Identifying a target market for your new business

You have a spectacular business idea and want to take it to market. You’ve worked hard on the concept, have a fan club for the idea and the drive to see it happen.

But do you know what really signals success? Paying customers. Nail down your target market before hitting the entrepreneurial road and you will be miles ahead in your journey.

To help get you started, we drew on the hard-earned wisdom of business owners we know along with ATB’s Aimee Parker, Entrepreneur Strategist. Aimee’s first bit of advice is this:

Don’t even start that business plan until you’ve done your market research and know who you should be focussing on. You might be surprised at the results.

Follow the three-step rule:

Step one: Know what benefit your service or product brings to the customer

There is no value proposition of having a business but no customers.

Before determining your target audience, know how your business will solve a problem - a “pain point” in marketing jargon. Then you’ll get a better idea of who will benefit and who you should target.

Example: Aimee was a makeup artist in the film industry for years before deciding to go into business for herself, giving makeup tutorials. She knew women in their 20s bought a lot of beauty products and enjoyed experimenting with new products. Bang–the perfect target market.

Or so she thought.

Step two: Do your research - rest and validate your assumptions

To truly understand what motivates your target audience, ask them. Dip your toes into your prospective targets’ world; find out what social media they’re on, what they're interested in, and what businesses they're presently buying from. A quick and effective way to engage with your audience is through a social media survey to learn more about them and their buying habits.

Chat with at least 50 people in your ideal target market to get their insights on what their pain points are, where do they go for inspiration when making a purchase, how do they evaluate things. Set up a focus group.

Read about their demographics on industry websites – Statistics Canada has a lot of great information, as do chambers of commerce. See how other similar ventures are connecting with their audience.

Example: When Aimee set up a focus group with twenty-somethings, the overwhelming response was yes, they loved experimenting with makeup and loved tutorials. And no, they would never pay for one because there were abundant free tutorials online.

Step three: Stay relevant – keep your market research up to date

The ability to shift and adapt is a key entrepreneurial trait. Being aware of your environment and changes to consumers preferences will allow you to pivot your business model to accommodate change.

You want to have a brand that resonates and appeals to your target audience. If you don’t understand the customer or what they are going through by keeping up with trends, you won’t be able to.

The economic slowdown of COVID-19 for instance, prompted many businesses to change their direction in order to stay viable. Restaurants are now offering online grocery shopping. A commercial laundry became a delivery service.

Example: Once Aimee realized her initial target customer wasn’t going to work out, she shifted to another demographic, women in their 40s to 60s. This group enjoyed the hands-on aspect of the tutorials and had the disposable income to pay for it. Plus, they love coming to a class with their friends.

At the end of the day, whoever you determine your target market is going to be, it’s important they become the north star for your business. Your customers will impact the branding and the messaging of your enterprise – and as surely as the seasons change, so will their needs and wants.

Keep your passion and your business idea alive: our entrepreneur guide offers more practical and timely resources to help you with market research and everything else entrepreneurial.