Market research is the process of educating yourself about your business. It includes everything you do to prove or disprove your business case.
When you set out to explore a business idea, you’ll be employing two types of research: primary and secondary. Secondary research usually gets done first, before narrowing the focus to primary.
Secondary market research is the information you’ll obtain from other sources, such as Statistics Canada or the US Bureau of Census, reports, articles in trade or consumer magazines, and the Internet.
Primary market research is the information you gather yourself by talking with customers, competitors, and suppliers. Typical methods for conducting primary research are observation, personal interviews, focus groups, formal surveys, mail surveys, and telephone surveys.
Most business plans that fall short of the mark do so because of ineffective market research. There are several reasons for this:
Market research isn’t easy.
For most people, it’s unfamiliar, daunting work.
The goals of market research are not clear to those who have not previously done it.
To be effective at researching, you have to speak with real people who may not agree with you and who will probably challenge your ideas.
The researching process is a sea of change from start to finish, and change can be disruptive.
You need to multitask, keeping your complete business plan in mind. For example, you might be searching for information on one topic and discover a number of unrelated but important items about your business; you need to be able to manage the massive amounts of information efficiently.
Most people are already busy enough without the additional stress that research adds to the mix.
At the end of it all, the business idea might be found to be unworkable, which can seem like a failure.
Research is a critical part of starting or growing any business. One of its greatest benefits is that it enables you to build confidence. As you research your business idea, your confidence will either increase or decrease. As you ask questions and listen to the answers, you will become very knowledgeable about your business. If your research confirms that your business idea is viable, you’ll eventually reach a stage where you are confident enough to start your business or implement your plan. If the opposite occurs and you decide not to proceed with your plan, the market research has done its job, which is to save your energy and investment for a different venture.
Challenging as it is, research is critical to the health of any business. In fact, successful business owners are continually researching. It’s a process that goes on for the life of the business.
Dan Boudreau owns RiskBuster Practical Business Planning Oasis and Blog at riskbuster.com.