When you’ve come up with an idea for a new business, you may be tempted to start diving into the logistics of getting it underway. It is easy to get caught up in a rush of entrepreneurial excitement—but before kicking off your startup, you have to sit down, roll up your sleeves and dedicate some time to market research.
What is Market Research?
Market research is the gathering of information related to consumer’s needs, tendencies and desires. Who is your target audience? Researching your market will help you define your future niche within your industry, and ultimately, should guarantee that you maximize your profits.
Market research for startups is thereby of vital importance. But are you aware of the best market research methods?
How to do Market Research for a New Business
When you do startup market research, you want to make sure that you have a broad understanding of the economy that you are about to enter. You also need to ensure that you have a comprehensive grasp on industry trends, employment patterns, etc. This is a broad, vague task that seems as though it requires a great deal of education and economic background. No need to worry, though—you don’t have to brush off your old economic textbooks in order to understand your market and research it effectively.
Economics and Market Research
The first thing to keep in mind when researching your market and the broader economy is that, for the most part, every analytical tool that you will need is available to you online, free of charge. The Small Business Administration recommends that entrepreneurs begin startup market research by looking at economic indicators, employment statistics and trends in income and earnings. Each of these datasets are provided by the American government or other sources for no fee, and all are helpful when conducting market research for startups.
Economic Indicators—when the SBA suggests that startup company owners look at economic indicators throughout their market research, they mean that you should keep on the Consumer Price Index, the Employment Cost Index, the Employment Situation, the Producer Price Index, Productivity and Costs reports, Real Earnings reports and the U.S. Import and Export Price Indexes, as necessary. All of these figures are updated regularly by the government and can give you a feel for the type of economy that you are about to dive into.
Employment Statistics and Trends—every single month, the Current Employment Statistics (CES) program collects data about all things employment across all industries in the United States. How much are people earning in each sector? How many hours does the average worker spend on the job in your state? In your industry? Keeping a close eye on the CES is a great idea for startup market researchers.
Pay and Benefit Indicators— knowing the recent trends in the wages for your industry, type of occupation and geographic area can surely be of help. The Bureau of Labor Statistics releases free data on Employment Cost Trends, National Compensation Data, Wages by Area and Occupation, Earnings by Demographics, Earnings by Industry, Strikes and Lockouts, etc. There are tons of great pay/benefits databases to which startup company owners have access.
Google Marketing Trends—Google, like the United States government, produces some resources for market researchers. Google, which has access to an incomprehensible amount of data when it comes to marketing and consumer preferences, will simplify your research process with its Marketing Trends reports.
Industry-Specific Market Research
Beyond using the above-listed websites to investigate the economy as a whole, it is a good idea for startup company owners to turn to industry-specific associations when doing market research. More than likely, your industry has an association of professionals that publish statistics and trends relating to the wellbeing of their sector of the economy. Take a look at some example industry associations to which startup market researchers can turn:
- Staffing Industry— the American Staffing Association pumps out tons of research about staffing industry trends.
- Trucking Industry—the American Trucking Associations is a nationwide group that can help prospective trucking startups with market research.
The American Staffing Association and the American Trucking Associations are two examples of what industry-specific organizations can look like. Each has a branch dedicated to publishing research and economic trends that can prove to be a valuable asset to you as a startup company owner.
If you’d like to hear from the consumer directly, there are some websites, programs and companies to turn to. There are a variety of survey-issuing organizations (like SurveyMonkey, Typeform and Survata) that you can pay to issue a consumer preference survey. Design a survey testing out different products, administer it to a target audience and see what consumers in your industry prefer. Though these sites require a fee, it is an effective market research method and may prove very helpful for your startup.
Following economic patterns, reading publications from industry associations and using survey services are all practices that can help you do your startup market research. It is no easy task, to be sure, but if you are determined and you utilize the free services available to you, it can be done efficiently and cheaply. If you need to make the process go even more efficiently and cheaply, give Factor Finders a call. We are the best at helping startup companies get the working capital that they need to expand and take hold of their industry.