It is rare today to gain a foothold in a market without facing competition. A first method consists in:
Take the example of creating a shoe business. The steps to determine market share in China are as follows:
Warning: the CA balance sheets and professional statistics do not include taxes (VAT).
In the case of a new activity, it is naturally difficult to find reference numbers. It is tempting to trace a similar experience in another area and hopefully the same results.
But beware, a successful experience in one area may prove not be as successful in another location. Therefore, it is compulsory to take into account all the specificities of each project.
At the time of the questionnaire survey, the potential consumer is often questioned about his intentions or shopping habits: usually quantities purchased, purchase frequencies, psychological price, average basket, etc. It is possible to use these to calculate a response revenue potential.
Of course we should be careful when we analyze the answers. Sometimes, a respondent may not actually buy a certain quantity of product but intend to buy this quantity. Also, a respondent may underestimate, over-estimate or even deliberately lie on their consumption. Therefore, it is important to remain vigilant, to interpret and to relativize this information.
Unlike the previous method, the purchase intentions are expressed withtaxes (VAT), by potential customers and so is the revenue resulting from this calculation.
This method requires to:
The literature review carried out upstream of the field study provides many elements on this topic.
Many Chambers of Commerce and Industry (CCI) are available for local studies on trade flows closer to their research department and / or documentation.
Chambers of Trades and Crafts, have built a tool called Olia local presence (Tool for the location and installation of the craft).
INSEE has also developed a tool for the diagnosis of local presence available online: Odil. A downloadable guide describes the operation of this tool.
Once the market is assessed, the project manager must determine the market share that it can take its direct and indirect competitors, taking into account not only potential customers unconquered (“not consumer related”), but also the avoidance of consumers (customers purchasing on other places due to lack of choice or the unavailability of products / services on place of residence).
Example: the sale of sporting represents 2 million in the action area of the project leader. Different competitors take 80% of the market (20% of escape to other Trade Points).
The future business leader estimated to 5% in the first year of the contract is 100 000 euros with a sales area of 150 m².
To test the project before creating her business, it is possible to use:
These two formulas can be self-employed or being legally carried by another structure which tests the market during this period.
Annual revenues can then be estimated on the basis of real information: purchase orders / contracts on the test period, customers periodicals, partnership projects and subcontracting.
The different methods presented above are intended to establish a provisional CA.
However, this estimate must be approved by the board of local professionals and / or business covered by the project: accountants, advisors support organizations to create business, professional, …
Their experience can weigh forecasts: an estimated turnover must be neither too pessimistic nor too optimistic, but simply realistic.
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