Even if everyone you talk to says they love your business idea, that doesn’t mean that it’s a good one. First of all, people say a lot of things; what they say they would buy and what they will actually buy are two different things. You also can’t start a business just because you “feel like it’s going to work”. Many entrepreneurs set out on a new venture based on an instinct that their idea is foolproof. There’s no shortcut; you simply have to do your homework.
What is the Market?
Remember that your “market” is just people. Instead of thinking of it as a summary of figures and statistics, it’s better to think of this in terms of all the different groups of people who are your potential customers. Who are they? How much money do they make? What do they buy? Look at the details, not just broad statistics. Let’s say that 70 percent of females in a heavily-populated area purchase clothes online at least once a week—that doesn’t mean they will buy shoes from you. Your goal should be to uncover specific data that will truly help you establish whether your market is large enough to sustain your business, and the only way to do it is by learning as much as possible about the people who populate your market.
Once you know where you will be selling, then you can find out who lives there, their salaries, and what they are buying. Will you primarily serve customers in a locality, such as a restaurant or office supply store? Then you need to learn who your local customers are. Do you own an online store? In that case, learning about your market will be a little more complicated, and you may have to look at consumer data nationwide, or even internationally.
Use the Established Market
If there is already a market for what you’re selling, then someone has already done a lot of the work for you. This is a great advantage because you can just look at data about who these existing customers are, and though this probably means you have competition—that’s not a bad thing. Another business has already educated consumers about the product, and you won’t have to start from zero.
Bonus: Check out our article Why Competition is Good News for Your Business.
Consider Hiring a Professional
You might as well accept the fact that good research will probably cost money. You could end up spending thousands of dollars if you do it yourself, and you could spend thousands of dollars by using a research firm. Though you will probably save money if you conduct market research yourself, it takes a lot of time and energy. You can save a lot of frustration by hiring a consultant who does this for a living, and they will likely produce more comprehensive information, and more quickly.