One area of a business plan that startups often struggle with is the market research portion. With a seemingly endless amount of information that can be gathered and interpreted, it can feel like an overwhelming task.
Despite the fact that this section can seem a bit arduous, it’s worth your time and effort to get this section nailed down.
So where do you begin?
Why Market Research Matters
Market research for your startup is all about providing answers. You want to know what your business needs to do to be successful, and how your business can compete. Strong market research can help provide insight into the gaps you may need to fill or give you data you can use to forecast the potential of your business idea.
Understanding the market landscape can ultimately mean the difference between whether your startup flourishes or fails.
Knowing who your customers are and what they want, and being able to show how that ties into your business plan, shows the investors that your business isn’t a flash in the pan.
If you plan to make a pitch to investors to secure funding, they’ll expect to see that you have completed your due diligence. And even if you aren’t looking for investors, knowing how to effectively do market research will still help your business. Market research can provide indispensable information that can help you strategize on how to launch your business or better run your company.
The Tie Between Market Research and Your Marketing
Want to understand what drives customers to buy certain products or services?
If the answer is yes (and it should be!), then you need market research.
The purpose of your research is to understand the different behaviors and factors that influence consumers to make a purchasing decision. And that’s exactly why market research can be a critical component of creating a robust marketing strategy.
Market research helps you tie the “why” behind the purchasing decision to your marketing activities. Seeing as businesses operate to make a profit, that’s essential knowledge for your success and profitability.
To get started, look at the comparable businesses within your industry. Seek out businesses that are a similar size, and similar operating age, with a similar number of people running the company. Then, consider their pricing strategy, marketing strategy, and customer satisfaction rates.
By identifying what needs the market is trying to fill, then looking at your competitors and how they’re meeting the needs of the consumer, your market research may uncover some unexpected insight that can help you craft an even stronger marketing strategy and position your business to be the most competitive.
Market Research is Ongoing
Think of market research as a dry run for your idea. You may think you already know exactly how your business will perform in the market, but you need to put it to the test against the competition.
When embarking on market research for your startup, it’s always best to start with an open mind. Through your research, you may find that your idea is or isn’t going to be as effective in the real world as you initially thought. But that’s exactly why you do it — so you can see what’s realistic and adjust your plans accordingly.
Once you’ve completed your market research for your business plan, you may think you’re done.
Guess what? You’re not done yet!
Market research is something that should be ongoing. Successful businesses that have been operating for the long term know that keeping on top of what’s happening in the market is an important part of directing their overall strategy.
The internet is a treasure trove of information, so it’s the first place you should start your market research. Some of my favorite resources include:
- S. Census Bureau: A good source for market info, such as size and demographics.
- Bureau of Labor Statistics: Another good source of trustworthy info.
- CensusScope: Get census results to back up your demographics.
- gov: Free and accurate government data.
- PR Newswire: A publicly available source of industry-specific information.
Once you’ve explored what’s available online, consider physical stops in your local city. Your local chamber of commerce can be an excellent resource for getting geographically specific information that can be used in your business plan.
Also, if you have a local university or business school close by, these can be great places to tap into for industry statistics and more local data that you may have to purchase if you find it online.
Don’t forget to visit local businesses and community members who are part of your potential customer base to get some organic market data. Directly asking people who might use your product or service for their feedback can provide the insight you may not find elsewhere.
No matter where you decide to start the process, market research for your startup is a step that shouldn’t be skipped when creating a business plan.
Are you working on market research for your business plan and need some guidance from an expert who’s been there, done that?
Check out my new book How to Write an Exceptional Business Plan HERE.