I know you’re excited about your new business ideas.
I know you have a great idea and when you tell others about it, they think you have a great idea, too. A great idea is the birth of a new small business.
But as a self-employed small business owner, you can’t afford to take chances on ideas without getting more information about what your entire market audience wants and what they’re willing to pay for it. Talking to 10 or 20 other people isn’t enough. You’ve got to talk to hundreds.
In the military and in NASA, they use a term called “ground truth.” While they can observe things via satellite and other distant monitoring devices, nothing beats getting down on the ground and seeing what’s really happening in real life through direct observation.
So, how can you get ground truth about the viability of your business idea? The answer is market research. Market research is a study of your consumer’s preferences and your competition. Sometimes you’ll hear it called a “feasibility study.”
Through in-person interviews and online surveys, literature research, internet research, and other information gathering techniques, you can learn the trends in your industry, as well as individual preferences of your potential customers. If you’re in a well-defined industry, like toy manufacturing or massage therapy, you might find that your national professional organization has already conducted research studies on behalf of the members of the organization.
Why is market research necessary?
Because we all have different tastes, different ideas about what’s important in our lives, and different ability (or willingness) to pay a particular price for what we want. Often the small business owner thinks they have a great idea for a new product or service, only to discover that people either don’t want that service or product, or they’re not willing to pay the price that the small business needs to set in order to be profitable.
Sometimes they discover, joyfully, that not only do people want this new product or service, but that these same people can suggest other new products and services that would work well with the new idea, allowing the small business owner to see future growth into new areas. Or maybe they discover through their market research that if they made a small change in their product or service, for instance, making a product with a red cover instead of a blue one, that people would buy it more often.
Another purpose of market research is to discover what your competition is doing. Say that you want to create a new type of office product and you think your idea is unique. Take a look at what’s on offer at the Staples, OfficeMax and Office Depot websites, and you might discover that your competitors have already created a product to solve the same problem as your product solves. Does that mean you should then give up the idea entirely? No, not necessarily. What it means is that you now have some ground truth about what you’re up against if you want to go head-to-head with these competitors.
You need to know the ground truth about your ideas before you spend countless hours and money taking a new product or service to market.
I know that it feels like it’s putting a damper on new business idea creation, but in fact, it’s just the opposite: I’m encouraging you to find out what your customers want, and what they will pay for it, so that you can ensure future success.