When business ideas come to our minds, we often feel as though we have struck gold in its purest form. We feel a rush of adrenaline everytime we reflect on them, which makes us sometimes want to risk it all especially when the thoughts of the expected yield of such businesses come to mind. Follow your heart, trust your instincts, just do it -but not before you look at the facts. This is where market research comes in.
While some entrepreneurs neglect market research because they do not want any negative feedback about their “perfect” idea, others feel market research is an expensive and cash-consuming way to go about starting a business.
Here’s the thing - Market research will save you a lot of money in the long run because you’ll be ensuring that you invest in the right business. Things as little as a business name could have a serious impact in your business in the long run.
So what is this Market research we’ve been stressing over?
Well, it is a process of learning everything possible about a business’ customers, competitors and the industry. The major objectives of the process are determining what products or services to offer, which customers are most likely to buy them, where to sell them and how to price and promote them. The process comprises of steps that help to achieve these objectives.
Before you resolve not to do market research because you think yours is a small business and will not be needing the research process, you should know that market research is as important for small businesses as is for the large ones. At a time in the past, all small business owners needed to worry about was other small businesses in the same line of service as them. Now there exist serious competition for local and international companies and even the e-commerce industry - Many of which could comfortably sell for less. As a small business, there are cost effective ways market research can be done.
Now how do we conduct market research? What are the methods?. First, it is important that you establish clear goals for the research activity you intend to undertake. What do you want to find out and why? Once this is done, you can then go ahead to select a method for collecting research data
There are two methods of collecting data -
Primary and secondary research
This is the information you get directly from the source - the (potential) customer. Collecting primary research can include questionnaires, surveys, focus groups and interviews. Primary research can be done by hiring a few individuals to collect data (online or offline) from their contacts and other potential clients scattered across the locations within which the business is expected to offer its services.
Small business entrepreneurs could single-handedly collect data from people within their network - work, community, religious group, friends of friends and strangers whose profile fit the target customer description. Notice that friends and family members are not included. This is because they are often not the best survey subjects. Feedback from real customers is what we expect to get and we do not want sentiments getting in the way of the research.
In secondary research, entrepreneurs work with existing data to get insights on what actions to take. Resources like company records,statistical data and industry materials could be used to provide answers to questions that may not be appropriate to ask in primary research -questions like the ages and income of potential clients. While secondary research may not be able to give you the full picture, it is a great place to start as it is relatively cheap. A lot of information exists on the internet and they can be used to help entrepreneurs make better decisions. Secondary research, as well as the internet (social media) may not always give accurate information, hence the need to combine both research methods.