When you are starting a business, getting to know your customers is one of the most important things you need to do. Without this fundamental knowledge, creating marketing plans will become difficult and your sales projections will always be off. Having a gut feeling about your market will only bring you more headaches. Instead, strive to challenge your assumptions with data and you will see a difference in your sales.
It is easy to dismiss the importance of market research. After all, when you first think of a business idea, spending hours on market research is the last thing on your mind. Most of us would rather start making and selling products right away than think about the value of market research. You may still be wondering, “Does my business really need to conduct market research?” Answer the following five questions to find out:
Are you serving a primarily local market? Understanding whether you are focused on selling locally or globally will make a difference in your marketing message and projections. Many small business owners realize they can sell outside the local market, but those who shop locally look for businesses within their community to support. Consider who your market is and decide on an approach that works best for that audience.
Does the category of business you are starting already exist? Chances are you may not be the only one in the market offering a solution to a need. But the only way to find this out is by doing research in your area to see who your competitors are. Your customers may already be comparing you to other competitors. This information can help you sharpen your strategy to attract business and grow within your market.
Do you have a plan to differentiate yourself from your competition? Once you know who your competitors are, then you can write out what separates you from the competition. Is it the way you provide your service? How you create your product? Your pricing? Without reinventing the wheel, find the best elements within your business that others do not have.
Do people spend enough on your type of business to support you and your competition? Many customers will shop around for the best quality and price. Are you priced right? Many small business owners think that they should compete on price and the truth is, that is a bad idea. Price wars only hurt the small business, so ensure you understand how your customers spend on your type of product or service
Do you already know your industry extremely well from prior work experience? Many professionals with marketable skills make the leap from career to small business owner. But having a skill is not enough to grow a small business. You need to know if you can make the industry better by researching where, how and why your ideal customer would want to buy from you.
Doing market research is the task of learning more about your customers. Time spent understanding your target market will save you money while making you money in the long run. The time you spend up front will be time well spent because your strategies and projections will be much more laser focused for success.
EDGAR RAFAEL OLIVO is a bilingual business educator, economic advisor, and contributor for several media outlets. He’s a nonprofit executive who is passionate about education. He is certified in finance and data analytics and holds a business degree from Arizona State University.
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