Our April 1stblog “Small Business Ideas Start with You,” introduced the Six Big Steps for Starting a New Small Business and discussed the first step – starting with an idea. This week I would like to expand on the second step – research.
The complexity of your business might help to indicate how much and how in depth your research will need to be, but all businesses should form at least a list of questions that they would like answered before investing energy, emotions and money into a new venture.
My main questions for clients are always:
- How do you know that people want to buy what your are selling?
- How do you know that those people will pay enough for it?
- Is there space for you amongst your competitors?
Discovering the answers to these questions will allow you to come to one of three conclusions:
- All of your assumptions were perfect – it might be time to go ahead and start the business as planned.
- There is a major flaw in the business concept –you should stop completely. This may feel negative at first, but there is value in redirecting your entrepreneurial energy to another project, rather than burning it all on a flawed concept.
- You learn something important about how you should position, price, or promote the product that will improve the execution of your plan. Use your research to adjust and make good decisions before the business starts.
A good research plan can involve two different types of research: primary and secondary.
- Primary research is made up of data collected by you. This could include a survey, a focus group, an interview, observation or experimentation.
- Secondary research is made up of data collected by others. This could include a directory, a database, a trade journal, census information, building permit reports, Canada Post maps, newspaper articles, or any other published work.
Here is a quick list of how I would progress through primary and secondary research.
- Start with an assumption – design the business concept in the way you think consumers will want you to offer your service. This will help you to form your research questions.
- Make a list of questions you would like to have answered about your customers’ behaviours and opinions regarding your product, your competitors services, strengths, weaknesses and performance, and your business model including pricing, key marketing messages, product design, and customer service processes.
- Search the available resources such as the internet, databases, directories, trade publications, magazines or newspapers for existing information that might answer some of your questions.
- Select some of the questions that you think would be most valuable to ask your consumers directly and pick one or two of the primary sources of data identified above. Work with a partner or consultant to verify that you are asking appropriate and complete questions in order to make the most of your data collection.
- Use secondary research again to explore the size and number of opportunities that may exist based on what you learn while talking to your customers. For example, if you discovered in the step above that women in Milton, who are part of families with household incomes over $200,000, are the most likely people to buy your product, you would want to use census data to find out how many people there are who fit this specific description.
Taking the time to conduct market research, to truly understand your customer and learning about the space in the market alongside your competitors is an essential, but sometimes overlooked step in making a strong decision to ente ra market and find success in a business idea.
The Small Business Consultants at the Halton Region Small Business Centre offer free one-on-one consultations to help entrepreneurs uncover potential research questions, develop a plan to collect primary data, and link you to existing secondary research sources. Call 905-825-6000 x 7900 to make your appointment. Check out our calendar of upcoming seminars, including Marketing: Research and Cost Effective Ideas.