Maybe expand into new geographical areas but stay the course. If you have been a residential contractor but have several workers with an experienced commercial background then maybe you stand a better chance of making the transition.
Guideline No. 6 Consider What You May Give Up to Start-up or Expand
When trying to determine a market to move into or to begin a new business consider what other contractors you may no longer receive support. For the residential contractor who used to pass on referrals to his commercial contracting friend, the residential contractor who decides to begin a commercial operation will no longer find his other commercial contractors friendly to his decision. Not that this should prevent the residential contractor from expanding his business, they just need to realize that in doing so they will probably alienate themselves from those whom they may have received referrals and support.
Guideline No. 7 Have a Business Plan…and Use It!
The number one reason most new businesses fail is lack of capital. The second reason? Failure to plan the business steps to success. Have a plan that outlines the direction, the players, the needs, the opportunities, the "threats" to the business, the budget needs/expectations, sales forecasts, etc. You don't have to be married to what you plan but planning forces you to think through the process of taking an idea and turning it into a profit center. Have a business plan, before you begin the execution, and use it!
Determining the right market to enter is a decision that should be carefully thought through before any action is taken. While you will seldom feel 100% confident or sure in making a start-up or expansion decision, you should feel good that you have explored the needed areas that can give your decision all the chances to be successful. Even then many contractors will tell you that they had a "gut feeling" about making a decision to begin their company or to expand their services.
Use the guidelines presented here to better position your thinking about determining the right market for your business. If you determine the right market and when you are going to launch the new work dig in for the long haul. Don't bail at the first signs of failure. It isn't always the smartest owners who become the most successful business-people but those that hung in there the longest. Good luck and stay at it!