Researching and knowing the target market for your business is an important first step when starting a business. Unfortunately, it is a step that many businesses, not just the small and home based businesses, fail to do.
I’ve met many business owners who are at a loss as to why they are not earning as much as they expected, only to find that they are unclear as to who their real customers are. I’ve also worked with this company that was surprised when their perceived target audience did not want their product, only to find a very responsive audience in a market they never considered before.
So how do you research your market? Consider the following:
- Clearly identify who will use your service. Make a list of those who you think will need your service. The target market should be measurable, and reacheable. For example, if you are thinking of starting a computer repair business, identify how big the market in your area by checking demographic information and other data from your Chamber of Commerce or Bureau of Census’ American FactFinder database.
- Verify if they will need your service. It is important to find out what your target market really needs, and whether you can provide it to them. Determine the real features and benefits of your service. Then interview or casually ask people who belongs to your target market. Ask them why or why not they will use your service.
- Get a clear handle of what price customers would be willing to pay for your service. This can be tough for a new entrepreneur as there is always the risk that you will overprice yourself out of the market, or terribly underprice yourself. The internet has made it easy to investigate what your competitors are charging. I know others who even go to the extent of calling up competitors pretending to be potential customers in order to check their pricing. However you do it, it is important to have some pricing benchmarks to consider.
- Find out the sales potential of your business. Going back to the computer repair business, check out how customers in your market actually find and use your type of service. Do they use services such as Geeks on Call whereby the computer technician actually goes to the customer’s home or business? How many prefer to go to a shop and leave their computers for the technician to repair? These are the types of information you need to determine whether the business is growing or not.
- Learn from your competitors. Carefully study how your competitors in your area are handling their businesses – from the way they treat customers to the quality of their service. Even better if you can talk to a customer of your competitor to find out what they like and what they don’t like from their current service provider. You may be able to pick up ideas on how to ensure that your new business is a notch ahead compared to your competitors.
If you have any other ideas, please feel free to contact me.