In the initial stages of starting a new business, one of the steps you absolutely cannot afford to skip is market research. There are many facets of market research to consider, from the industry as a whole to the specific customers you’ll be targeting.
Market research is pivotal in determining your business’s chances at success. Without it, you’ll miss key pieces of information needed to shape and build your business appropriately.
Why is market research important for small businesses?
Market research involves gathering and analyzing data about the various elements that affect your business. Most importantly, you’ll want to conduct research on your target market—the customers you want to sell to—and the competitors—both large and small—that you’ll be selling against.
At a base level, market research gives you extra information with which you can more easily plan and market your business’s products or services. However, market research’s benefits go far beyond making the process simpler. It is a critical component of building out your business plan before launching.
- Be sure the market exists: One challenge some entrepreneurs encounter is a market that’s too small to run a viable business in. If you have a great product or service but there aren’t many people who need or want it, your business won’t be able to sustain itself long-term. Market research helps you identify a target market and determine how large it is, allowing you to forecast the future.
- Differentiate from the competition: If you’re trying to offer the same products or services as an established competitor, you might run into problems obtaining customers. Doing market research on your competition allows you to identify their strengths and weaknesses and to find a niche where you can offer something different or better.
- Ensure you’re seeking adequate funding: Market research gives you insight into the potential size of your market, the ways your products or services will need to stand out and even what measures competitors are taking to get the word out about their business. All of these things can help you determine what your startup costs will need to be to compete. This information will ensure that you’re seeking adequate startup funding and aren’t selling yourself short.
Tips for conducting startup market research
Small business owners might choose to hire a market research firm to produce a full research report. However, it’s completely possible to do market research on your own. Whether outsourcing the task is cost-prohibitive or you just want to pull some preliminary information, here are some tips.
- Define your niche: The first thing you need to do before you start digging into research is to define who, specifically, is in your market. Which demographics and psychographics are you trying to pull into your business? With that market in mind, you can start looking for numbers and more quantitative data.
- Seek out free and inexpensive resources: There are tons of free or inexpensive resources available to compile secondary market research. Check out the resources available at your local library, trade associations you’re a part of, the U.S. Census Bureau, your local chamber of commerce and others and see what information they can provide about your industry and target market.
- Scope out the competition: You can compile a lot of information about your competitors just by scouring the internet and visiting them in person. How many competitors do you have in your region? What are their prices like? What is their target market? What kind of marketing are they doing? Create a SWOT analysis that lists the Strengths, Weaknesses, Opportunities and Threats within your competitive landscape. This way, you can identify ways to set your company apart.
There are many facets of market research to consider, but even doing some preliminary research can help you determine whether your startup is a venture worth pursuing or how it might need to be changed to be scalable and successful. Tenet Financial Group can help supplement your market research by guiding you through funding opportunities for your startup. Contact us today to begin the conversation.