Knowing there is a need for your product or service prior to starting your own business is beneficial. It takes a brave and financially secure company to invent a product and then find a market for it. Apple would be a prime example and we know how big they are!
Therefore, researching your market thoroughly to ensure there is a need for your product or service gives you, prospective business partners, lenders and investors confidence that sales will be achieved.
Some common methods of completing market research are:
Test the market - Start small. Produce samples or tasters to try with customers. Offer your services on a local scale or alongside your employment. This minimises the risk, allows you to get feedback before you launch your product or service and enables you to match the demand with the supply.
Test the competition - Visit the competition. What do they do well and not so well and how will you improve upon it. Listen to their customers, why do people buy from them. Which ideas are you going to copy and which are you going to change or improve.
Observe - Look for trends. Which type of shops are opening and which are closing. Is there a reason why what you are proposing to offer does not currently exist in your area. Have you really got an original idea that people want or has it been tried before and failed.
Ask people/questionnaires - Traditional market research involves asking people questions and analysing their answers. Don’t be afraid to do the same but be wary of people giving you the answers they think you want to hear! At the same time as carrying out the survey give out flyers, business cards or samples. If people sound genuinely interested in what you have to say, get their contact details so that you can tell them when you start trading.
Focus group - Not always the easiest to organise and depends on what your business idea is. Get a group of people involved in your idea, get them to taste, sample try and discuss in a group. Often people are more honest when talking to others in a relaxed environment. Ask questions and record the comments from the group. As above, don’t be afraid to record contact details.
Internet research - Simple and easy to do - some form of passive research is always worth doing. Google your business idea and see what links are generated. Glean as much information as you can without leaving your armchair.
Journals and newspapers - Look to see who is advertising, which shops or businesses are closing and opening. Read trade journals if appropriate to identify new or emerging markets and trends. Look for possible niche openings – local newspaper articles about a new office block could offer potential for a sandwich bar or cleaning company; a new engineering company may require transport or packaging materials.
Advertise - This can cost money and you must be careful not to promise what you can’t deliver but one of the best ways to see if customers exist for products and services is to advertise what you have to offer for sale and wait for the response.
What is your market research plan – what are you going to do and when?