Many successful small businesses were started by entrepreneurs with the ability to see a trend before everyone else. They were able to take their insight and capitalize on it in a new and creative way. Businesses from Uber and Lyft to Airbnb and HomeAway are just some of the most recent examples of entrepreneurs benefiting from growth sweet spots. But just because it’s been done before doesn’t mean it is easy to find more growth sweet spots and capitalize on them.
Smart entrepreneurs are always looking for an edge. They want to know how they can identify trends and how they can use that skill to build and grow a business. Fortunately, there are steps you can take to develop this skill yourself.
The Fundamental Growth Elements
There are three fundamental elements that drive all trends:
- Basic Needs
- Drivers of Change
- Innovations
The secret ingredient of trends however isn’t actually any of one of these elements. Rather, it’s the tension created as the three elements interact with one another. This tension can best be identified by understanding customer expectations and by looking for gaps between what customers want – both now and in the future – and what they are currently being offered.
Understanding this enables you to hit the sweet spot of trend-driven innovation with your new offering – when you beat customers’ expectations and resolve this tension.
Here are ten keys to find growth sweet spots:
Anticipate change
I frequently remind coaching clients that the only constant is change. Believe it. Assume that change is coming and look for it. Change can be either social — as in the rise of socially responsible business — or technological, as exemplified by the growth of mobile commerce. Sometimes change can be both. Social media is a great example of that.
The basic tools of the growth trend tracker are seeing, hearing, smell, taste, and touch. In other words, every sense that can be used to get information about the world should be employed in looking for upcoming changes. Start by reading and watching everything you can. That should include general interest news outlets, trade publications, blogs, government reports, and casual conversations overheard in elevators. Be especially alert for problems people are talking about.
Consider using trend-tracking tools like Google Trends, Topsy, and Trendhunter to help you zero in on trends that are worth investigating further. You won’t be the only entrepreneur looking for business ideas on these platforms, but you can use them to dig deeper to validate hunches.
Today, there’s too much broadcasting and not enough receiving. Everyone is focused on pumping out information, but turning off our own signal and receiving and digesting, that’s a skill that has gone away.
I like to immerse myself in a topic by reading about it. I dedicate an hour in the morning, and again before I go to sleep, to reading. I actually schedule it
Look beyond your own boundaries
You have to look around and ask yourself: What are the general trends going on, even though they haven’t affected my business yet?. Early this century you might have noticed that people weren’t yet ready to buy music by the download, but the way they found new music was shifting. I thought, today it’s record labels, but I can see how companies will become major players launching new music, such as Apple through its commercials, or Starbucks with its stores. I saw a trend where people weren’t necessarily interested in discovering music by walking into a record shop or watching MTV anymore.
Be realistic
An online retailer that aims to beat Amazon at its own game is unlikely to show up on top of any fast-growing startup lists very soon. Make sure the solution you envision is one you can realistically provide with features and costs that will compare favorably to established alternatives.
Again, it’s vital to talk to potential customers. Don’t just brainstorm in-house. What you can do conveniently and inexpensively may be of little value to customers. The sweet spot for a trend-exploiting startup is at the intersection of business capability and customer need.
Create a competitive advantage
To get the biggest benefit, be the first mover. It is rare for any single entrepreneur to be the only one who sees an opportunity. Most will hesitate and not move at all. Many others will not move swiftly enough. Lasting competitive advantage usually goes to the first entrant to stake a market out and capture customer loyalty. Those who come later usually have to settle for slimmer profits and more competition.
Being first is not enough, of course. Business history is littered with well-financed startups directed by well-regarded leaders who committed too much, too early, and in the wrong place. So test before committing. Again, look for revenues that overwhelm costs and customers who are overjoyed.
Choose Your Sources
Just as it took multiple sources—bloggers, Facebook, word of mouth—to realize that the time is ripe to visit Colombia, spotting a trend in other industries is much the same.
As you put together a list of blogs, news sites, social media channels, and other sources, here are some tips to help you hone in and filter extraneous content:
Follow Trustworthy Thought Leaders
When selecting your sources for news and information, find reputable resources you can trust. These are people who are experts in their field, brands whose information you find to be reliable and valuable.
I follow a number of travel bloggers who have been in the business for years. Most of them I’ve found through other people I follow or trust. When their blogs are too gimmicky or inauthentic, I stop reading. Be selective and filter out the noise.
Take care on choosing sources
Just as it took multiple sources—bloggers, Facebook, word of mouth—to realize that the time is ripe to visit Colombia, spotting a trend in other industries is much the same.
As you put together a list of blogs, news sites, social media channels, and other sources, here are some tips to help you hone in and filter extraneous content:
Look Outside Your Industry
In addition to watching what’s going on in your own niche, it often pays to expand your horizons. Our world is so interconnected, true trends pop up everywhere. Keeping an eye on developments in other fields can sometimes be key in predicting changes closer to home.