Market research makes a lot of sense to put in before starting a business. Common mistakes that people often make before starting a business is that they simply don’t do enough research on what their end product should be or how they are going to market themselves, if at all. Doing market research first ensures that you are making an informed decision on what business to start and how you are going to go about it.
Many people don’t know what they’re getting themselves into when they start their own business. It’s easy to get carried away with ideas, but it’s so important to always do market research first.
- Do the research on your own – Before you begin wasting resources on advertising, you’ll want to analyze your market and your target audience. One of the easiest ways to begin doing this is by taking a look at other companies that are offering similar products and services – companies that will most likely be your competitors. By studying what they are doing, you can see what works and what doesn’t without going through the process of trial and error yourself. There are also all kinds of resources available for you to do your research – Survey Templates, Survey Questions and Survey Design themes to get you kick-started right away!
- Obtain customer data – Find out what customers would think about your products and services by conducting online surveys or focus group sessions – whatever works best for you. How do you find consumers to obtain data from? Simply placing an ad online, such as on Craigslist, and offer small compensation and you’ll get plenty of willing subjects. Just make sure that they belong to the demographic you are targeting. You could even find qualified graduate students that might be willing to conduct this research for your at a local college or university if you offer them a rate that is reasonable.
- Buy expert market research data – Sometimes it takes too many resources to try to obtain all the data you need on your own. In this case, there are a lot of firms out there that specialize in market research, such as the Kantar Group and IDC. They have the means and ability to perform detailed studies on particular segments of the market. They can provide you with incredibly valuable data that would have cost you a huge amount of money to gather on your own. The only drawback is that you may not receive the particular data you wanted for a certain geographic region or specific market. Make sure that you find a firm that focuses on your particular industry as well.
- Hire a research firm – A research firm can provide you with expert market research data as well as information directly from your target consumer base. They will not only provide you with a sophisticated market analysis, they will also interview consumers at select destinations in order to help figure out what your target demographic’s shopping behaviors and purchase decisions are.
Things to research before starting a business
Sole trader or limited company?
Which you choose will impact on the tax you pay and how much legal and financial responsibility is laid at your door.
Define your target audience
Appealing to everyone appeals to no one. You need to focus on your target audience and style everything, from your website to your marketing campaigns, around them. Creating a customer persona or two can really help.
Make sure you are targeting the right people by conducting market research. Send out online surveys, speak to your customers through social media and hold focus groups.
The only way to provide a product or service people really want is to get inside their heads. Involve your target customer in the development of your business and continue to test, test, test.
Once you’re up and running, consulting your customers will also make them feel like they have a voice, inspire loyalty and, if you’re lucky, increase the likelihood of them recommending you to others.
Your business name
Think long and hard about your name: you’re going to be stuck with it as rebrands are expensive and painful. It’ll need to work with an available web domain and will also often be the first thing prospective customers see. Make sure there aren’t lots of other businesses with the same name.
Consider what your name needs to say about your business. It is an important part of your business branding.
Should it simply be a case of ‘says what it does on the tin’ or communicate aspects of your brand identity, such as Innocent Drinks? Or perhaps geography is important if you’re focused on serving or representing a local area – Manchester Landscaping Ltd or Premium Lincolnshire Sausages Ltd, for instance?
Your web presence
Did you know that 50% of small business don’t have a website?
Most want one, but they either think they can’t afford one or don’t have the skills to put it together themselves. The latter may have been true a few years ago, but web building tools such as Wix and Squarespace mean absolute beginners can now get a fully e-commerce website up and running in no time.
You might not need to sell online though, perhaps a simple brochure site showcasing what you do would be enough – but, then again, wouldn’t it be nice to take bookings?
Start thinking about how much more business you could be doing by embracing an online market – then explore the available options to make it happen.
Funding
In an ideal world, you would have enough money to self-fund the launch of your new business. Read our ultimate guide to funding a new business.
But, for the majority, that’s not an option. Instead, you can ask friends or family if they may be willing to help or you can look into getting a bank loan or seek out an investor.
You should also look into what business grants are available: they’re hard to come by but brilliant if you manage to get one. If you can’t secure the funding you need to launch your master plan, start small and prove the business works – then go back to the bank or investors with more evidence. There’s information about bootstrapping your startup here.
Write a business plan
Business plans rock – really! Don’t view them as a chore that you have to do for the bank or an investor . Use this as a chance to prove to yourself that every aspect of your business plan and model works and makes sense. If it doesn’t, do you really want to go ahead? Check out our ultimate step-by-step guide to writing a business plan. And if you need a little extra help, download our business idea template to get started with.
Potential partners
Who could you benefit from working with? Forming a relationship with a business in another sector could help you tap into a whole new customer base.
For example, if you’re a florist you could find a wedding planner and supply flowers for them at a discounted price. You’ll get access to their customers and you can recommend people to them. It’s beneficial for both parties. Find someone to share half the workload and you’ll move twice as fast.
Find the best business bank account
You’ll need a business bank account, but don’t just go straight to the bank you’ve used as a consumer. Find one that understands your business and who you feel comfortable with. Most banks also offer incentives for new sign-ups.
Insurance
You are required by law to have employers’ liability insurance if you have any staff and public liability insurance if you expect to welcome customers or suppliers onto your premises.
You must also insure any vehicle you use.
If you sell products explore if you need product liability insurance. It can be expensive, but think if your business could survive should the unthinkable happen and your premises, equipment or stock was stolen or damaged.
Shop around for the best deal and ask your bank for any deals that may come as part of your account.
Technology
Audit your business plan to figure out what technology will enable you to do five things: save time, save money, stay in control, make more sales and deliver a better service to your customers. For example, a CRM system can help you market more effectively to your customers, whilst accounting software can help you save time and effort on your invoicing and expenses.
Steps of Market Research for Startups
Defining the purposes of the marketing research
Asking the right questions
Analyzing the competitors and potential market
Analyzing the potential audience
Conclusion
In the beginning, it may cost you hefty sums of money to get started. But if you learn how to do market research, you can save money and stay competitive in the business world. The steps below will help you take a closer look at your idea while remaining flexible to change.