Launching a company or developing a new product or service is a leap of faith for most entrepreneurs and intrapreneurs. With so much information to organize, financing to secure and staffing to consider, it’s critical to get solid footing from the beginning. As you formulate a business plan, you’ll need to explain market needs, growth or lack of it, and trends to understand the market needs that will lead people to buy your product or service. Companies and entrepreneurs who understand the competition and industry landscape are more equipped to build a creative culture, fail fast, learn quickly and move on.
Stop to consider:
- Are there other products or services that offer different ways to satisfy this same need?
- Which market trends should you consider?
- What factors seem to be changing your business or your market?
- What developing trends could make a difference?
Ready to make informed decisions about your strategic direction? Here are 7 steps to get you started:
1. Do your homework
- Google keywords, such as your industry plus market size and your competitors’ names.
- Search trade associations and publications online.
- Review press releases from research companies about their reports. You can glean a lot about an industry for free.
- Check business and general press as well as press releases.
- Explore government databases, such as those of the Census Bureau.
- Visit your library. It may have some of those expensive research reports or trade publications for free. It may also have online computer databases, such as Factiva.
- Review annual reports and 10K reports on public companies.
2. Shop the competition
Visiting a company’s website is frequently the first step. But if you’re opening restaurant, eat at different establishments. Aspiring retailers should visit other stores. Park across the street and count the customers who go in. Note how long they stay inside and how many come out with purchases. Browse the store and look at prices. If you can’t shop the competition, ask your customers and suppliers about them.
3. Conduct your own research
Not everything you need to know about your market and customer exists. Sometimes you need to conduct your own primary research. There are two types of research: qualitative and quantitative. Use qualitative research to understand why customers behave as they do or to develop hypotheses about that behavior. Examples of qualitative research are personal interviews and focus groups (a facilitator explores a topic with a group of 8 to 12 carefully selected people). Quantitative research is a very structured form that attempts to put numbers to a question or topic. Survey tools include SurveyMonkey, Zoho Survey, Survey Gizmo and Google Forms. In addition, your email marketing tool may have surveying capability.
4. Collect and organize internal data
For companies launching a new product or service, it is critical to understand your own numbers and how they fit into overall trends going on in the market. Develop a process for tracking and reporting all relevant sales trends.
5. Focus in on a market niche
For most small businesses, you’ll be better off narrowing your focus than being all things to everyone. In which segments do you have the greatest expertise, competitive advantage and market opportunity? Prioritize these segments higher than those in which you are a novice.
Divide the market into segments by age, income, product type, geography, buying patterns, customer needs, lifestyle, psychographics or other classifications.
For example, when a local computer store defines its customer segments as “high-end home office” and “high-technology small business,” its segmentation says a lot about its customers. In developing segments, consider what factors make a difference in the purchasing, media and value patterns of your target groups. Does age matter in the choice of restaurants or are style and food preference more important? Is income level a key factor?<
6. Synthesize data
Analyze the intelligence you’ve collected, draw conclusions and make recommendations based on it. Develop a plan for seeking out opportunities that offer clear-cut advantage. If weaknesses are revealed, develop a plan for overcoming them.
Taking time to walk through each of these steps will prepare you to handle obstacles in your path, ensure you’ve covered your bases when interacting with investors and help position you for success.