“I think there is a world market for maybe five computers.”
— Thomas Watson, chairman of IBM, 1943
A client recently asked me why I don’t get them to do market studies and projections. This staple of “start your own small business” courses to me is a waste of time and money. Literally. Why?
The “science” of economics is divided into two worlds: macroeconomics, which deals with general economic trends, and microeconomics, which deals with the consumer-producer relationship.
Economics postulates the existence of a “market”, an amorphous aggregate of consumers that is measurable both in size and in intent. Through market studies and analysis, you can apparently estimate the size of a market and the proportion of it that you can capture.
I believe there are several faults with this logic:
- first that you can estimate the size of demand with any kind of accuracy. Demand is rarely latent – is is generated when the means to satisfy it appear. When the first cell phone appeared, who would have figured that grade-schoolers would be toting them? Or remember that famous remark that the market could support five or six computers, that’s all?
- second, that there is any loyalty between a provider and a market. I flunked economics (an engineering elective) in university because the element that was always missing for me was how to integrate the dimensions of quality of the offer, evolving technologies (various ways to satisfy the offer) and demand creation.
- third, as a solopreneur, measuring a potential market makes no sense. For example, in Quebec, studies put the number of self-employed at around 300000 (out of a total population of 7 million). The number is most certainly underestimated, but let’s go with it for sake of argument. Even if I could service 300 clients in a year through my course, at $2000 a client (which is what my clients pay now), that is $600000 a year in income. For me right now 300 clients is huge (I don’t have the infrastructure), yet it is not even 1/10 of 1% of the “market”. And that’s not counting the clients I want to serve through teleconferences and webinars across Canada, the US and elsewhere.
Therefore, as a solo or even a small business, even if I capture only an infinitesimal part of the “market”, I have more than enough business to make me very prosperous.
- “A cookie store is a bad idea. Besides, the market research reports say America likes crispy cookies, not soft and chewy cookies like you make.”
- — Response to Debbi Fields’ idea of starting Mrs. Fields’ Cookies.
And at this nanoscopic level, the laws of supply and demand of microeconomics fall apart, because the strong link between myself and my client becomes that of trust.
That’s why I talk about “nano-economics” – the economic relationship between individuals. There are three basic principles of nano-economics:
1. For every combination of passion and talent, there is someone, somewhere, who wants to experience it.
2. This person can be anywhere on the planet, to find him or her I have to broadcast a message that is specifically tuned to what they are looking for.
3. Once the connection is made, the bond of trust that is created generates a loyalty that connects me to others who want to experience what I offer.
Just as in physics, where at the subatomic level, the force of gravity is overtaken by other, special forces, then in economics, at the nano-economic level of individuals making offers to attract those who are looking for precisely that offer, the bonds of trust, loyalty and even love are stronger than simply price.
By thinking nano-economics, success as a solopreneur becomes a game of communication and trust rather than “domination”, market share, and price comparison.
This is why the traditional business plan concept fails at helping the solopreneur in launching their business. What the solo has to do is to master communicating who they are and what their passion is, then the right people will show up.
Someone, somewhere, is waiting to hear from you. Are you calling out to them?