Many aspiring entrepreneurs get so caught up in their initial “aha!” moment, they forget to assess if their idea is viable. Though sometimes a poorly researched idea still succeeds, more often it leads to business failure. To prevent this, we’re here to guide you on how to research your business idea, keeping you on track towards your goals.
Getting the idea and visualizing its potential is easy for some entrepreneurs, but conducting market research is often a challenge. You can have a billion dollar idea, but that means nothing if you can’t get to the market. It’s not always this way, but having some sort of an implementation plan can make the execution easier. Try to take a little time to research. Otherwise, you could waste valuable resources going in the wrong direction (or, no direction at all).
So, what is market research? It’s when you can evaluate your idea’s feasibility. You can pull this information from different places, such as: the internet, journals, primary sources, interviews, industry associations, government agencies, etc. The goal is to have a general understanding of the target customer or be willing to uncover it through the research process.
Your research plan should clearly state its objectives and provide the necessary information to move forward with your idea, make adjustments, or start from scratch. Compile a list of questions you need to answer through research and create a plan to answer them. What kind of samples can you get, questionnaires answered, and information gathered? This can depend on the product or service and research objectives. Research can be used to identify a potential market, evaluate competition, or test the effectiveness and positioning of your product or service. For example, allowing the target audience to interact with a tangible product prototype can be valuable, while exposure to descriptive copy or a draft website can help refine messaging for intangible products.
There are four (4) lenses that you want to be able to evaluate a business idea from. Look at it as if you are the company, customer, competitor, and collaborator. The four C’s. It’ll allow you to see the idea before moving forward with building it out.
- Company: What do YOU want to offer your customers? What products and services are within the frame of possibility? What problems do you want to solve? What promises do you want to share?
- Customer: What do your customers think about? What are they missing and what do they want? Where can they get it right now? Why do they usually buy? Why would they change? Is this something that they would even consider? How many are in the Consider three types of customers when it comes to your idea: buyers (those who make the purchasing decision or pay), influencers (the individuals, organizations, or groups that impact the purchasing decision), and end-users (the people or groups who will directly use your product or service).
- Competitor: How many competitors are in your market? How often will the product/services be competing against each other? Are there any overlaps? What do they think about your potential product/service? Would they position you as a vicious viper or a docile dog (there are in-betweens)?
- Collaborators: You want to think about who is going to be affected by the success of your business, not just those that are directly benefitting from it. What kind of trade associations, media outlets, and other companies will be serving the same customer base?
Another way to research the market is through a SWOT analysis, which observes the strengths, weaknesses, opportunities and threats facing your new venture. This tool helps entrepreneurs understand the impact of internal factors such as product development, cost, and bureaucracy as well as external factors such as politics, culture, and foreign exchange rates on their product or service. You’re trying to assess whether a product or service will succeed in the current market conditions.
Regardless of the approach you choose, make sure your research objectives are clearly defined and met. Keeping these objectives in mind while evaluating your idea will help identify any weaknesses that need to be addressed.
If you want to understand your competition, become their customer. Shop at their store, visit their website, subscribe to their mailing list, talk to their customers. Ask them what they like or dislike about competitor’s products or strive. If conducting formal research, include questions about where they currently purchase similar products or services and why. The goal is to find out what the competition is doing and identify areas where you can improve or do things differently. Your unique selling point will be the center of your marketing strategy and what sets you apart from your competitors.
If after evaluating your idea and analyzing the competition, you find that your idea has flaws, don’t abandon it just yet. Sometimes, it may just need to be revised or improved. While it can be disappointing to spend time and effort on research only to find that your idea needs adjustments, taking the time to address the weaknesses is crucial for future success. People that are launching new ventures don’t want to hear that their idea needs improvement. It is, after all, an idea- but, it’s also a fundamental part that makes us feel inspired. But, listening to feedback and making necessary changes is the key to success. If it’s the idea isn’t clicking, it might be time to consider a different idea.
Keep in mind that many ideas just require some refinement. Before you jump to a conclusion and start brainstorming again, take a moment to reflect if you can make your current idea work. After all, there was a reason you came up with this idea in the first place. Some ideas that appear to be failures after initial research end up becoming huge successes.
Ideas that seemed dead on arrival are intriguing, because maybe it was luck or maybe the entrepreneur had a clear understanding of the potential. People have launched ideas and businesses that looked impractical and panned out. Sometimes it’s gut, but being able to tolerate the risk of just trusting your gut.
In your market research, look at what your competitors are pricing their services at. See what customers are willing to pay. You can align your pricing with competitors, but you can also target markets with more exclusive pricing or lower tier pricing. Make sure to deliver value that justifies the price. Test different options to see what resonates with your market.
In terms of marketing, make sure you’re reaching your target audience. If you’re selling online, allocate a budget for marketing to drive traffic to your website. On the other hand, if you’re selling in-store, consider hiring experts with industry experience to help you reach your target market.
Finally, don’t be afraid to seek help during the process of bringing your idea to life. Utilize resources such as the Internet, local libraries, industry associations, trade shows, and new product development firms to gather information and make valuable connections. As Keller suggests, it’s about seeking knowledge from various sources and being willing to evolve your idea for success.