Small businesses: the importance of knowing your market
So you’ve had a lightbulb moment and come up with a business idea. Now you need to ask yourself a simple question: “‘Will my idea work?” The only way to answer this is by doing research. But, even though the information and knowledge you can acquire from personal observation, detailed online research, attending networking events and talking to other people who are in your business sector is critical, entrepreneurs often ignore the need for market research.
However, the commercial viability of your product or service is the difference between a successful business and a hobby. You need to know your market, competitors and potential customers inside out, and thorough research will help you uncover any gaps in the market. Remember, you shouldn’t feel disheartened if the idea has been attempted before – as long as you have a unique selling point and can add value to the market, you can still stand out from your competitors.
Imagine, for example. that you want to open a women’s clothes shop. The best advice I can give you is to go to 10 different comparable stores, in 10 different areas, all selling different brands. Spend time in these shops observing the ambience and style, and watch how their customers shop. Why do certain shops stock certain products? How long do customers browse for? What percentage of customers make a purchase? Some large retailers employ research companies and send people to local high streets, where they stand outside empty shops to record how many people pass by. If you don’t have the right amount of traffic in retail, the venture won’t work. Understanding how other shops run can help you understand what works well and what isn’t so successful.
Attending relevant networking events is also a valuable research tool; you will always find out new information or learn a new way of doing things. The more people you speak to about your business opportunity, the stronger it will be. Sharing any business idea is essential before you spend money, time and effort on developing your vision, only to realise there is no market for it. Make sure you seek advice from the right people; it is no good asking your friend for advice about opening a garage if he or she works in publishing and has no clue about car maintenance.
The internet is great for finding out a lot of information in a short space of time. You can see competitor’s websites, look at price points for similar products, read articles and find out more about your sector. With all these methods, there is no excuse for not knowing your market.
Start Up Loan recipient Chris Gillian made sure he did extensive research before launching his product Heroes Vodka. After leaving the armed forces, Chris decided to launch his own alcoholic drink. He spent time researching the best-selling beverages on the market and discovered vodka had the biggest market share, but also the practical advantage of a long shelf-life. Although there are plenty of other vodka brands available, Heroes Vodka has the unique selling point of giving 20% of profits to ex-military charities.
Chris attended local commerce events, as well as those from his sector and picked up tips and advice on everything from marketing to meeting new suppliers. Only after carrying out all this research and fully understanding his marketplace did Chris launch his venture. The business is going from strength to strength and he hopes to secure further funding to grow it further.
You wouldn’t book a holiday without first looking into the destination or listening to friends and travel agents. You wouldn’t buy a new car without making sure you were getting a good deal. It is no different when developing your business, perhaps even more essential. Research is the strong foundation for any successful business Before you do anything else, answer that all important question: “Will my idea work?”