Evaluating Market Size for a Niche

When evaluating a potential niche, it's important to determine if the market is large enough to be viable, but small enough to be manageable for a self-funded startup.

The "Goldilocks" Principle of Market Size

You are looking for a market that is "just right."

• Too small: A market that is too small will not be able to generate enough revenue to sustain a business.
• Too large: A market that is too large will be too competitive and expensive to market to effectively.

A Rule of Thumb: The Magazine Test

A useful, though not foolproof, rule of thumb is to look for a market that has a magazine devoted to it, and where a full-page ad in that magazine costs less than $5,000.

• The existence of a magazine: This indicates that the market is large enough to support a dedicated publication.
• The cost of an ad: This provides a rough measure of the size and competitiveness of the market.

Other Methods for Evaluating Market Size

In addition to the magazine test, you can use other methods to estimate the size of a market:

• Census and labor statistics: Government data can provide information on the number of people in a particular occupation or demographic.
• Website traffic analysis: Tools like Compete.com can be used to estimate the traffic levels of websites that cater to your target market.
• Magazine rate cards: These documents, which are usually available on a magazine's website, provide information on circulation and subscriber demographics.

By using a combination of these methods, you can get a reasonable estimate of the size of a potential market and determine if it's a good fit for your startup.