Turning back to our example, what if you thought you were going to give a 10 percent discount and he thought it was 20 percent? What if you can't resolve it and he insists you provide discounted products? You will end up in court with dispute coming down to which party judge or jury believes. Are you really willing to take that gamble?

With even a simple written contract, you can create a clause containing language that states you will give a 10 percent discount. If dispute ends up in court, he is asked if his signature is on bottom, clause is read and you win. The contract should also contain a clause requiring "prevailing party" to be reimbursed for their attorneys fees and costs. In short, he has to pay your legal bills as well. An additional benefit to using a written contract is due diligence element. I realize you will be shocked to learn that there are unethical businesses. In negotiating a contract, very specific requirements are put in writing. What if other party starts squirming? It may be a sign they are unable to meet their obligations. Might that give you pause before you commit to tying up your inventory? You can save yourself a lot of headaches by discovering this information in advance.

In summary, even a simple written contract should be a mandatory bullet in your arsenal. Much like car insurance, you will be glad you have one if a business transaction falls apart.

The methodology required to size these new markets requires two approaches. Each approach will yield a different approximation of potential market size, and often figures will work together to provide a solid foundation for market’s potential. Growthink calls first approach “peeling back onion.” In this approach, we start with generic market (e.g., coffee market) that that company is trying to penetrate, and remove pieces of that market that it will not target. For instance, if company created an ultra high-speed coffee maker that retailed for $600, it would initially reduce market size by factors such as retail channels (e.g., mass marketers would not carry product), demographic factors (lower income customers would not purchase product), etc. By peeling back generic market, you eventually will be left with only relevant portion of it.

The second methodology requires assessing market from several angles to approximate potential market share, answering questions including:

•Competitors: who is competing for customer that you will be serving; what is in their product pipeline; once you release a product/service, how long will it take them to enter market, who else may enter market, etc.

•Customers: what are demographics and psychographics of customers you will be targeting; what products are they currently using to fulfill a similar need (substitute products); how are they currently purchasing these products; what is their degree of loyalty to current providers, etc.

•Market factors: what other factors exist that will influence market size – government regulations; market consolidation in related markets, price changes for raw materials, etc.

•Case Studies: what other markets have experience similar transformations and what were customer adoption rates in those markets, etc.

While these methodologies are often more painstaking than traditional market research techniques, they can be difference in determining whether your company has next iPod or next Edsel.