Perform Market Research

April 6th, 2010 by | Print

 

This is post 2 of 10 in a series discussing the essential steps for launching a successful, sustainable solopreneur business. If you missed the disclaimer post, it is important you take a minute to read it before going forward. Here’s the link to the post.


Plus, since the series is in sequential order, make sure you’ve read, “Define Your UVP and Prime Prospects” before going forward. Research before defining your UVP and prime prospects is a waste of time.


Performing market research is an often skipped or skimped step in the start-up process. According to the feedback I get, many fear it, can’t figure it out or simply believe their idea is so strong that it’s better to get started selling.


Market research is your opportunity to justify your UVP and prime prospect choices. It matures your business ideas from “I think …” to “I know …” before you gamble with your time and money.


How much research is necessary?
The amount of research necessary for starting a successful business is directly proportional to the complexity of your business idea and the amount of funds needed to get it off the ground.


For example, if you plan to sell lemonade from a stand in front of your house using less than .00005% of your net worth, you can get away with researching some recipes and maybe a little something about your neighborhood. If, however, you are developing a proprietary widget for the military requiring a patent, a security clearance and a few hundred thousand dollars from your own bank account and investors, plan on putting in some time and / or money into research.


Cutting your research short before launch leaves you at risk to figure it out as you grow. In the scenario of the lemonade stand, you can probably gamble getting started right away. However, in the latter, more complex company, shortcutting your research may well lead to underfunding and delays, potential killing your business before you get the first sale.


I bet you’ve heard that most companies fail due to a lack of funding. I disagree. Lack of funding is often not a root cause, but a symptom of a lack of focus, research and planning.


Conversely, you can over do it, too. You will never have enough data to guarantee 100% that your business will be a success. Lacking the ability to make quick, decisive choices can kill your business, too. Some of your learning will come from opening for business and getting to know your market firsthand.


What should I research?
Although we aren’t to the “Create a Business Plan” post in this series, I recommend letting your plan be your guide for determining the depth of your research. I recommend you only research your UVP and prime prospect choices to start. You may find through this initial research that you choose to change them. You don’t want to waste time researching other aspects about the market and your business until you have objective evidence that you made strong choices regarding your UVP and prime prospects.


Here are some of the basics questions:

1. Is my UVP truly unique or are there other businesses that offer the same service?

2. Who are my competitors? What are their UVPs? What products and services do they offer … and at what prices? What appears to be their weaknesses?

3. What is the population size of my prime prospects? Is that population shrinking, staying the same size or growing?

4. What are the age range, location, gender, discretionary income, wants, needs, and any other specific characteristics of my prime prospects as it relates to my UVP?

5. What products and / or services can I offer that my prime prospects will benefit from and will generate a profit for me?

6. Who are the vendors that can provide me with products and services I need to support my prime prospects? What do they charge for these items?

7. Who are potential mentors for me?

8. Who are potential co-marketing and / or joint venture partners that I can connect with to keep my marketing expenses down while increasing my credibility and visibility within my prime prospect population?


Again, depending on the complexity of your business, you would be amazed at how quickly you can find answers to these questions. Remember though, you aren’t just looking for the data that supports your UVP and prime prospect definitions, you want to challenge your choices, too.


Where can I go to find the answers?
Your sources for information will vary based upon your market and UVP, however, following is a list of the most common sources:

  • Your personal experience within an industry
  • Industry experts
  • Google searches
  • Polls and Surveys
  • Interview other entrepreneurs
  • Research firms
  • The library
  • US Bureau of Labor Statistics
  • FedStats.gov
  • Dun & Bradstreet
  • Hoover’s
  • MarketResearch.com
  • The Small Business Association (SBA)
  • Public companies Investor Relations statements (often 10Q statements)
  • City Hall and the Chamber of Commerce (for local data)
  • Online business forums

 

Research is your opportunity to identify and either eliminate or navigate around obstacles that will block your path to reaching your goals. Due to the dynamics of all markets (changes in customer populations, income, needs, new competitors entering the market, etc…), you won’t be able to identify all obstacles before starting your business, but you can greatly increase your reaction time to not only bypass them, but turn them into opportunities.


As we get into the next post, “Create a Business Plan”, you will have more research to perform as detailed within your plan.


Still have questions regarding research? Leave a comment below or drop me a line at thesologuide@gmail.com.


All the Best,


Doug Dolan
The Solopreneur’s Guide

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3 Responses to “Perform Market Research”

  1. cna training Says:

    Wow this is a great resource.. I’m enjoying it.. good article

  2. Natural stress relief Says:

    This is one of the most useful pieces I’ve read on how to do market research. Thank you for providing the sources because I’ve been stumped by how to go about this task without spending tons of money.

  3. Douglas Dolan Says:

    Great. Thanks for the feedback. I’m happy you’ve found it helpful. If you find that you get stuck following some of my advice, drop me a line.

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