Do your market research and do it well before you start your business. This is a very important step. Most people have seen a future business owner passing out questionnaires or samples trying to get some feedback about their potential business ideas. Often they will pay to have demos or informational pamphlets made explaining the business or products. These are sent out to potential customers, critics, and clients to see what the response is. However, you decide to go about testing your market it is important that you do to discover the pros and cons of your particular service and or product.
Market research is not easy. You have to strike out and approach people that you have never met and get their feedback. As uncomfortable as it may be, there is no better way to learn about your chosen field. Without this information, you are just acting on a hunch about the potential of your business. Clear cut and definitive market research is one of the only ways to really have a good idea if there is a need for your business or service. Many potential business owners forget this most basic yet essential step. They dive head first into their venture without this information, which is a really bad idea. It has been said that only a quarter of entrepreneurs conduct market research. Perhaps this is one of the reasons that so many businesses don’t make it.
There are ways to make market research as efficient and cost effective as possible. Experts suggest that you conduct your research in stages.
Stage 1: SWOT Analysis
This will show you your business strengths, weaknesses, opportunities and threats.
If this analysis is favorable in showing that you have enough positive reasons to create your business then you can continue on to the next stages of primary and secondary research.
Stage 2: Primary Research
You have to pound the pavement in this stage. You must go out and interact with the public in order to know the real response about your product or service from you potential clients, customer, and competition.
There are firms that will conduct market research for you but doing this yourself can be helpful. This can also be a valuable time to network and initiate some of the relationships needed to establish your business.
- Make as many contacts in your field as possible. These contacts will be able to give you a lot of helpful insider tips.
- Talk to possible distributors and find out about the market climate and the potential holes in the industry that they feel exist. Understanding these holes can help you realize the best way to offer your service or product.
- Get feedback from businesses that are close in nature to yours. They might also be able to give you some good tips and information.
- Reach out to business that carry product or offer services similar to yours. An example of a similar field would be if you were making violins, you could talk to someone in the field of making guitars. They might be able to give some guidance as well as some client leads.
- Searching out future clients is one of the most integral parts of conducting primary research. You must be aggressive in reaching out to them. Talk to as many future clients as possible to figure out who will be the primary target for your services or products and what they will need from them.
Station yourself in a public venue to try to find and speak to as many potential clients as possible to see what there purchases are and why they are purchasing that item. The ultimate goal is to get them to demo your product or service. It is critical that you get out into the public and get as many opinions as possible. Ask direct and honest questions to get the true opinion about your product. Ask if they would purchase your product or service and why or why not. Find out what price they would be willing to pay for your product or service. Criticism should be sought after so that you can find a strategy to improve your product or service, or to decide if it is even worth the investment that you are about to make.
Focus groups and questionnaires are very powerful resources. Focus groups are a gathering of potential clients that will give you objective opinions on your product or services. They will enlighten you to the positives and negatives and give you ideas on how to make your product of service better.
It is important to remain unbiased when conducting a focus group. It might be best to hire a professional to run the focus group for you. They will be knowledgeable on the questions that need to be asked and how to field the responses in a constructive manner. The bigger the focus group the better. A good guideline to follow is if you are hoping for a market of 100 people you should conduct a focus that consists of 400 or 500 people. This allows for the best statistical representation of your potential market.
With the technology that is available today, it is easy to use the internet to conduct your research with the same results. You can do online polling or start an informational website that has a complete description of your product or service and invite visitors to leave comments. Draw traffic to your website by sponsoring ads or links on similar websites. It might even be worth it to put click ads on your own site like Google Adsense or Microsoft adCenter. Ask family, friends and peers to fill out questionnaires but encourage them to answer truthfully.
Stage 3: Secondary Research
This is research that is retrieved from informational resources like magazines and trade journals. You can get information from published papers or statistical research. Some good types or data are industry forecasts, population statistics, securities analysis, and research reports. These types of data will assist you in understanding the characteristics of the market, the current climate, the trends and areas of growth and the potential pitfalls and slumps that could exist for your industry.