Why is Market Research Important For Starting Your Business
Before starting your own business, there’s some background information that you will need to attain. Without researching the market, how will you know whether or not people will buy your product or service? In order for your business to be successful, you can’t assume that your product will sell. You also can’t sell your product or service for the price you think it’s worth. This is something that needs to be effectively planned.
It’s believed that as many as 8 out of 10 business owners fail within the first 18 months. In order to survive, it’s important that you do enough market research. When you research, you expand your knowledge. When you expand your knowledge, you can provide better products. Research allows you to stay one step ahead, which is essential in the business world.
Why is Market Research Important
Having an idea can spark high levels of excitement. Business owners sometimes lose sight of necessary market research. They go from imagining the possibilities, to executing their ideas. Although some may get lucky, this isn’t an ideal strategy. You may pass by vital steps.
If you do not perform valuable market research, you could lose a lot of money. More importantly, you could lose a lot of precious time. It’s not uncommon for business owners to be so passionate, that they get a head of themselves. When you don’t take the time to plan and research, you could essentially fail.
The most important research will look at how valuable your concept is. Is there a need for what you offer? How much money is spent on your specific industry each year? This will help you better understand the demand. More importantly, is there room in the market for another business like yours?
You can start by looking at the market in terms of competition.
- Are you planning on selling locally?
- Is there already a similar service or product offered in your area?
Once you find potential competition, explore what they have to offer. Look at what they do well and how they are unique.
Now, focus on what you do well. What are their weaknesses? You need to think of ways that customers will favour what you have to offer. In order to gain customers, you’ll need to research your target audience. Once you know your target audience, are you able to access them?
For instance, you may want to start a business that offers beach equipment and clothing. If you’re selling beach equipment but don’t live anywhere near a beach, how are you planning on getting your product to those who will buy it? Focus on the population in your area, or ways that you can reach individuals outside of your area.
Once You’re Confident About Your Idea
If you’ve researched your target audience, competition, and market; you may be ready to start your business. However, to develop the best possible business, you can dig even deeper. To gain a competitive edge, you’ll want to source valuable information.
- Business Support Group: You can approach your local chamber of commerce for more specific information. There are also various government sponsored, business support centers; helping small business owners and entrepreneurs. Whenever possible, take advantage of the resources available to you. There’s more than likely support in your community, so seek out that potential assistance.
- Look Into Data: When looking into demographic and economic data, you can use the U.S. Census Bureau’s Economic Census or American Fact Finder. This will allow you to find information regarding income, age range, and the number of businesses in a certain area. You can also look at total sales within your category.
- Local Competitors: If your business is focused on the local market, then you’ll need to look at your competitors. Don’t be afraid to shop their products and visit their website. It’s important that you see what else is offered. Depending on your circumstances, you may find a similar business that’s selling. If so, ask the broker why they’re selling. Some even get lucky, as they’re able to purchase a related business.
- National Competitors: In order to look at national competitors, do a search online. This will help you properly evaluate your competition on a national level. See what’s offered; as this may help you fine-tune your idea. Just remember to stay unique. Looking at national competitors gives you an idea of where the market currently stands. What’s popular and why? You need to make observations, then act upon them.
- Potential Customer Base: It’s important to get feedback. Although your mom and best friend will support you, they’re not always the best people to critique your product or business. They may not tell you the truth, but the truth is what you need to hear. This will help you see if your plan is ready, or if it needs tweaking.
If you’re currently looking to start a business, make sure you’re continually doing research. The market is always changing, so strong research skills will benefit you long after you start your business. The key is understanding WHAT to research and WHY.
Depending on your business, you’ll need to target difference areas of research. For example, will your business require insurance? If so, what’s your best option? You can also focus on the importance of insurance within your industry. Another example is shipping. If you’re going to be shipping your products, how will you find the best rates possible? You need to be in the time and effort.
This is why market research is so effective, as no detail is too small. When you research, you can always stay ahead of the compensation. You can offer the best products and services, at competitive pricing. At the end of the day, that’s what consumers want.
Take a proactive approach to your business. Although the present is important, you not only need to be focused on what’s happening now; but you’ll need to be aware of what the future will bring. When you actively research, you can plan your next move more effectively.
If you think you’re ready to own a business, then continually improve your research skills. Don’t be afraid to ask questions, dissect figures, and adapt accordingly. Although your idea will be your baby, make sure you’re willing to make changes based off of what you find. If you’re unable to adapt and change, then this is most certainly something you need to be conscious of. Research is meant to strengthen your business; so focus on the present, while planning for the future.