The Key To Finding a Profitable Market

Summary

• Look for a market that is either stable or growing, but not shrinking. Choose a market you can add the most value to, especially if you have personal experience or an inherent advantage.
• A market must have a desperate need for your product or service. Products that are merely 'nice to haves' are less likely to be purchased, particularly during economic downturns.
• Focus on markets related to timeless human needs: health, wealth, and relationships. These areas tend to have consistent demand because they address fundamental pains like loneliness, financial struggles, or health concerns.
• Choose a market that is growing, not one that is declining. A growing market offers more opportunities for expansion and profit, as shown by the example of a friend who switched from selling newspapers to manufacturing masks.
• The market should be easily identifiable and targetable. If you struggle to find and reach your prospects, you won't be able to sell effectively. Seek out markets with established associations or groups for easier targeting.
• Ensure the market has purchasing power. It's not enough for a market to have pain and growth; potential customers must also be able to afford your offerings, as seen in the failed attempt to sell resume services to unemployed people.
• Use a four-piece checklist to evaluate a market: pain, growth, findability, and purchasing power. All these elements must be present to maximize the likelihood of success.
• When you have a core value proposition, select a market that allows you to maximize income by meeting all four criteria. For instance, a relationship coach might find greater success helping seniors find love rather than helping college students, because seniors typically have more financial resources.
• Personal experience trumps everything else when choosing a market, as it enhances your ability to empathize and solve the customers' problems effectively.
• A well-selected market that meets all four criteria and benefits from your value addition increases the chances of business success. When investing, look for founders with relevant experience who are solving problems in such markets.

Video

How To Take Action

I would suggest implementing strategies based on understanding your market thoroughly to ensure your product or service will be successful. Here's a step-by-step guide to do that effectively:

1. First, look at markets that are stable or growing. Avoid markets that are shrinking, as they offer fewer opportunities.

2. Make sure there's a desperate need for what you want to sell. Even better if this need aligns with timeless human desires related to health, wealth, or relationships. These are problems that people will always want solutions for.

3. Find a market you know well, especially if you have personal experience. You'll be able to understand your customers' pain better and create solutions they value.

4. Ensure your target market can be easily identified and reached. Look for markets with established groups or associations where you can find potential customers more effectively.

5. Check that your market has purchasing power. Your customers must be able to afford what you're offering.

Here's a checklist to help you evaluate your market:

• Is there pain or a desperate need for your service?
• Is the market growing?
• Can you find and target your market easily?
• Do the potential customers have purchasing power?

Remember, personal experience is key. If you have it, use it. It gives you an edge in understanding and solving customer problems.

Lastly, if you're looking at a market you're unfamiliar with, make sure it meets all four criteria from the checklist. This increases the likelihood of success. For example, if you're a relationship coach, consider targeting seniors instead of college students, as they might have more financial stability to afford your services and a keen interest in finding love later in life.

By following these steps, you'll be able to choose a market that can bring the greatest value to both you and your customers.

Quotes by Alex Hormozi

"As long as the market is not dying and is either normal or growing, then which of the markets can you provide the most value to"

– Alex Hormozi

"The first thing that I'm going to look for is, is the market in pain"

– Alex Hormozi

"Do they have a desperate need for my product or services"

– Alex Hormozi

"If you can't find them, they'll never find you"

– Alex Hormozi

"You want to have all four in any market you pick"

– Alex Hormozi

Full Transcript

talk to you about today is a question that i get all the time which is how do i know i have a good market right which is what are the things i should be looking for to know i have a market that i should go after and the first thing i want to address here is you know i had this conversation yesterday and someone's like hey i'm between uh you know uh you know dentists and hearing aid specialists and pharmacists right for what market i wanna go after and serve right and i was like okay cool well what are the considerations right and they didn't know how to actually analyze each of those businesses and so the first rule of thumb that i'll give anyone is as long as the market is not dying and is either normal or growing then which of the markets can you provide the most value to all right so most value and that's given your skill set so if you have an advantage inherently or you have experience working with people in a specific marketplace or especially if it's personal experience then i would usually recommend going after that market first because you know their pains you know what it feels like you will empathize with them and you ultimately create a better product that will provide more value to them and you'll be able to win now that's a great scenario but many people i talk to have basically no experience in any market and i'm like okay well then these are the four things that i look for all right so they are as follows the first thing that i'm going to look for is is the market in pain all right so do they have a desperate need for my product or services right a nice to have is not something people are going to take their money out and buy especially in a bad economic condition right if we're in a good economic time when you're watching this and that's awesome and if we're in a bad one then you'll know right so the first thing i'm looking for is do they have a desperate need are they starving for the thing that i'm looking for right there are some things that are timeless right health wealth and relationships are the timeless needs of humanity right uh you know are they are they sad and lonely that's relationships uh are they broke that's always pain and uh health are they are do they feel bad about how they look and are they unhealthy right and so there's the three big ones right but is there key pain that i'm solving the second is is the market growing right so i'll give you an example of this uh i think i've told the the story of my buddy who owned the newspaper company uh he could not figure out why his company was not growing um and he called me up and i was like dude like you're much smarter than i am uh it's probably because you're selling the newspapers he was like no no it can't be that and i was like no i think it's that and as soon as he switched from selling newspapers to selling masks in manufacturing he went from a few million dollars a year to a few million dollars a week all right same entrepreneur simply applied it to a growing marketplace all right the uh the next thing that i'm looking for in terms of marketplace is are they easy to find all right and this is important because if you're marketing and you can't find your prospects if i'm marketing to plastic surgeons for example and the only people seeing my ads are nurses then i'm not going to be able to get my my my product my service in front of them or even get my offer to them if they're impossible to find and so whenever i'm picking a market i'm going to try and find one that i can easily target that has associations they have groups they have channels they all watch they're all congregated in one place and so that way i can cast my fishing line there and then i can hook the clients that can take a step towards me because if you can't find them they'll never find you right and so one they have to be in pain two they have to be growing three they have to be easy to find all right now the fourth one is purchasing power all right which is do they have the monies right now a quick example of this is i had a friend of mine who was looking at this and he was like dude i've got the perfect market i'm going after unemployed people and i want to coach them on how to do their resumes right tons of pain on not having a job he said it's definitely growing because people are coming in and out of the market so there's tons of people that are coming in outside my ads won't get fatigued and i was like okay he's like they're super easy to find and i was like that's great but then he's like no one wants to buy my stuff because they all say they don't they don't have jobs and so he wasn't able to have the purchasing power from this target right and so let me give you an example of of of two different ways that you could use this framework right so let's say if i were a relationship coach i was somebody who serves uh couples i'm good at helping people find love right well i'm gonna look for a market that has all four of these things which means instead of saying i'm gonna help you know college kids right for me my service business find love all right instead of having that's a heart uh college kids find love what i would probably do is instead go after seniors right in maybe their second half of life to find their next partner that would probably be where i would focusing and what happens there is seniors have tons of pain because they're alone it's growing because people die and get older every day right they're easy to find and i know that senior citizens in general have far more money than college kids though right and so even though i have the same core value proposition i'm choosing to serve a better market that i will ultimately probably make more money with all right and so this is kind of the process that i look at is number one above all else which market can i provide the most value to if i have personal experience that's going to trump everything now if i don't have personal experience and i just have a skill of being able to market or sell or whatever then i'm going to look at my market in these in in this four four piece system whatever you want to say checklist and the thing is is you can't just have three of them right uh in the in the newspaper example they were in tons of pain they were easy to find and they had purchasing power the problem is they weren't growing they were shrinking every year right uh the the the unemployment example they were growing they were in pain but they didn't have the purchasing power so that's the that's the problem there uh the nurses and plastic surgeons example that would be one or if i can't find them then i can't display the ads to them and then obviously if people don't watch your product at all and it's just a nice to have then they will not buy it all right and so you want to make sure that you do not have one two three of these you want to have all four in any market you pick and ideally pick a market that you already know you can provide value to and solve a problem that meets these four criteria and you'll have the recipe for success so i hope that made sense that's how i look at markets that's what i look at when i'm trying to invest in companies i look at the founder i see if they already have experience in this and then i see if the problem that we're solving matches these things and then at that point i say you know what i think this is a good opportunity let's do it hope you enjoyed that and uh see you the next video [Music] [Music] [Applause] you