Unless you're in a niche market, or selling to large corporations within a specific industry, your initial target market is probably too big. You should have big aspirations, but for initial growth and to become an expert at selling your product, your target market should be small, identifiable, and addressable.

Here's why:

1. A small market makes it easier and cheaper to reach people. When you have massive resources, then you can afford to reach everyone (think Super Bowl ads), but right now you just can't.
   
2. If the initial market is large, you will likely use a "spray and pray" approach to marketing - where you just "try to be everywhere" and hope that you get lucky and get people to sign up. This approach is called gambling and rarely works. We want to create something predictable and repeatable to grow your business.
   
3. The smaller the market, the easier it is to identify who the customers are, and the greater the likelihood that they're part of the same "groups" or have similar interests. This enables "cluster marketing" where you can invest in targeting large groups of people and getting them to sign up, instead of one-to-one marketing (which is often expensive and slow).
   
4. A smaller initial market helps you learn how to address that market at a reasonable cost (500 cold calls instead of 2,000,000).
   
5. If you can learn how to sign up / sell to 25% - 30% - 40% of a target market, you'll then be able to sell to an expanded market.
   

Here's an example of the benefits of having a smaller initial addressable market:

Let's say your total potential market is all fast food restaurants in North America. You would be smart to start with only fast food restaurants in Chicago (or wherever you live), only ones which sell X (hamburgers, for instance), and which are independently owned. Your target market just went from millions to an easily defined group (for the rest of the example, we'll say 250).

What do all independent, Chicago-based, hamburger restaurants have in common? You find out that almost all of them are:

• part of the same restaurant association
  
• contact information is listed on that association's website
  
• are serviced by one or two hamburger bun / soft drink / meat suppliers
  

You also learn that their challenges are almost universal - staff quality / retention, low-cost regional marketing, and rising operational costs.

So you put together a marketing plan and here's what happens:

1. You do an email blast telling 250 owners about your new service. Result: 10 signups (4%).
   
2. You decide to do a "drip campaign" of 4 emails over 2 weeks to warm up the rest of them to your idea and convert them. Result: 15 signups (6%)
   
3. You start cold-calling every restaurant. You not only increase your conversion, but you learn a lot more about what they like or don't like about your product. Result: 45 signups (18%)
   
4. You decide to reach out to the association and ask them to promote you in return for expert content that you have and perhaps a profit share. They email blast their members. Result: 10 signups (4%).
   
5. You contact the bun / soft drink / meat suppliers and offer a partnership. A couple tell you that they're not interested, but one likes the idea and you build a co-promotion. Result: 20 signups (8%).
   

You've just spent a little bit of cash and a couple of weeks hustling. You've learned a lot about your market, how to speak to independent restaurant owners, and most importantly, what motivates them to buy.

Oh, and while becoming an expert at selling your product to independent restaurant owners, you also captured 40% of the market! With numbers like that, you can legitimately claim to be an expert at customer acquisition of independents in Chicago. You're also in the enviable position of deciding how to expand. You have three choices at this point: learn how to sell to large chains in Chicago (likely a lot different, so cutting your "sales efforts" in half!), expanding to all independent fast food restaurants in Chicago (probably a lot of similarities), or expanding nationally to all hamburger independents in America (probably even more similarities).

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