How to Research Your Market

Tweet

 Print

 Email

Related Posts

• How to Build a Business Plan for Investors
• How to Write a Business Plan
• How to Conduct a Competitor Analysis
• How to Use Your Business Plan to Attract Finance
• Target Market Worksheet

Starting a business is a little like buyinga car: You need to do some research before taking the plunge. First, figure outif there’s demand for your product or service. Do a competitive analysis. Finda place to set up shop. And create a plan to differentiate your offering.

Doing your due diligence can mean thedifference between success and failure, and it doesn’t have to cost a penny.Networking, online research, informal focus groups and other do-it-yourselfmethods can often do the trick.

Consider the case of an event facility. Itstarted as a place to hold weddings. Located in a beautiful old house, itattracted wedding business, but wasn’t turning a profit because it was usuallyempty on week days.

So the owners contacted members of anationwide wedding planners’ association with similar estate-type settings inother geographic markets. They discovered that others in their situation filledthe gap with corporate meetings and by offering bed-and-breakfast arrangements.Today, 40% of the facility’s business is corporate events, and the owners arebuilding a lodging facility on the grounds to expand their offerings.  Before you get the research ball rolling, youneed to come up with a solid business concept. Once you have a concept, youneed to determine if it’s viable.

Once you’re sure of your business idea, digin deeper. You need information that’ll help you develop a unique businessproposition that’ll give you a competitive advantage. The best sources ofinformation will vary depending on the type of business and circumstances, butoptions include the following:

1.Trade Information.
In the wedding facility examplecited earlier, the trade association for wedding planners provided a directpipeline to the information the facility was seeking. Other trade informationcan also be found in print or online trade publications, or by walking theaisles of a trade show.

2.Demographic and Economic Data.
Try the Governmentportals such as www.statssa.gov.za, www.thedti.gov.za or city guides such aswww.joburg.org.za to find out general information on things like age range,income, number of businesses by type in a geographic area and total sales inyour category. For even more information, a reference librarian can point youto other specialised databases.

3.Business Groups.
Your local chamber of commerce maybe able to help you find the information you need. Also trygovernment-sponsored Small Business Development Centres, which assistentrepreneurs and small-business owners.

4.Local Universities.
Sometimes professors atbusiness schools are interested in having their graduate students do a marketfeasibility study for course credit.

5.Local Competitors.
If you’re starting a localbusiness, shop the competition and check their websites. Or find a similarbusiness in a similar city and ask to talk to the owner. Also look for similarbusinesses for sale and contact the brokers for information like why they’reselling and what their financials are like. You may be interested in buyingthat business yourself.

6.National Competitors.
Do an online search ofbusinesses in your industry and evaluate what they offer to help fine-tune youridea.

7.Potential Customers.
Run your idea up the flagpolewith informal focus groups. Talk with friends of friends – but not your ownfriends or family, since they may not tell you the truth – and old customers orexisting customers if you’re already in business. This is the acid test to seeif your plan is ready for prime time or needs tweaking. to figure out if youshould go ahead with your business idea, you need to ask questions like these:

• Is the market saturated?
  Doesyour city really need another hardware store or flower shop? How much money isspent in your industry each year in your area? Is there room in the market for one more business?
• Does the market want whatyou’re offering?
  If you’re thinking of providing day care for dogs or afacility where people can cook a week’s worth of meals in a group setting, willanyone care? Or if you’re developing a new online service for day traders, isit something they can’t live without?
• What’s the competition doing?
  What do they do well? What do they do poorly? What’s unique about them? Can youoffer something different that’ll encourage customers to patronise you insteadof more established businesses?
• Can you reach your targetaudience?
  If you’re selling inline skates, are you opening in an area with apopulation of the right age and disposable income?

About the Author

Brad Sugars is a startup expert and the writer of 14 business books including “The Business Coach”, “Instant Cashflow”, “Successful Franchising” and “Billionaire in Training”. He is the founder of ActionCOACH, a business coaching franchise.