Starting a new business is an exciting venture with limitless opportunities. However, if you’ve decided to take the leap into entrepreneurship, you’ll need to do your homework before you hit the ground running.
After choosing a business idea, the first step to starting a new business is researching that idea. You'll want to know if there is a demand for your potential product or service, as well as the type of competition you'll be up against. Doing this work can help you anticipate and counter any potential issues, giving your business the best possible chance of success.
Here are three simple steps to jumpstart your business idea research.
[Read: 5 Expert Business-Planning Strategies to Help You Reach Your Goals]
Develop a market research plan
Conducting market research can help you determine who your target audience is and how to reach them effectively, as well as how your product or service uniquely solves a problem that audience is facing.
There are two main types of market research: primary and secondary. Primary research refers to any information that comes directly from your audience, such as focus groups, surveys and interviews. This can help you understand your potential customers’ habits, preferences and needs, so you can cater your offerings accordingly.
Secondary market research comes from the public or outside sources. These may include public sources like government statistics, commercial sources like market reports and internal sources like your company’s own marketing data. You can use this information to identify trends and patterns, allowing you to target your marketing.
When conducting market research, consider where your target audience spends time, then invest your efforts on those platforms. For example, if your ideal customer isn’t typically a big social media user, reaching out to people on Instagram might not be the best use of your time.
Conducting market research can help you determine who your target audience is and how to reach them effectively.
Study your competitors
Once you’ve gained an understanding of your audience, you’ll also need to gain an understanding of your competition. Competitive research involves identifying your competitors and identifying their strengths and weaknesses. This not only helps you see how your own business idea compares (and where you may need to make adjustments), it also provides valuable insights regarding industry trends.
Your first step is to identify your business’s main competitors, which can be done by simply searching your product or service category online. Competitors can be divided into direct and indirect: Direct competitors are targeting your same audience with a similar product or service, while indirect competitors may have slight variations in their product/service or target audience. Researching both can help you discover areas of growth for your own business, while also mitigating any potential threats to your business’s success.
Once you’ve found your main competitors, analyze their online presence by reviewing their websites, blogs and social media pages. You may even consider signing up for their email lists and following their social media profiles to get an idea of how they communicate. Finally, track your findings and use the information to fine-tune your business idea and its offerings.
[Read: Need Some Feedback? How to Conduct Customer Interviews and Focus Groups]
Conduct a SWOT analysis
A SWOT analysis helps you objectively evaluate both internal and external factors that could impact your business. SWOT stands for strengths, weaknesses, opportunities and threats. Take time to brainstorm what your business does well, where your business can improve, which opportunities your business can take advantage of and which external threats could have a negative impact.
Once you’ve completed your analysis, implement what you’ve learned by creating an actionable plan that will help you capitalize on your company’s strengths and minimize the impact of any weaknesses.
Finally, keep in mind that your initial business idea research is just the first step. Your product or service, your audience and the market may change over time. Conducting regular research and analyses of your business will give it the best opportunity for long-term success.
Stay tuned for our next Startup2021 article on doing a competitive analysis.
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