Somewhere between sitting at your desk at work and thinking “I need to quit and start my own business” and jotting down your business idea in a notebook, there’s actually a process that you will have to go through to ensure that your start-up is a success. Many times, potential entrepreneurs get too enthusiastic about their ‘brilliant’ ideas that they forget to do conduct sufficient research about whether the idea is actually viable.
While there are some instances where your idea could work in spite of not doing market research, other times your idea could just flop and this might mean that your business could collapse. Market research, then, is very crucial in determining the potential of your business idea.
Analysing the Market
Most companies borrow a leaf from marketing scholars and analyse their business ideas from a marketing mix perspective. There are three main perspectives in which you should analyse your business idea: company, customer, and competitor. Being a financial institution, we add capital to this list, because how are you going to start a business without knowing the amount of capital required for an effective launch? Approaching your business idea from this angle will allow you to extensively analyse it before you even start thinking about developing your brand.
- What are the benefits that your business idea will bring to your target market? Is there a pain point that your business is seeking to address? E.g. If you want to start selling beddings, what benefits are they going to bring in the market that other existing beddings have not brought? Plus, what image do you want your company to have? Image and personality are very important. They can help you differentiate your business from your competitors.
- Think about the different types of customers you will need to reach as you come up with your business idea. For example, will you need to target buyers, suppliers and influencers or just buyers?
- The position of your potential competitors in the market will directly affect your business. What do you plan to do so as to differentiate yourself from them and create competitive advantage for your business?
- The amount of capital needed to start your business directly affects your business because, if it’s a products business, you need to know how much stock you’ll need to satisfy the demand of your target market. On the other hand, if it’s a service business, how much will it cost you to offer your services? And how will you access this capital? Savings, loan or sponsorship?
If after analysis your idea seems like a flop, don’t be discouraged. You can always fine-tune it to make it work. On the other hand, if your analysis shows that your idea is great and you can go ahead and implement it, keep in mind that even good ideas fail.
Whatever your approach in evaluating your idea, just be sure you’re meeting the research objectives you’ve outlined for your product or service. With those goals always at the top of your mind, your analysis will help you discover whether your idea has any holes that need patching.
The more you do before you implement your idea, the less you will do afterwards.
How did you research your business idea? Share with us in the comments section below.