The core problem of a small market is, well, it’s size.
I’d personally call it as one of the two major problems of the local business ecosystem, with the latter being the risk-avert mentality. Let’s keep risk phobia out of the picture for now; I’d like to dig a bit further into the market size issue.
Many will argue that size is not that much of a problem; yet underestimating a problem is a safe way to make it a real one. For example, in the greek case, a pretty popular perspective goes along the lines of “aren’t 11 million clients enough for you?”. The answer, unfortunately, is an emphatic no; and here’s why.
A shallow market has numerous implications into your business, many of which are not easy to detect at first sight. I’ll attempt a short and incomplete summary here, while also trying to provide some more or less obvious workarounds where applicable.
Even if you create consumer products for the mass market, arguing that the whole population stands as your target is, well, naive. Well-known and already mature products target specific demographics and end up getting just a piece of the pie; assuming that you’ll perform better will probably lead you to mistaken decisions.
In fact, you need to start with a small set of clients anyway, to optimize your product and validate the market need; however it remains a question if the size of the market that you finally address is big enough for your company to grow beyond being a family business. With market size being the amplifier -or precipitator- of your efforts, a balkanized market is far from the place to be.
Products are not entities separated from their environment. On the contrary, they cannot but embrace customer needs in a darwinian process which lets them -and the ecosystem- to evolve. If the environments’ constituents are innovation averse and shortsighted within their comfort zone, ground breaking products cannot get used and mature, and start-ups get essentially trapped under a vision cut but the very limitations of the market itself.
In this context, rare successes remain within the local boundaries, further fueling the introvert status quo, thus also partially canceling their disruptive nature. In short, product development for a local opportunities often ends up to be self-fulfilling on the market’s limitations, and you’d better break all those in the first place.
Great expertise cannot be made by anything than extreme focus, heroism is not a sustainable work ethic after all. It takes time and commitment to develop a specific skill; the only way to become a world-class expert is to put years of hard work on a very narrow vertical. Guess what, this is not what you end up to get while doing pretty much everything to serve the various shallow needs of the local market and sustain your business. And, due to this very cause, you also cannot find people with exceptional skills to partner with; not affording to built expertise results to an ecosystem not affording to innovate, a shallow talent pool is a safe path to remain uncompetitive.
After all, a small market does not only affect your business with regards to its target size, but also ends up to be a brake for the product and team development as well, essentially acting on all core parts of your operations.
Is there a solution? To me, there is; by reverse engineering the problem. Instead of effectively spreading your resources thin on serving those numerous yet shallow opportunities, you’d better break the vicious cycle and focus on a single very specific need. It will be hard at the beginning, as you will be leaving money on the table and you’ll struggle to survive. But, you will finally be able to take the time and create a unique product, innovating against the international competition thus enabling you to go after bigger markets. At the same time, you will also be building top level expertise within your team to stand up from the crowd at a personal level.
Most of the above may sound apparent to many of you, but I’m unhappy to realize that they have yet to reach common sense in many european markets. And, like every problem, the very first yet truly important step into solving it us realizing it’s existence and essence. No matter if the tips and tricks and jacks of the trade provided are sound and applicable in your very case, I do hope you now have a more spherical understanding of the problem at it’s core and I’m looking forward to learn more by your approach and solutions.