Don’t Fail Before You Start – Or Why Market Research is Essential

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Sit back and I'll tell you The Tale of the Unsuccessful Entrepreneur

There once was a gal who wanted to be self-employed.  So she started business after business, but they all failed.

But she had a new idea. A new concept that would surely be her ticket to success. Her idea was so great! This time, there was NO way she could lose!

She saved and planned. She rented space, got a new sign, and excitedly opened her new business. And waited for the flood of new customers.

And waited. And waited. And waited…but they never came.

Why did our unsuccessful entrepreneur fail? She didn't lack determination or drive.  What she did lack was a simple knowledge of market research.  Because if she'd done any market research, she would have understood that her latest business was destined for failure.

Why? It was a good concept.  But it was all wrong for her community.  It was too pricey, competition was too strong, and the market was not big enough. Some ideas seem great. But are never destined to be more than a good concept.

So how do you tell if your great idea is good enough to be a real business? You research your market.

Know Your Market

Market research is the analysis of a specific area, including demographics like age, median household income, level of education, etc. You can get a lot of data from the recent Census and the SBA. This will help you create the big picture of your area. It will help in determining things like price and location. For example, you don't want to open a high-end retail shop in the middle of an economically depressed downtown.

Bottom line: Understanding your market is an essential piece of success.

Know Your Industry

The easiest way to understand your industry is to buy an industry report. There are NAICS & SIC codes for each industry.  However…these are very costly unless you can get them through a library.

So you may have to research your industry on the web. But this is not bad. For example, you can easily search “retail industry trends” and find a ton of info. You can also search professional or trade groups, magazines, and online groups.

Bottom line: Some careers are dying out, while others are thriving. Don't get caught trying to join a profession that doesn't have a future.

Know Your Area

Here's where our unsuccessful entrepreneur really dropped the ball. The local market was not big enough to support another business like hers. Her's was a little bit different…but there are similar businesses down the street. With strong and loyal customer bases.

Look around at your area. What is your competition like? Do you have a product/service that could really stand out? Do you have a specific niche your targeting? Do you have a marketing budget and strategy that will grow your viability?

Our unsuccessful entrepreneur's business would have to steal customers from very strong businesses. That was very unlikely to happen without a lot of time and money.

Bottom line: Be realistic, not just excited.

Set Yourself Up for Success, Not Failure

Don't be an unsuccessful entrepreneur because you failed to do proper market research.  It's hard enough to establish a business. But trying to grow a business in the wrong market, and that's a recipe for failure.

Learn a lesson from our unsuccessful entrepreneur: Fail to plan, than plan to fail.

Here's some resources if you need help:

How to Research an Industry

 

Conducting Market Research? Here are 5 Official Sources of Free Data That Can Help

Liesha Petrovich is passionate about micro business education. Doesn’t sound sexy does it? But teaching micro business owners how to createsuccess and freedom is. Learn more at Micro Business Essentials and follow her on Twitter

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