Market analysis is the foundation of your sales and financial plans. However, a good analysis of the market entails comprehensive market survey whose costs may be beyond the reach of small business owners.
If you do not have thousands of dollars needed to hire marketing research firms, here are some methods of market research home based businesses can do on your own for only the cost of your time:
Look at the advertising sections of local newspapers for similar businesses.
This is particularly relevant if you’ve chosen a product or service that is advertised in newspapers or magazines. Check issues a year old or two to see if the firms are still operating. Repeat ads are a good indication that sales are being made, and there is indeed a demand for the product.
Get a feel of the number of similar businesses.
Go online and search for similar businesses in your area. Go to the search engines and search for your main keyword — and try to evaluate the businesses that appear in the top 10. Is the industry dominated by big boys? What are the common elements of the websites in the top 10?
Check how many similar businesses have websites. Look at Craigslist and check how many similar businesses in your area are advertising on the site.
Also check the Yellow Pages to see how many businesses similar to yours already exists. Call them to find out how long they have been in business. While Yellow Pages have shrunk significantly in recent years, it can still be a valuable resource for those doing market research on the cheap.
Check market research and demographic resources.
Investigate such resources at a public or college library as future trend books, market studies, census data, trade publications, and so forth. Demographic characteristics of your prospective customers, such as the number of people in your area and their age, sex, and income level are available in the Bureau of Census reports. You can also investigate the industry using standard data sources such as Moody’s and Standard and Poor’s publications.
Talk to friends, relatives, and strangers for their opinions about your business concept.
To the extent possible, survey prospective customers in face-to-face conversations, telephone interviews or mail surveys. Ask them directly – would they buy your product or service, how frequently, and what price would they be willing to pay? Ask them what they like and what they don’t like about your competition. Carefully listen for any indication of unique features that, if offered, will provide an advantage over competition.
Shop the marketplace and get some feel about business conditions.
Talk to other business owners in a similar venture (in a non-competing area) to get their feedback about how they see the potential growth and expectations for their business in future years. Do the businesses appear profitable? Are customers waiting in line and paying high prices? A strong demand means there’s probably another room for a supplier. The firsthand information that they can provide could be very useful.
Online, try to find forums or websites dedicated specifically to the industry. Get a sense of how other business owners think about the industry, and the challenges they are facing.
Get the opinion of suppliers.
To the extent possible, meet with suppliers of materials, which are another source of excellent information. They know what’s selling and what’s not and generally have a good feel for market trends.
Talk to other business owners.
Attend meetings and network with home-based business associations and Chambers of Commerce chapters to get some feedback about the predicted growth of businesses like yours in the area. Your chamber of commerce may also have data about your market, including consumer demographics and the number of competitors in a geographical area. Trade associations are excellent places to locate valuable marketing information.
Test advertise by placing a small advertisement in the local newspaper to solicit interest in your business idea. Or online, use sites such as Craigslist. Evaluate the positive and negative feedback that you get, if any.
A word of warning, though: A positive reaction to market research doesn’t assure success. People sometimes say one thing and then act differently. But doing some research is still better than acting on a gut feeling. The more you know about your business and your market, the better your chances at succeeding.
Recommended Books on Market Research:
- Marketing Research Kit For Dummies
- If You Build It Will They Come: Three Steps to Test and Validate Any Market Opportunity
- The Market Research Toolbox: A Concise Guide for Beginners
- Marketing Metrics: The Definitive Guide to Measuring Marketing Performance (2nd Edition)
- The Entrepreneur’s Guide to Market Research
- Affordable Market Research for Your Small Business
- How to Make Money Doing Data Entry
- Starting an Information Broker Business
- 5 Examples of Data Visualization Useful for Any Company
- 13 Marketing Mistakes to Avoid