Before you pour your life’s savings or a huge chunk of your time into your business, it is best to test first whether your business idea will work or not. Alas, market research is typically a tool for the deep-pocketed big businesses, and not for small businesses trying to stretch their dollars or struggling to find start-up capital.
Avoid spending large sums of money and get excellent feedback by following some low-cost tactics to research your business:
1. Let your fingers do the walking.
Get your yellow pages phone directory, and count how many businesses are offering the type of business you envision. Is this segment already too crowded? What do you think you can offer that will give your business a push above the competition. If you decide that your business needs to have a separate location from your home, consider the walk-in traffic. Map out your would-be competitors’ locations to see if your planned location can still attract some portion of the market.
Or when you look at the yellow pages, is no one is offering this type of product or service? Ask why — is it because there is no demand for this product or because you are simply so brilliant that no one ever thought of this business idea before? If there is no demand for the product, do you think you have the resources to create the demand? That will be one tough call.
2. Conduct an informal focus group.
You can also brainstorm and get feedback on your proposed business by conducting a home-made focused group. Focus groups are a marketing research tool typically conducted by market research agencies defined as a “carefully planned series of discussions designed to obtain perceptions on a defined area of interest in a permissive, non-threatening environment.” However, instead of outsourcing the process (and spending thousands of dollars), you can gather instead a small group of friends and acquaintances who meets the profile of your target customer (and this is important!). The key is to assess possible demand for the product or service, and you need to ask questions about their needs, problems, and what they will will address these.
3. Give potential customers a call.
If you are unable to bring the potential customer in your informal focus group, then call them. Speak directly to them, not just sending them a questionnaire through direct mail. You can better gauge the needs and wants — and how your products or services can address them — by asking them directly.
4. Ask on the Web.
Without giving too much information away (lest someone with more resources steal your idea), go to question and answer sites and ask away your questions. Verify if indeed the problems your product or service addresses actually exist. Check the reaction to your proposed solutions. Yahoo Answers is one excellent venue that you can tap — search first whether anyone has asked questions pertaining to the business and review the answers received. Even if a dozen or so questions have been asked, ask away your questions as well as you never know if you’ll get better responses.
5. Read trade publications, publications of associations and books specifically on the business.
Learn more about the business you are planning to start. Check if the business has associations, and whether they have researches and publications about the industry. Find out if there are newsletters or magazines published specifically for industry players and stakeholders. From these materials, you can learn the problems that arise and new niches that are proving to be popular.