Stage 2: Define and Evaluate Selected Verticals
Once potential verticals have been identified, assess these markets for alignment with your company’s capabilities and optimal opportunities. Use the following steps to define, explore, and evaluate the verticals identified in the previous stage.
1. Determine market health. How large is the vertical you are exploring? Is it overly saturated? Is it too barren? Only consider verticals that are large enough to enter and expanding in size.
2. Identify competitors operating in market space. Knowing who you’re up against can offer invaluable insights. See who the competitors are, what they do, and who they work with.
3. Identify potential clients in the new vertical. Create a list of the companies you’d like to work with in the new field. This gives a clearer image of what entering the market will look like.
4. Evaluate potential clients. Create profiles of these potential clients that outline their size, employees, revenues, and needs. A SWOT analysis may be beneficial. Learn the clients!
5. Ensure vertical is a good opportunity. Step back and objectively evaluate if the potential industry is large enough and expanding, isn’t overly saturated, and has high quality clients. Forecast and compare potential generated revenues from operating in these verticals.
6. If considering multiple verticals, use the analyses conducted in this step to weigh the new industries against each other. Focus on the vertical with prime opportunity.
Additional Actions and Considerations:
Test your assumptions. Once you have a vertical identified, create a sample list of potential clients in this industry and evaluate them to ensure they need your services, can afford your offerings, and that the industry truly is active and developing. Reach out and discuss ideas with these contacts.
Consider the changing tides of the industry. Nothing stays the same for long, so examine where the industry is in the growth cycle, its possible saturation, or if other opportunities are better for your company given current circumstances.
Determine if there is any overlap in the verticals you are considering. There may be some clients that operate between industries. Working with them can be a great way to penetrate new markets. Partners may also work across different industries, so consider them, too!