Introduction

Market Research

It doesn’t sound very interesting, yet it’s increasingly important. I made the mistake today of not researching a market well enough before entering it. Specifically not researching the market in my country.

What happened

I made the decision at my company to target boxing gyms with our product offering. The issue with this, is that in the UK boxing gyms are more like clubs, that have sponsors and receive donations, unlike the US where boxing gyms are businesses which you can sell too. When doing market research I looked at statistics like the number of boxing gyms in the UK, which are misleading. Because in the UK boxing works differently to the US, for instance, the gyms in the UK are a lot smaller than the US, they operate as charitys rather than businesses.

This causes a huge issue if you are now trying to sell your premium product offering to them and not a single person you cold call has any money for it.

Pivoting

Small startups in the service space have one massive advantage over larger corporations. We can pivot at a moments notice. Chaning our product offering to a different niche is as easy as changing 6 words in the cold call script and adjusting your presentation for the sales calls. A short conversation with the development team later, and that’s it. Now you are working a whole new niche.

The sunk cost fallacy

The sunk cost fallacy refers to the misconception where people continue investing in a project, venture, or decision based on the cumulative prior investment (time, money, resources) despite the future costs outweighing the potential benefits.

This is a massive issue in companies. People struggle with this because 9/10 times it means having to own up to a mistake you made or a lapse in judgement. But for the company it’s 100x better that you identify a project as being a failure before wasting countless hours, time and effort in order to complete something that doesn’t offer much benefit.

Summary

Identify the mistake, own up to the mistake, and make the best decision in the situation. Pivot if you can, adjust to avoid downsides if you can’t. Just don’t sink money into something that doesn’t yeald any future benefit.