Market Entry Intelligence Checklist

How to use this tool. This checklist is for owners considering a new region, customer segment or industry. Set aside 90 minutes with your numbers and a pen. You will finish with a scored recommendation (go, staged test or no-go), a break-even figure and a short list of actions for the next 30 days.

Why it matters

Most failed expansions do not fail because the market was bad. They fail because the owner committed money and people before checking the basics: do buyers there actually want this, can we reach them, can we deliver profitably at that distance or scale, and what will it cost to find out we are wrong?

Market entry is a series of questions that can each be answered cheaply before the expensive decision is made. This checklist puts those questions in order so you can stop early when the answer is no.

The method: five questions in order

1. Who exactly is the market? If you cannot describe it in one sentence, you cannot research it.
2. Is there demand you can see? Look for evidence of buyers already spending money on this problem, not just opinions that it sounds like a good idea.
3. Who else is serving it, and where is the gap? You need a reason to win that a buyer would recognise.
4. Does the maths work? Work out how many customers you need to cover the cost of entry.
5. Can you deliver without damaging your core business? Capacity, cash and licensing decide whether a good opportunity is a good opportunity for you.

Work through the parts below in order. Be honest in the scoring. The tool is only useful if it can tell you no.

The tool

Part 1: Define the market

Complete every row in one sentence or less.

Part 2: Evidence checklist

Tick only what you have actually seen or heard, not what you assume. Add a note beside each tick on where the evidence came from.

Demand

• I have spoken to at least five potential buyers in this market (not existing customers or friends)
• At least three described the problem unprompted or confirmed it is a priority
• I have seen evidence they already spend money on this (tenders, existing suppliers, job ads, project announcements)
• I know roughly how often they buy and the typical order value

Access

• I know where these buyers look for suppliers (referrals, associations, tenders, search, trade events)
• I can name at least ten specific businesses I could approach this month
• I have a warm connection, referral or existing relationship into this market

Delivery

• I have confirmed any licences, registrations, insurances or accreditations required to operate there
• I know the extra travel, accommodation, freight or setup costs per job
• I have named the person who will lead this, and what they will stop doing to make time

Risk

• I have set a maximum amount I am willing to lose testing this market
• My core business can carry the cash drain for at least six months if the test earns nothing

Count your ticks: ______ out of 13.

For licensing and regulatory requirements, check with the relevant regulator or your adviser. This tool does not replace that advice.

Part 3: Competitor snapshot

List the three to five suppliers buyers would most likely compare you with.

Our reason to win, in one sentence a buyer would agree with:

Write it here before moving on. If you cannot, mark the Competitive gap score below as 1 or 2.

Part 4: Break-even calculator

The formula in words. Add your one-off entry costs to twelve months of extra running costs. Divide by the gross profit one customer produces in a year. The result is the number of customers you need in year one to break even.

• Gross profit per job = average job value × gross margin percentage
• Gross profit per customer per year = gross profit per job × jobs per customer per year
• Customers to break even = (one-off entry costs + extra monthly costs × 12) ÷ gross profit per customer per year

Worked calculation (example figures only):

Your numbers:

Reality check: How many customers could you realistically win in 12 months, given your list of named prospects in Part 2? ______. If that is lower than your break-even number, the plan needs a lower cost, a higher price or a longer timeline.

Part 5: Scorecard

Score each criterion from 1 (weak) to 5 (strong), using the evidence above. Multiply by the weight to get the weighted score.

Your percentage: total ÷ 85 × 100 = ______%

Part 6: Decision rule

Worked example

Fictional example: Banksia Commercial Roofing, a Perth roofing contractor with 14 staff, is considering Bunbury and the South West.

Banksia defined its market as facilities managers and property managers of commercial and light-industrial buildings in the South West, starting with roof maintenance contracts. It spoke to six prospects, four of whom confirmed the problem. It named twelve target businesses and had one warm referral. Its break-even was nine customers, and it judged six to eight was realistic in year one.

Its scores:

54 ÷ 85 = 64%, which falls in the staged test band. The weak point was capacity: no one could lead the work without pulling a crew supervisor off Perth jobs. Banksia decided to run a 90-day test with a $6,000 cap, target five contracts with a travelling crew, and hire a coordinator only after three signed.

How to read your result

• Look at the lowest score first, not the total. A strong total can hide one fatal weakness. A 1 on demand, break-even or capacity should stop you whatever the percentage.
• Compare break-even customers with your named prospects. If you need nine customers and can name twelve prospects, you need a very high conversion rate. That is a warning, not a plan.
• A staged test is a good outcome. It means you have found a promising market and limited the cost of learning more.
• Good looks like a written market definition, at least five buyer conversations, a break-even figure you believe, and a capped downside.

Common mistakes

• Researching only your friends and existing customers. They are polite and they already like you.
• Treating "interesting idea" as demand. Look for people spending money already.
• Ignoring the cost of your own time. If you lead the entry, something else in the business gets less of you.
• Using best-case margins. Travel, rework and slower first jobs usually push margins down in a new area.
• Defining the market too broadly. "Western Australian businesses" is not a market. "Property managers of commercial strata buildings in Bunbury" is.
• Skipping the compliance basics. If your test involves emailing or texting prospects, you need consent, clear sender identification and a working unsubscribe under the Spam Act 2003. Calls to individuals must respect the Do Not Call Register. Handle any customer or contact data in line with the Privacy Act.
• No stop point. Decide the cap on spending and time before you start, not after.

Put it to work this week

1. Complete Part 1 today and cut the market to one sentence. Share it with a colleague and ask whether they would recognise a buyer from it.
2. Book five buyer conversations in the next ten days, and write down the first three questions you will ask: what they use now, what frustrates them, and what they last paid for.
3. Fill in the break-even table with real figures from your last twelve months of job costings, not estimates from memory.
4. Score Part 5 on your own, then ask one person who knows your operations to score it independently. Discuss any gap of two points or more.
5. Write your maximum test spend and your stop date on a page, and put a review in the calendar for 30 days from now.

Where Lotus helps

Lotus Strategic Services helps Australian small and medium businesses test markets with real evidence: structured buyer interviews, competitor analysis and break-even modelling that stands up to scrutiny. We can pressure-test your scorecard and help you design a staged entry that limits your downside. Book a free 30-minute discovery call at lotusstrategic.com.au.