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Market Research: The Foundation of Your Business
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Market Research: The Foundation of Your Business
At the Ohio Small Business Development Center we conduct numerous training sessions throughout the year to educate small business owners on various business topics including strategic planning, marketing, successful selling and product commercialization to just name a few. Yet of all these, and the ones I haven’t mentioned, undoubtedly the most important element of business development is the market research we cover in our basic business 101 overview. Here Michael Bowers, Regional Director of the Ohio Small Business Development Center at Columbus State Community College addresses the importance of market research in his Ideas to Deals*: The Innovation of Small Business and Entrepreneurship blog post, It’s about Demand… Enjoy.
I meet with a lot of people that are trying to build a business. Most have a cool idea for a product or service. ALL think that EVERYONE will need it. Why? Because it is their passion. Most people I interact with frequently know I am runner. I have all the technical clothing, purchase all the gear, and read a number of blogs to learn more about running. The moral is, I am pretty passionate about running and see the value in all things running. It stands to reason that if I decided to do business in something involved with running I would see the applicability to many potential customers. Is that demand real or is it more specific to me? This is the question you need to be able to answer. It is critical that when you are thinking about building a business you determine what you want out of the business and whether or not there are enough potential customers for your product or service to enable you to reach your financial goals.
Much of time when I teach business start-up classes I sense that people don't want to hear about market research but that is what will make you successful. It is all about market research. The more research you can do up front, the more risk you can take out of your business and the less money you will waste chasing non-existent customers. Understanding the demographics of your market and applying psychographic* research to those demographics will allow you to better target your message and get more customers. Like I always say, it is about knowing who is out there to buy your product and how are you going to get them to buy it. Market research will help you answer both questions.
OK, here‘s the lesson:
Step 1 ...Go to your local library. Regardless of whether you are in a small community or a big city your library will have resources to help with your research. If you are in a smaller community your local library may not have all the resources you need but they will have the trained staff to advise and guide you. Most metropolitan libraries have extensive on-line resources that you can access simply by having a library card (which you can also get on-line). Access the on-line resources and leverage local assistance to help you locate the information you need.
Step 2 ...Talk to your potential customers.I don't care what kind of a business you are building you should be researching the likes and dislikes of people that may buy you product. This will allow you to get off the ground faster once you launch and save you money on marketing because you will have a better understanding of your customer.
Step 2.1 ...Discount the opinions of friends and family.This is not really a step but more of an add-on to step two. If you ask your friends and family what they think I promise you they will like it and encourage you to go forward because they think that is what you want to hear and they want you to be happy. Not a good focus group for you.
Step 3 ...Apply what you are learning about your market. Research may lead you down a path you didn't anticipate. Trust what you are hearing and apply it to your strategy. As long as you are comfortable with the direction and it still fits within your mission you will be much better positioned to sell your product and make money earlier in the life cycle of your business.
Step 4 ...Never stop learning. Once you launch, it may become more difficult to do research but never stop doing it. Markets and tastes change and you need to stay on top of those trends. Use your industry trade associations, Chambers of Commerce, the national network of Small Business Development Centers* among other available resources to help you stay on the cutting edge.
I wanted to leave you with one more great resource to find information on building your business, CentralOhioEntrepreneurs.org*. This site will provide you with tremendous content and resources to build your business. While it is based in central Ohio much of the content is universal so wherever you are reading this you will benefit.
I know it is time consuming but every successful entrepreneur I know has told me that the secret to their success is research. Let me know your thoughts and any other resources you have found to be valuable.