Proper research is one of the most powerful tools that you, as an entrepreneur, have at your disposal. It can spell the difference between creating a business which has real potential and one which is destined to go nowhere.
Research is much more than just asking your friends and family whether they would buy one of your products. Whatever your product or service, your research should extend to an in-depth analysis of your potential market, your competitors, trends within the industry, forecasts of its growth and likely direction.
Essentially the basic question you are trying to answer is: are there enough people out there who will want to buy my product or service, at the price I want to sell it to them, to make my business viable? The good news is that there are many resources available to help you, much of it free. Here are the top ten ways to research your business idea.
1. Go the library
Visit the Business and Intellectual Property Centre (BIPC) at the British Library. It has an enormous amount of resources available to help entrepreneurs. This includes market research reports which give details on the major players in a market, the size of their market share, the sector’s potential for growth and so on.
The Business and IP Centre also runs free events and workshops for start-ups. City Business Library is another useful place to visit, offering free information and free workshops for entrepreneurs and start-ups.
2. Find out what customers are looking for online
Google’s free search keyword tool (sign up to Google Ads Manager and then click on reporting and tools) the keyword tool will tell you how many people have used particular search terms to find things on the internet in the past month.
3. Research your competitors
Competitor analysis is critical. Research your competitors and then scrutinise their websites, order their products and use their services. Look at how and where they sell their products and services and how much they charge.
Search online for reviews of them and their products. Study their accounts – if they are a private company then search for them on Companies House or Duedil. If they are a PLC, then their accounts should be readily available online. You are trying to find out what they do well, so you can do the same or better, and also what they do badly so that you can do better.
4. Ask potential customers for their views
Go to where you think your target customers are most likely to be found – in the gym for example, if you are creating a health drink, or in the mother and toddlers playgroup, if you are creating a baby product – and then chat to them.
The research you gain won’t be quantitative, but it will be qualitative, and it will give you enough to either support or demolish your gut feeling. Then at that point, you can start to get some quantitative research, by asking 100 people, or 200 people whether they would buy your product, and crucially how much they would buy it for. Maybe even create an MVP to test the market’s appetite for your product or service.
5. Find your niche
Look at what other products or services are currently being sold in the market you wish to enter and where your product or service might fit in. Are you aiming to be the cheapest, or the most expensive, or somewhere in between? Who will be above and below you in terms of price and quality?
Then draw up a mental picture of your market segment, who your target customer is, and therefore how you can make your product most appealing to them. Think about your target customer demographics, what kind of job they will be doing, how often they will be buying your product and why.
6. Be inventive
When three friends from university wanted to find out want people thought of their pulped fruit drink, they set up a stand at a local jazz music festival and put two bins outside.
Customers were asked to vote on whether the budding entrepreneurs should give up their jobs to make their drinks full time by throwing their empty bottles into either a bin marked yes, or a bin marked no. By the end of the weekend, the ‘Yes’ bin was overflowing – and Innocent Smoothies was born.
7. Do it yourself
Never employ an agency to do your market research for you, unless it is the most basic kind such as counting footfall. It is going to be hard enough to get this thing right without putting hurdles in your way, and if you are trying to interpret what is going on through the conduit of someone else’s experiences and impressions, you can easily end up with a confusing and murky picture. You have to be out there yourself listening and talking and absorbing the mood and acting accordingly.