Starting a business is thrilling, from the initial seed of an idea to the Eureka moment that sparks your plan, it is easy to get swept up in your own ideas and lose sight of what is important – is there a market for your business and if so, how do you tap into it?
Market research is great for any business, after all who doesn’t think their own ideas are the best? Sometimes we need a reality check to keep us grounded and focused. For startups, it is not just a good idea, but essential before you even start to spend all your imaginary profits in your head, to carry out initial market research. The following is a short guide to the key pieces we would suggest you look into to help your business not only survive, but thrive.
Know your market
When it comes to your potential market, size most definitely matters. You have the idea and the product, but you need a pool of customers to sell to in order to make it a viable business. Essential to your business plan and securing investment if required, you need to show that there is an initial market and appetite so that your business has longevity and scalability to fit your chosen sector. If the market is smaller, does your offering need to be more expensive to make it work? Will anyone pay that higher cost? Equally, if your market is large can you drop the price? Will that effect the perception of your quality? These are all good questions to ask.
Knowing your competitors is also key to your market research. This will help you see if there is room for your offering – is your market saturated, mature, emerging? You can also see what makes you different and uncover your Unique Selling Point (USP) which will form the majority of your marketing messaging.
Having a great product or service is good, but if you can’t access your market then it makes no difference. In order to anticipate the viability of your business, you need to research your target audience, the segment they fall into, where to find them and how you can market to them. Considering their age, gender, location, career, hobbies, marital status, religion and even political affiliations, as well as so much more can help build a clear picture and solid case that your business has a market. Then think how you will communicate with them – younger audiences might respond better to social media whilst pensioners might prefer traditional printed media such as specialist magazines or direct mail through their doors. Whatever route, full costs should be explored to ensure your market can be reached at a price that doesn’t outweigh your profits.
Finally, you need to establish if your market have the money to spend on what you are offering. Is it luxury to a small audience or an essential to the mass market? Think who will be buying it, why would they part with their cash for your offering over a competitor and what their lifetime value to you is, be that repeat custom or word of mouth.
Whilst this is just the tip of the market research iceberg, it provides an initial starting points to test the legitimacy of your business. This should be research though and never guess work, which is why it can pay to utilise the many online resources as well as agencies and companies available to help in your research. Whilst they can often cost you money upfront, the long-term benefit of solid market research could save you a lot of money in the long run.