1.) Does a market exist?
Basically, are there customers willing to pay for your product or service. Most products and services are an extension of something that already exists, so you know that a market exists. This question becomes even more important as if you are offering a disruptive product or service.
2.) How big is a market?
Basically, are there enough people who are willing to pay for your product to sustain your business. You must also consider at this point how many competitors are there and how entrenched are they. For example, if there is a million dollar business but there are already a dozen competitors, there will not be a lot of unmet demand. Then your business will have to out perform enough of the established businesses to squeeze into the market.
3.) Is the market concentrated?
Basically, how spread out is the market. It you are providing a service where you have to be present but your customers are spread across a 250 mile strip, it may not be a workable scenario. With the power of the internet, it is significantly easier to service a market that isn’t concentrated. You may have to structure your business differently depending on how and where your customers are located.