Profitable Markets
Starting a business is a multi-step process that requires research, planning and execution. But if you  start a business without looking into the profitability of your business idea, then you'll have a huge problem on your hands.
What good is it if you invest thousands of dollars, hundreds of hours of your time, and all your hopes and dreams into a business that won't make you enough (or any) money? A business without enough profit is a business that could fail and take you years to recover from.
This can happen is if you enter into a business venture without doing your market research. You need to know if there is enough mark-up, if there is room for you in the market place, if there are enough people that want what you have to offer, and if there are enough people that can afford what you have to offer.
Below I provide some exaggerated example to emphasize my points.
Mark-up:
Is there enough profit per sale for the product or service you are providing?
If you are able to sell 1,000 units a day, but only make a penny per unit, well that's not going to make you any useful money.
You'd be better off selling a unit a day making $100 per unit. So there must be a large enough profit in what you sell to support you and your business operating costs. Selling only one unit that has a $100 profit allows you to spend more on advertising, pay expenses and keep your business going.
It's important that there is enough Profit per sale, otherwise whatever you do won't work.
Competition:
Your business model may be profitable, but there may be too much competition in your area. If you live in a town with 1500 people, and there are twelve pizza parlours, well there aren't enough people to support the industry. There is no use in you opening another one where you will do what everyone else is doing.
Another point about the competition is: can you compete? Let's say you want to sell books online. Can you really compete with Amazon? Trying to do so will prove to be highly unlikely as well as unprofitable – unless you have a few hundred million dollars to invest.
You have to know what you're up against before pursuing your business idea.
Demographics:
You may be selling high class foreign cars. The profit is high and you don't need to make a lot of sales to stay afloat, but you live in a small town with 500 people and the majority of them work minimum wage jobs. Sure the profit is there for each car sale, but no one can afford to buy one in this town, therefore no profitable market exists.
To make a profit you'll want to make sure your target market can afford what you're selling.
Customers' Desires:
Your business may have a profitable business model, and people who can afford to buy what you have to offer, but no one wants what you have to offer. If no one wants what you have to offer, then you can't give away what you're trying to sell. Make sure people want what you have to offer. See Tips to Help You Find What Your Customers Want
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