This post is part of a series called “Starting a Small Business,” where we look at the steps to start a business and make it big.
So now you have a business idea and a business plan. What do you do next if you want to start a small business? You have to make sure the idea will actually work before you start spending money to bring the business to life.
Marketing is not just figuring out ways to convince consumers to buy your product or service, it also includes checking to see if your business is feasible. If the only person willing to pay for your product is your Mom, you will not be a successful entrepreneur. If everyone in town would really buy it, you might be on to something. Remember, we can't all be as popular as the “Soup Nazi” on Seinfeld, where people would line up for blocks to have our soup.
Market research can be as simple as a free online survey and web search or as complicated as a multi-million dollar research project run by a professional company like Gallop. The goal of market research is to find out if people really want what you have to offer and what they are actually willing to pay for it.
Each product and service is different, so I am not going to do a step by step “how to” guide for market research. Rather, I am going to give you a few tips on what to look for when doing your research.
- Demand – If you are targeting a product to a specific population, make sure there are enough people in that population to make it worth your time. For example, a product targeting the Jewish community in Dubai would be a massive failure, as there are no Jews in Dubai. If you were to target the Jewish community in New York City, you would be much more successful. (I used that example because I was just in Israel, insert any religion/race/age/gender/socioeconomic group you wish for other examples). And don't just ask friends and family, find a random sample of people who will give you an honest answer.
- Price – You need to have a price point where consumers will buy. Also, remember to find a price the average person would be willing to pay. For example, $10 is reasonable for a music CD, $50 is not. However, selling accounting services for $10 would be extremely under-priced. If you are entering a market that already exists, check out competitors to get a good idea of what you should charge.
- Placement – Where are your consumers and where are they likely to be searching for what you have to offer? Should you sell online, in a brick and mortar store, open your own store, etc.
That is not an exhaustive list my any means, but it should give you a start. If your research results are good, go ahead and try to run a test market. Make a limited quantity or commit a select length of time to try it out. It is worth spending the time and money on a small batch before you throw your life savings into an idea.
If you have done any market research before, please share your ideas, successes, and failures with the other readers in the comments.
Please read all of the posts in the series: