How do you figure out if there is enough market share in an industry to consider starting a business in that industry? And/Or how do you figure out if a market demand is being fully or adequately satisfied?
>if there is enough market share in an industry
What do you mean by that? Market share represents how much of the market is being supplied by each player in the industry.
As long as there is a market and there is at least one person supplying it then you can define a market share.
Looks like you meant to ask something else :p
>how do you figure out if a market demand is being fully or adequately satisfied?
As for "adequately satisfied" no market ever is, buyers want lower prices, quicker delivery of the good/service, longer payment schedules, higher reliability of the good, easier purchasing process, and a big etcetera. Don't focus solely on having a lower price good/service than the competition, your strength can be somewhat else. No market is ever adequately satisfied.
As for the "fully satisfied" part, I won't mention the equilibrium point in your graphic suggesting that all markets are always fully satisfied (thus in a demand-supply equilibrium). Many companies increase their sales by either gaining market share from their competition ("stealing" someone else's clients) or creating new clients (like Mattel selling Barbie dolls to boys).
I hope my answer can open the way for new questions.
Yeah, I probably did mean another term that I can't think of right now. What I meant is, how do I calculate if there is enough people demanding a product/service so I can make a living of it?
For example, lets say I start a mechanic shop. (probably a bad example) How do I know there will be enough people coming into my shop, if there are a lot of mechanic shops in my area?
haha. I see what you mean.
So, like, all things aside(quality, price,etc), no matter what kind of business I start (so long as it's not something completely outrages), there will probably be enough demand? And just allocate pricing accordingly?
>For example, lets say I start a mechanic shop. (probably a bad example) How do I know there will be enough people coming into my shop, if there are a lot of mechanic shops in my area?
This is a tough question, probably the hardest to answer before going into business yet one so critical.
For already established industries you can look up statistics online (which give you a broad picture) and from there try and come up with a figure for your geographical area. In the case of this "bad example" there are statistics regarding the number and type of car failures per 1,000 miles, and knowing how many cars are in, say, a 10-mile radius from your mechanic shop you can estimate the number and type of customers.
If you're going to be carving a niche in a market held by a big corporation that sells stock in the stock exchange then you can look up their financial reports online, since they have to disclose those to their investors and they are freely available.
If you're against a mom 'n pop shop you can spend a few days observing them up close and overhear their volume of daily sales. This one can be tricky to pull, you're basically spying on their cash registers. You can sit somewhere in the venue and count how many burgers, ice cones or w/e it is they sell in a day. You know the price of the items and thus you know how much they raked in. You then need to estimate their costs.
Technically there is demand for just about anything, you might have seen those wacky auctions on ebay (girls selling their virginity, people selling a ghost-in-a-bottle, curstom My Little Pony pictures, etc). Knowing if there is enough of a demand to pay for your costs and leave some profit to have the lifestyle you desire is a tough one to know up-front. That's why so many investors shy away from anything not blue-chip, yet a few are willing to invest in non-proven start-ups.
I won't ask you to disclose what it is you're thinking to sell, but is it a physical good or a service?
Nothing amazing or anything like that, anything that will make me some cash to live off of. Some sort of blue collar or white collar service.
Really, the reason I was asking was because I noticed a lot of smoke shops, beauty salons, mini marts, etc. So I was wondering if there was enough pie for all of them to make it worth it. As someone looking from the outside in, who also doesn't know much about business, they probably supply more than I realize.
In your opinion, whats a market you think needs more or better supply?
If your idea is opening a shop you can talk to a couple realtors. Some know jack shit about their business and are realtors because they can't get "a real job", while some do it with a sincere passion to earn commissions while helping people.
Ask them what they think would work in some of their properties for lease, they usually have their own ideas plus they will tell you what the owner thinks can work. They also know the neighbourhoods, and thus they may notice what's missing. They might also know what businesses went under in the past few months.
Mind you the conflict of interest, since realtors want someone to lease their properties and earn their commission (it's human nature). Take their advice with a healthy dose of skepticism.
Strip mall owners want a certain mix in the shops in their malls: a couple restaurants, a ups store, a smoke shop, an ice-cream shop, a barber, etc. They create an eco-system where one shop attracts patrons to the others, thus benefiting everybody - including themselves. Try and talk to a strip mall owner as well.
supply & demand is a joke.
Demand is mostly artificially created trough advertising.
People dont want to buy your stupid shit.
You can literally make up any useless product, advertise it to the moon and the masses will automatically buy it.
It doesnt really matter what the product is as long as people can buy it.