Starting a business begins with one essential step – evaluating your business idea. Before diving in, it’s crucial to understand your market, from potential customers to competitors and industry trends. Conducting thorough market research will provide insights into the viability of your business idea and set you up for long-term success. In this article, we’ll explore how to evaluate your business idea using market research strategies, and key factors to consider along the way.
Two Ways to Do Research
1. Primary Research
You can source this type of information yourself by creating questionnaires and conducting surveys, focus groups, and field testing. The advantage of primary research is that you can create questions that will address exactly what you need to know. Plus, you’ll gain a better understanding of your customer base.
The disadvantage of this type of research is that it’s often time-consuming and labour-intensive since you have to do all the work.
2. Secondary Research
You can also gather information from reports other than your own. Secondary research is great because it’s fast, less labour-intensive, and relatively inexpensive.
The disadvantages of secondary research are that the questions were created by someone else and might not address your needs. Also, you won’t get as much information as you would by gathering opinions yourself.
Three Factors to Keep in Mind
1. Your Target Market
A target market is a group of people that share common characteristics such as age, income, education, lifestyle, and so on, and that are most likely to purchase from you. When you think of your target market, you should mainly concentrate on the characteristics of the majority of your customers.
You should also consider ranking the characteristics in terms of “likeliness to buy from you”. Age may be more important than education, income may be more important than occupation. Maybe your target customer is a post-secondary student living away from home for the first time, or a middle-aged, upper-income homeowner. Each of these types of customers will require a different message when you market your business.
Once you have a list of important characteristics of your target customer, you can search for information on where they’re located and the relevant trends within your target group. Local, provincial, and federal governments are excellent sources of demographic information.
2. Your Competition
You’ll need to learn about your competitors to understand how you can get your target market to buy from you and not someone else. For example, promising better service to your target market isn’t going to increase your sales if all of your competitors are promising the same.
By researching what your competition is doing for their customers, you can work on differentiating yourself. You can also broaden your sales by offering products and services that your competition isn’t. Use company directories, the Internet, or licensed databases to identify who your competitors are, where they’re located, and what their advertising strategy, product lines, and web presence are.
3. Industry Trends
You need to be aware of the current and long-term trends that could impact your business. Here are some ways to learn about industry and societal trends:
- Online sources such as Springwise or Trendhunter.
- Licensed periodical indexes that contain relevant magazines and newspaper articles.
- Your local city hall’s planning department who can provide information regarding density and future developments.
Check out our Market Research Resources Guide for a more comprehensive list of useful websites to visit when researching your business concept.
Evaluate Your Business Idea
Evaluating your business idea isn’t always easy – especially as a first-time business owner. Use our Evaluate Your Business Idea Checklist to dive into your business idea and ensure it’s viable. This step will highlight the areas of your business you might need to evaluate further and set you on the right track.
Small Business BC is Here to Help
SBBC is a non-profit resource centre for BC-based small businesses. Whatever your idea of success is, we’re here to provide holistic support and resources at every step of the journey. Check out our range of business webinars, on-demand E-Learning Education, our Talk to an Expert Advisories, or browse our business articles.