It all begins with a business idea for a startup. An idea, like a seed, can hold such incredible potential. Some seeds bloom and surpass our wildest dreams and some seeds produce nothing no matter how much you toil and provide for them. How do you know which kind of seed is your business idea? You can’t know for sure, because there are no guarantees in life, but if you do the market research for your startup idea properly you can get a pretty good idea.
Market research is not a crystal ball but it can help you “clean the window” so you know what you are looking at.
So what steps do you need to take?
Step 1 – SWOT Analysis
Write down your business idea in simple language. Then, answer the following questions:
- What are the strengths of your proposed startup?
- What are the weaknesses?
- Where/what are the opportunities?
- Where/what are the threats?
This process does not need to take a long time at this point and it is a solid place to begin before delving a little deeper.
Related: The role of the SWOT analysis when planning a business
Step 2 – Deeper Market Research Questions
If you are still confident that your idea has merit, take your SWOT analysis to the next level by answering these questions:
- Who do I think will want my product or service? What is my target market?
- Why do I think they will buy/need it? What problem does it solve for your target market?
- Where and how will I sell it? In stores, online, wholesale…
- How do I plan to market it? Digital marketing, social media marketing, direct mail, appstore…
- What do I think I have to charge to make a profit?
Related: How it’s done: Testing Your Business Idea
Step 3 – Informal Market Research
Now that you have answered those questions, you can take your more fully formed business idea out into the real world and test it. Create a survey and ask people to take it. Keep it short and to the point. Most of the time there is no reason to offer an incentive if your survey takes someone less than 5-10 minutes.
Step 4 – Formal Market Research
Make sure to collect information on the following from Google research, the Census Bureau, your local Chamber of Commerce, and industry association:
- Industry stats and trends
- Demographics on your target market
- Trends on your competition
Related: The market analysis of a business plan
The growth of your idea seed is fully dependent on where it is planted (in the right industry, in the right place), how it is nurtured (your marketing plan), how much light it gets (not too much competition blocking out the sun), and how much attention it gets (your demographic interest).
Do your market research to get all of those parts right and you should see a bloom from your new business idea!