What must be carefully investigated when identifying a possible business area?

When identifying a possible business area, understanding client potential is crucial. It involves evaluating the demand for your services or products in a specific market segment. This assessment helps in determining whether there is a sufficient customer base that would generate revenue and sustain the business. Client potential encompasses not just identifying who the clients are, but also analyzing their needs, preferences, spending habits, and determining if these factors align with what the business intends to offer. Without a thorough investigation of client potential, a business risk misaligned offerings or insufficient market demand, which could lead to financial instability or failure.

In contrast, while the cost of materials, employee preferences, and marketing costs are also important factors in establishing a business, they do not directly address whether there is a viable customer base ready to support the business. Therefore, although these elements are important, they are secondary to understanding the client potential, which forms the foundation on which a successful business is built.