Market Analysis & Research
Having a skill or being knowledgeable or experienced in an area that you feel can be turned into a business is no guarantee of success. No matter which way you look at it, there has to be demand; it’s straight forward – without a customer you simply have no one to sell your goods or services to and that means NO business.
The first stage in assessing your business proposition is analysis and research, research and a bit more research. You need to establish demand and understand the market you are operating in.
There is a mass of free information out there about virtually every business sector and this can be very generalist (i.e. trends, market size and value) or quite focused (with regard to specific areas of business). Knowing where to look is always useful and, apart from the plethora of online resources, it is extremely beneficial to utilise the business section of your local library, business support organisations (Chambers of Commerce for example) and individual trade bodies for additional sources of information on your specific area of interest.
Whether you are looking to exploit a niche market or offer something that exists but with a different twist, you still need to carry out a level of market research to establish a number of things with regard to your business proposition –
- Who are your customers?
Depending on what you are offering, this could be quite a broad profile with a mass market or something more specialised which could be aimed at a more specific target. Either way, you need to identify what your customer looks like and the more you understand them the more successful you will become.
- What do they think?
You need to know what customers think about your offer. You should gather opinions through speaking to potential customers about what you are bringing to the market.
- What will they pay?
You must understand the value people put on your products or services. Clearly you can charge a premium if you have something a little more unique but if the answer to the question “would you buy at this price?” is “no”, you probably need to reconsider.
- Who am I dealing with?
Will you trade business to business (B2B) or business to consumer (B2C)? The research you do and the questions you ask will take a different approach. The key thing is that you evaluate the answers fully, make an honest assessment and learn from what the information tells you.
*A small footnote here in respect to the research on customers. By all means ask family and friends BUT REMEMBER, there is a strong likelihood they will tell you what they think you want to hear rather than a completely frank assessment and it is highly unlikely they represent your target audience.
- Who are my competitors?
Never underestimate the power of having in-depth knowledge about the competitors in your market. Never make the mistake of thinking you don’t have any – there will always be someone. If nothing else, researching them can give you a good line of sight on the price or going rate for similar products or services in your market sector. A crowded and highly competitive market could make your venture extremely risky and you may need to rethink to have a chance of being viable.
- Are there any barriers to market entry?
A consideration often overlooked. It is crucial you identify anything which can stop or restrict you selling your goods or offering your services. This includes anything covered by legislation or regulatory (such as CE marking on certain types of goods, or licences/certificates to undertake certain types of activity such as food hygiene licensing for businesses like restaurants, cafes etc). Additionally, your customers may need you to be affiliated to (or a member of) a particular trade body so you can do business with them.
After asking yourself these questions and pulling together the information you have researched, you will be much better placed to move forward with your business plan. You will have a pretty good idea that the market exists for your idea to have commercial viability.
You may have to make adjustments and alterations to your approach and thinking but that is what research is supposed to do. It might be the case that the research has exposed serious short comings in what you are planning to do. But it’s better to find that out at this stage, when all you have spent is time, than later when the investment is much greater (both time and money).
In addition, it often happens that budding business owner’s work through several ideas before finding the right one to run with. What has been outlined prior to this point gives you a solid template for assessing each one as they come along – so, don’t give up!
Check there is a market and a need for your product or service before you start investing your money and time in your business
Research thoughts from Yorkshire Powerhouse
Now you’ve read our article on undertaking market research – have you any more questions?
Here at Yorkshire Powerhouse, we’re happy to help as much as possible – is there anything else we can do to help you, do you have any further questions or can we help introduce you to an expert – please let us know:
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