Look before you leap. This age-old advice has been proven right countless times in various situations, but none more so than when you’re considering starting a new business venture. When you get that lightbulb moment and are struck by a new idea, it can be easy to get over-excited and push on full steam ahead, even eyeing global expansion, without stopping to assess the situation and gather information before you make any significant commitments.
Self-restraint in these situations can be tricky, especially in a world as fast-paced as the one we live in today. It’s all too easy to fall into the trap of feeling as though one skipped a day or one missed opportunity could mean that somebody else will capitalize on your hesitation.
However, the fact remains that taking the time to conduct proper market research and the subsequent analysis of the data you collect is vital if you want to stand the best chance of success with your new venture and see your dreams come to fruition. So what is market research in the first place, and what exactly does that mean when organizing your business strategy?
Well, to put it simply, market research is best defined as the process of evaluating the feasibility of a new product or service and the business landscape in which it resides. This research is generally conducted directly with consumers and through qualitative and quantitative data, either publicly available or compiled from scratch, with the goal of achieving insights into competitors and industry trends.
For example, if you're interested in selling Etsy printables, you can research the products already offered by other Etsy sellers and evaluate the demand for different types of products.
Armed with this information, entrepreneurs can make more accurate decisions, understand the most effective way to engage with consumers, and better gauge their true market position. On that note, let’s take a look at some of the primary benefits of conducting thorough market research before embarking on a new business venture.
Establishing demand for your product or service
Before you consider starting a new business venture, one of the first things you need to do is validate your product or service. This viability analysis is carried out to ascertain whether the product will sell, the size of the market, and even its future.
It is a crucial process that can help a business avoid major pitfalls that startups experience, such as heavily investing in researching, developing, and producing something that does not have enough demand to cover its costs.
It’s far better to kill your idea in the planning stages than to be faced with the sobering reality that your product missed the mark and nobody wants to buy it. In the latter scenario, it’s going to be very hard for any business that’s in its infancy to recover after having wasted so many resources on an unfruitful go-to-market push.
However, if you conduct market research and establish there is no need for the product or service you are proposing, you can ask for feedback and make adjustments until you find a recipe that works. This refining process allows you to find the right features that are most in-demand. This will also come in handy when it comes to marketing, as you will better understand where the value lies and what your unique selling point is.
Reducing risk and increasing chances of success
Most new ventures fail. In fact, it’s estimated that the failure rate of startups is around 90%, which is not exactly the most encouraging statistic in the world for aspiring entrepreneurs. In other words, embarking on a new business venture is extremely risky. Fortunately, market research is one of the best ways to mitigate that risk.
Businesses fail for many reasons, but some of the most common include:
- Not a compelling enough of a value proposition
- Poor market timing
- The number of people who suffer from the pain point the business is trying to solve is too small
- Not understanding consumers well enough
- Underestimating the competition
- Not reacting to industry trends promptly
In general, almost all of these reasons boil down to poor decision-making due to a lack of information. If you can’t see the wood for the trees, then there is no way that you will be able to steer your startup to success – unless you get very lucky.
Gaining a better understanding of the competition
Competition analysis is a fundamental aspect of your market research as a start-up. These are the companies that you should be looking to for inspiration, and they are also the companies that you are going to be fighting against over consumer dollars.
Unfortunately, many people mistakenly view competition as a negative factor, but that simply isn’t the case. As a startup, you can observe your rivals from a privileged position, carefully picking apart their strategy and analyzing what they do well and the areas where they could be better.
You can also see how they engage with their consumers and the various channels they prioritize when communicating with them or when carrying out marketing campaigns. All of this is precious data that you can use to calibrate your strategy, allowing you to come out of the gate as a well-rounded and agile offering that will be differentiated and hopefully more attractive to your target market.
In a business world that is becoming more competitive by the day, it’s never been more important to conduct thorough market research before embarking on a new business venture.
Observing industry trends, analyzing competitors, and validating your product/service enable you to identify problem areas before committing any resources, which means that you will stand more chance of being successful once you finally do unearth that killer product that is in demand.