Understand Your Market: 5 Things to Research Before You Start a Business
Yes, I’m sure you’re thrilled about your business idea (5 Business Ideas to Run from Home), and can’t wait to launch it. But wait… You first need to test it, take a closer look at it, improve, and prepare yourself, before you actually form a company around your idea.
The statistics say that only one quarter of new businesses will survive the starting period and stay on the market after three years, and one third of those that have failed will be forgotten after the first six months. And it’s probably because they’ve rushed into starting their business without first doing some market research to see if their idea is good enough, is it feasible, can it bring profit, who will they target, how big is the market, …
You must put some effort into research and gather insights so you can better target your market, and ensure your business thrives, not just survives. Here’s what to consider:
Who are your customers?
Appeal to everyone and you’ll appeal to no one. You must define your target audience, the potential market for your products or services, the possible scope of your business. Make sure you target the right people by identifying those who share a need that your business can address. The goal of the research is to arm your business with as much information and data on your target customer as possible.
Send out questionnaires, involve your target audience in the growth of your business through social media, consult them, make them feel like they are being heard, and if you’re lucky, they may recommend you to other people in their circles.
What makes you unique and essential to the customer?
Your business idea may sound awesome to you, and it’s also great for your family and friends; but what does the market say? You need to do a market research, through surveys, literature, and questionnaires, to test the response of your potential customers, get their feedback, and identify buyers’ willingness to pay for what you offer.
Before investing significant time and money in actually starting your new business you want to understand what makes it different from the competition, why would people want to choose you over a competitor, what makes your products or services unique and essential on the market.
Study your competition.
It’s important to learn about your leading competitors, so you can better position your business on the market. Who else offers the same products and services as you? What are your prices compared to theirs? Look at what the customers of your competition appreciate, and learn from the mistakes they make. The idea is to understand what your competitors are doing so you can do it better.
Have you thought about funding?
The ideal solution would be to self-fund the launch of your new business. Sadly, this option is not available for most beginners. Make sure to research your alternatives before starting, – is there an entrepreneur in your family who would be interested to invest in your idea, can you get a bank loan, are there business grants available, or should you look for a venture capital? In case you can’t secure enough funding, you can start small and prove your business is worthy; then go back to the investors with more evidence.
Licenses and legal issues.
Depending on the business you’re in, you may need to acquire some special licenses and follow other legal obligations to be able to sell your products or services. It’s important to also ensure the processes, provide agreements, legal binding contracts, terms and conditions. Research what’s required on your market, or even get a professional legal advice, to make sure no fines can damage the bright prospects of your new business.
To obtain this information and conduct a market research businesses use a variety of sources, – credible statistical websites, Government agencies like Statistics Canada and Industry Canada, local chambers of commerce, trade journals and magazines. You can also do your own primary research for specific information about your unique business and the market share you hope to attract, using tools like interviews, surveys, questionnaires, observational research and focus groups, to identify your particular strengths and weaknesses.
Quality and objective market research helps you understand whether you have a viable idea to start with, and what you can improve to position your company as a powerful force in the competitive business landscape.
What have you discovered through your market research? Let me know in the comments…