Growth & Leadership Brief
How to Decide Which Market Your Business Should Enter Next
Every new market looks attractive from a distance. Score the candidates against the same criteria, use public data to size them and test the best one small before you commit.
Short answer
To decide which market to enter next, list candidate markets (geographies, customer segments or product lines), score each on size and growth, competition, fit with your strengths, cost and time to enter, and risk, then test the leading candidate with a small pilot. Use public sources: the Census Bureau’s County Business Patterns series gives establishment counts, employment and payroll by industry and area,[1] and the SBA recommends market research to find customers and competitive analysis to see how to be different.[2] Prefer markets where your current customers, skills and reputation give you an advantage.
How do you list and compare candidate markets?
Start by defining what “market” means for you: a new geography, a new type of customer, a new channel or a new product line. List four to eight candidates. For each, write down the customer, the need you would meet and why you think you could win. Then score every candidate against the same criteria. The aim is not a perfect number but a disciplined comparison that exposes assumptions.
| Criterion | Questions | Evidence |
|---|---|---|
| Size and growth | How many potential customers, what spend, how fast is it growing? | Census data, trade bodies, customer research[1][2] |
| Competition | Who serves them today and how well? Where are the gaps? | Competitor review, customer interviews[2] |
| Fit | Does it use your strengths, current customers and reputation? | Win/loss history, referrals |
| Cost and time to enter | Investment, hiring, licenses and months to first revenue | Forecast of costs and revenue[3] |
| Risk | What could go wrong, and what is the downside? | Scenario and stress tests |
What public data can size a market?
Use public data first; it is free and credible. The Census Bureau’s County Business Patterns series provides, by industry and area, the number of establishments, employment during the week of March 12, first-quarter payroll and annual payroll for establishments with paid employees.[1] That lets you count potential business customers or competitors in a county, compare areas and see employment size. The SBA’s market research guidance suggests gathering demographic information on population, age and income to understand opportunities and limitations, and recommends combining existing sources with direct research with customers.[2]
Public data have limits: they describe the whole industry, not demand for your offer, and they lag. Use them to narrow the field, then validate the top two or three candidates with customers.
How do you validate demand and your ability to win?
Interview ten to twenty potential customers in each finalist market. Ask about the problem, how they solve it today, what they pay and what would make them switch. Test willingness to buy with a low-cost offer, a small pilot or pre-sales. Look at your own data too: have you already won business from this segment or place without trying? Unprompted demand is a strong signal.
The Federal Reserve’s survey found that reaching customers and growing sales was the most commonly reported operational challenge, cited by 57 percent of employer firms,[4] which is a reminder that demand has to be earned, not assumed. Define in advance how many customers or what revenue the pilot must produce in what time to justify going further.
How do you plan the entry?
For a new location, the SBA advises first updating the marketing plan with the new location in mind, thinking about the target customer, sales plan and competitive advantage, then reviewing finances, building a forecast of estimated costs and revenue and checking that the balance sheet can cover the costs, and finally complying with laws, rules and regulations in the new location.[3] The same sequence works for a new segment or product: marketing and positioning, finances and legal and regulatory requirements.
Choose the lowest-risk route to learn. A pilot, a partner, a limited launch or a contract with one anchor customer lets you learn before building fixed costs. Set review points at 90 days and six months with the numbers that matter and a pre-agreed rule for continuing, adjusting or stopping.
What mistakes should you avoid?
Entering a market because a competitor did, or because it is growing, without a reason you would win. Underestimating the time to first revenue. Spreading leadership attention too thin. Ignoring the effect on the core business. Treating the first sale as proof when it came from a friendly contact. BLS data on establishment survival show how hard it is to build something new: 34.7 percent of private-sector establishments born in March 2013 were still operating in March 2023, with the largest drop in the first year.[5] Plan for a longer and costlier start than your first forecast, and protect the core while you test.
Frequently asked questions
What data can I use to size a market?
Public sources such as the Census Bureau’s County Business Patterns give establishments, employment and payroll by industry and area;[1] supplement them with customer interviews and trade data.
How many markets should I compare?
Four to eight candidates, scored on the same criteria, then validate the top two or three with customers.
How do I test a market cheaply?
Use a pilot, pre-sales, a partner or one anchor customer, with a defined target and review date.
What does the SBA recommend for expanding to a new place?
Update your marketing plan, compare yourself to local competition, build a cost and revenue forecast, check your balance sheet and comply with local laws.[3]
Is the fastest-growing market always best?
No. Fit with your strengths and customers, competition and cost to enter matter as much as growth.
What to do next
- List four to eight candidate markets and score them on the same grid.
- Pull public data on size and competition for each.
- Interview ten to twenty potential customers in the top two.
- Design a pilot with a target, budget and review date.
Plan Your Next Stage of Growth
Two Pillars helps owners and leadership teams investigate growth, partnership and leadership questions with evidence and a structured assessment process. A good first step is a short growth readiness and options review that tests margin, cash, demand and leadership capacity, and compares expansion, acquisition and partnership routes.
Sources
- U.S. Census Bureau, County Business Patterns. Accessed October 2026.
- U.S. Small Business Administration, Market research and competitive analysis. Accessed October 2026.
- U.S. Small Business Administration, Grow your business. Accessed October 2026.
- Federal Reserve Banks, 2025 Report on Employer Firms: Findings from the 2024 Small Business Credit Survey. Accessed October 2026.
- U.S. Bureau of Labor Statistics, 34.7 percent of business establishments born in 2013 were still operating in 2023 (The Economics Daily, January 12, 2024). Accessed October 2026.
Sources checked October 2026. This guide is general information for business owners and leaders and is not legal, accounting, tax or financial advice. Figures and rules are cited to the sources below and may have changed since they were accessed, so confirm anything you rely on against the current source. Two Pillars & Co is independent of the organizations cited. See our editorial policy.