How to do market research when starting a business
Starting a business is risky, so anything you can do to mitigate that risk is a good idea. This is where market research can help. Doing some basic analysis before you start up can help you feel confident that your business will succeed. Here are five ideas to help you research your market and make sure your business gets off to a flying start.
1. Do some desk-based research
The first step is to learn as much as you can about the market you’re planning to enter. Find out about the competition by searching online for the product or service you intend to sell. You’ll soon get an idea of the number of competitors who are already up and running.
You can also try searching for any free reports on your industry. These can give you even more insight into the size of the market and your opportunity. Make sure you write down the results of your research.
2. Talk to your friends and family
Your friends and family can be a great resource when you need to get opinions on your business idea. There are various free online tools you can use to create a survey to share with them. Just ask them to be as honest as possible in their responses.
Ask not just what they think of your business idea, but also where they’d expect to buy this product or service, what they’d expect from it and the price they’d expect to pay. If you’ve come up with a name for your business, you can use your survey to get some opinions on that too.
When you get the answers back, read them thoroughly. If certain people have given more insightful or detailed answers, or they closely match your target audience, ask if you can give them a call to discuss in more detail. Write up an analysis of the survey.
3. Review and reflect
After completing the two research projects above, take note of any conclusions you can draw. For example, you may realise you need to drop one aspect of your idea or adjust the business name. It might be how you plan to sell your product or service that needs to change, or perhaps your price point needs a rethink.
Try not to take answers from your survey or conversations with friends or family personally. It can be hard to receive feedback, but it’s better to learn how to improve your idea now than after you’ve invested money and time. Iterating your idea is much easier and cheaper when you’re still in the ‘on paper’ phase. Any changes you make now will stand you in good stead once you start up.
4. Test your idea
Once you’ve refined your idea using these low-cost research strategies, it’s time to test it out by actually taking it to the market. This is the best kind of market research you can do - there’s nothing quite like the ‘acid test’ of seeing if anyone will buy what you’re trying to sell.
Ideally, you’d start your business in the smallest, lowest-cost way possible and see if you can make any sales. This will be easier for some businesses than others, but even if your ‘big idea’ requires investment or development time, there might be a version of your product or service that you can create at a much lower cost in order to test it in the marketplace.
When you’ve made some sales, ask your customers for feedback. If it’s not possible to ask them face to face because you don’t sell in person, send an online survey to anyone who buys from you. Take on board the feedback you receive and iterate your idea if you need to.
5. Rinse and repeat
You may now feel ready to launch your business properly, putting all your focus on making it a success. If that’s the case, don’t imagine that the need to do market research has gone away. It’s all too easy to become complacent or to think that because your business has been running well, there’s no room for improvement.
Instead, make market research a habit and set a schedule for when you’ll look again at your competitors and the market. When it comes to listening to customer feedback, try to build in a mechanism that lets your customers easily tell you how they feel about your product or service.
Most of all, remember that your customers are the lifeblood of your business and getting it right for them should lead to a flourishing business for you.
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