So, you have an idea for a new product that you’re sure will be a winner with consumers everywhere. Or maybe you have an idea for a fabulous service that isn’t currently being offered by anyone else. The temptation to jump right into business is strong – but you really should look before you leap.
Before you hang out your “open for business” shingle, you must first determine if there really is a strong market for what you have to offer. You’ll also want to take the time to fine tune your product for optimum success. To do this effectively, you’ll want to take time to conduct market research. Conducting market research is gathering the information you need to make smart decisions about your business.
Many new small business owners neglect this crucial step because they are excited and eager to get started. And while being excited is a good thing, smart business practices will help you be more successful in the long term. Many new entrepreneurs are reluctant to do market research – after all, nobody likes to hear negative feedback about their great idea.
There are plenty of agencies out there that will be glad to conduct paid market research for you…at a cost. For most small business owners, hiring an agency to do market research simply isn’t in the budget, as it can run you thousands and thousands of dollars.
Good news. You can do your own market research.
Doing your own market research isn’t difficult, although it can be time consuming. Odds are, you’ve done informal market research already, and you just didn’t realize it. Every time you talk to a customer, you’re conducting informal research. When you talk business with a supplier or industry professional, you’re also conducting informal research.
I’ve gathered a few of my best tips for doing your own market research without breaking the bank.
Research Tip #1: Use your library.
Use your local library and any nearby university libraries. University libraries tend to have more trade publications and business specific materials at their disposal. Don’t know where to get started? Start by becoming familiar with the business reference section – you’ll be spending most of your time there. Ask reference room librarians for the best resources targeted at your specific business niche. Most librarians are more than happy to help—you just have to ask.
Research Tip #2: Go online.
You can conduct much of your market research without ever getting up from your chair. Thanks to the World Wide Web, you have access to a wealth of business information. You can view business databases online, or visit websites dedicated to market research alone. You can find everything from business news to industry trends and company-specific business information.
This information can be used to identify markets, develop mailing lists and research your competition. Some market research websites are completely free to use, and others charge a modest fee. Either way, you’re still coming out cheaper than by hiring an agency to do the work for you.
Research Tip #3: Put trade associations and memberships to work.
Do you belong to any trade associations? Industry associations, clubs, and groups can prove to be a wealth of knowledge. Make your membership work for you. Many of these groups offer free publications that may assist you in your market research efforts. These publications may include market statistics, lists of members (perhaps your competition), and books and reference materials related to your unique area of business. Talking to others in the same business area can be one of the best ways to gather informal business data.
Research Tip #4: Small Business Centers
Many cities now have small business centers that exist for one purpose: to help small business owners succeed. Check and see if your community or nearby city has a small business center you could visit. These centers employ experts in small business development that offer free coaching and training. Another benefit – small business centers usually have a lending library.
Research Tip #5: Talk to your customers or potential customers.
Talking to the people you do business with is the most direct way of conducting research. This type of market research is usually inexpensive, but it can be the most time consuming. A few ways you could gather information from your customers or clients:
- Conduct interviews, either by phone or face-to-face.
- Try surveys and questionnaires – popular because they can be done in larger volumes indirectly, online or by mail.
- Use focus groups. Gather a sample potential clients or customers and record their feedback.
Focus groups can offer a good amount of feedback, but proceed with caution. Many marketing experts have determined that focus group members often tell you what they think you want to hear, or a “puffed up” version of the truth. You’ll want to use other methods such as interviews and surveys in conjunction with your focus groups to get a clear and balanced perspective.
And last but not least…
Research Tip #6: Spy on the competition.
Most definitely, you’ll want to assess the strengths and weaknesses of your competitors. First, if you haven’t done so already, you must determine who your competitors are. After that’s done, you need to take a look at how they do business, what their price points are, and how they communicate with customers. What are the key factors in their success, and how can you improve upon that?
If your competition has an online presence, you should begin by carefully examining their website, page by page. Don’t look at it only wearing your business owner hat. Pretend you’re the customer. You may even want to make an actual purchase from your competition (yes, you read that correctly) to see how easy they make it to buy from them, and what follow-up methods they use with their customers.
If you want to have a competitive edge in the market, you have to know who you’re going up against.
What Do You Do With Your Research Findings?
After you’ve gathered all this information, it’s time to process what you’ve learned. Look for patterns, trends, and potential holes in what is and isn’t being offered in the market. Write down your findings. Often, keeping a chart to track your competition is helpful.
Take your feedback and listen to the customer’s perspective. Identify products that are currently not available in the marketplace, but are desired. Add, subtract, and tweak your product or service until it meets customer desires, to the best of your ability. The final result? Happy customers who give repeat business and tell all their friends about you.