So you’ve decided to start a business…what now?
I‘m not suggesting every entrepreneur literally go back to school, unless that’s part of your grand plan and you need to enroll in classes to acquire some knowledge or skill.
Anyone starting a business, though, is wise to thoroughly study the market.
- Spend some time online. Use your browser to…browse different companies, products, and services. See what’s already out there. See what’s new, what’s working, and what’s not. Maybe pick up some ideas you haven’t yet considered. Be careful, however, to not rely on the internet for all your research. It’s important to get different perspectives. How did we ever find anything before Google, by the way? Let’s all just accept that we are useless without it.
- Take the 30,000-foot view. What are the biggest, most important trends in the sector? How do they affect your new business? What does the future look like in terms of innovation and customer demand? If your passion is journalism, for instance, the signs might tell you to stay away from traditional print media and focus online.
- Assess the local market. Is your community already crowded with competitors, or will you fill a gaping market hole? Reality is usually somewhere in between. Of course, this may not be applicable if you’re planning a web-based business with a wider reach. A lot of people are making money on Etsy without a single customer in their own zip code.
- Speaking of customers, who are yours? What are the profiles of your ideal customer? Where are they? Why would people want what you are offering and, more importantly, are they already getting it somewhere else? Can you offer them something new, better, or cheaper?
- Inventory available ancillary resources. Will your business need third party vendors or suppliers? Make sure there are reliable partners in your market or know how you will compensate.
If you have the time and budget, you might consider a more scientific research approach. Hire a professional consultant to conduct surveys and/or focus groups of potential customers, and you’re likely to get a good return on investment in quantitative and qualitative data. You simply can’t get that type of information from the internet or talking only to people you already know.
Plus, it’s always good to have objective research substantiating your claims as you develop your business plan and line up funding. If you’re going to ask for money, whether from investors or a bank, then they’ll want some level of assurance that the business will be successful. Your grit and determination – impressive as they may be – by themselves won’t get you a business loan.
This article outlines some more cost-effective, DIY ways entrepreneurs can get primary research information.
Take these two points if you take anything out of this:
- The best, most successful entrepreneurs identify a market need and fill it. Your market research should tell you whether you are an innovator, or just another competitor. Answer this question before you do anything else.
- Spend enough time and energy (and money, if necessary) studying the market so that you feel confident proceeding, but not so much that you get caught in an obstructive research cycle. You can’t know everything, Nostradamus.