At this point, you have a good understanding of why it’s important to find your target audience—and to start with that first, rather than your product. However, it’s good if you also have an idea about the kinds of problems you want to solve, or at least the issue you want to address. Knowing that will give you direction as you narrow down your target market.
If you have no idea what issue or problem you want your business to address, we recommend Tad Hargrave’s book, The Niching Spiral, to get you started. Once you have a general issue or topic you want to address, you can start thinking about who’s affected by the issue—which will lead you to the person you can help.
For now, let’s start with broad categories. Suppose you know you want to address the problem that small businesses have finding good, affordable programmers. There are a lot of people who are affected by this issue, or who could be influenced by it:
As you can see, each type of person affected by this issue could lead you to a different potential business idea.
Now think about the issues you care about, and make a list.
Think as wide as possible: consider the people who are most frustrated by the problem, but also include the people who cause the problem and the ones who are affected by it in various ways. Right now, don’t edit your list—all of these people are potential target markets for you.
If there are several different issues or problems you think you might to address with your business, make lists for all of them! Right now your goal is to think about all the different possible people you could target for your business. Later, we’ll narrow it down.
Once you have a long list (5-10 different categories of people for each issue is a good place to start), it’s time to start thinking about yourself.
At this point, you have a list of a lot of different categories of people. All of these people are affected in some way by an issue you care about, but that doesn’t mean all of them are good target markets for you. The key to a good target market is to find the right combination of three things. First, you want a group that is similar to you in some way, so you can relate to them and understand them. But second, you also want a group that’s different from you in several key ways, so you’ll be able to help them. And third, you want a group that you’ll enjoy working with for a long time—not just for your first product or service, but for the life of your business, or at least the first few years.
To identify the best target market for you to start with, you’re going to look at your list of people and compare each group to you. Consider your own passions, experiences, interests and skills, and think about how you relate to each group of people you’ve listed. For each group, ask two questions:
Your similarities with your potential target market will give you ideas about how well you can relate to them. It will also help you think about whether you want to work with them—most people enjoy connecting with other people when they have things in common.
On the other hand, your list of ways you differ from your target market will show you where your business potential lies. It’s hard to start a business serving people who are exactly like you, because you won’t have any additional knowledge, skills or expertise to offer them. (It can be done, but you’ll need to first solve a problem you share with them, and then sell them the solution.) The best business opportunities often lie in the ways you’re different from your target market. To go back to the example of programmers above, maybe your programming experience could enable you to teach recent graduates real-life skills, or maybe your ability to communicate cross-culturally could enable you to interface between overseas programmers and U.S. businesses.
Once you have a list of the ways you’re both similar and different to your potential target audiences, it’s time to rate them. There isn’t a mathematical way to do this, because it depends as much on your gut feeling as on numbers. But if you look at each group, you’ll see you have several things in common with them as well as several ways you’re different from them. For each group, look at those lists, and then start to brainstorm.
After you’ve thought through all those questions, it’s time to make a commitment. Remember, this isn’t a final commitment—as your business grows and changes, you’ll expand to other target markets. But for now, it’s time to choose the one group of people you want to choose as your foundational target market as you launch your business.
It’s okay—in fact, it’s a good idea—to take a few days to think about this if you need to. But remember, too, that you won’t be excluding the other groups—you’ll still be able to reach them and help them as well, and you might find that your main target market changes as you grow. Right now, you just need a place to start—and that’s what your first target market will give you.
This is an optional step, but one that will save you a lot of grief in the long run…
What you’ve done so far is define the people you want to work with. Sometimes, however, it’s just as vital to be honest with yourself and think about people you don’t want to work with.
After all, why have your own business if you can’t have the final word on which clients to keep… and which to turn down? Being clear on this is going to be better for you, for your business, and for everyone involved.
Think about the customers you’d rather not work with:
For example, some businesses don’t ship their merchandise internationally, to avoid unnecessary costs and possible incidents with lots or damaged shipments. Do they lose a lot of revenue doing so? You bet. Is it still worth it, from their point of view? Of course it is.
It might seem borderline rude to exclude potential paying customers. But consider what this is really about: running your business in a way that’s best for you. If that means not working with some people, so be it.
And in case you’re worried about your income suffering, don’t be. For example, Ramit Sethi doesn’t accept customers with credit card debt… and his company still churns out multiple seven figures in revenue every year, and growing.
Of course, these rules aren’t set in stone. As time goes on and your business evolves, you can reconsider these standards, making them more (or less) stringent. Some customers, you will discover, are unbearably low-value and high-maintenance. Others might be average spenders, but a pleasure to work with.
It’s always up to you to decide what kind of people you will surround yourself with. Don’t let anybody tell you otherwise.
Ready to make a commitment? Great. Now that you’ve chosen a group to be your broad target audience, we’re going to go deeper—a lot deeper. You’re going to break it down from a target market to just one person: your ideal customer.