While vital for the lasting success of any enterprise, small business owners especially cannot overlook the importance of in-depth market research. While not always the case, smaller businesses typically run with tighter budgets, smaller team sizes, and less financial capacity to cover strategic errors. Those who own or manage small companies must be diligent in understanding the current marketplace and where their brand stands within it. Otherwise, they risk making easily avoidable mistakes that could have been found through market research. Market research can also reveal fantastic opportunities previously unseen.
From determining whether your region has the demographics to support your business venture to offering the right products for your top clientele, a great market research strategy can be why a small business fails or thrives in a competitive economy. Let’s dig deeper into what market research is, and how your small business team can conduct your research the right way.
What Is Market Research
Market research is the process of collecting, analyzing, and interpreting data and other information related to your industry, competition, products and services, key demographics, region, etc. to better inform your overall business strategy. While market research is essential when planning and launching a small business, it should ideally be an ongoing part of every entrepreneur’s strategy for a company’s lifetime. By compiling these informed, clear, and accurate insights, business owners can get a realistic view into everything from international buying trends to rising local competitors to customer preferences, market trends, competition, and other factors that should influence business decisions.
Market research is usually comprised of primary and secondary data. Primary data refers to information you gather directly from the people who make up your actual or ideal customer demographic. This data can come from sources like customer surveys, focus groups, interviews, or observations. Secondary data involves the gathering of information from already established sources such as industry reports, research-backed publications, government records, or reputable online databases.
When accurate, unbiased, well-defined and comprehensive, data-driven market research can be one of the most impactful processes for lasting business success.
Why Should Small Businesses Do Market Research
From securing a small business loan to finding the perfect store location, there is plenty to do before opening your doors on day one — and market research must be one of them. With razor-thin profit margins and typically less financial backing than large conglomerates or franchises, even a relatively minor mistake can mean catastrophe for a small business. Conducting market research puts a spotlight on potential hurdles and problems, as well as positive findings and insights, so you can build a smarter business strategy built on real facts from the people who matter most, your ideal customers.
Are there enough young families in your area to support a new day care center? Should you adjust staffing for your landscape company during the winter? Is there a sizable gap in the fast-casual restaurant market that could be filled with your new sandwich shop? These are just a few examples of information that great market research can reveal for hopeful entrepreneurs.
Then, once a company is up and running, business leaders and owners need to keep a close pulse on the ever-changing consumer marketplace. Diligently follow market changes so you can pivot from lackluster marketing initiatives, identify new business opportunities, or make other strategic adjustments all guided by data-driven research. By ensuring that market research remains an integral part of your ongoing small business strategy, you feel proactive and confident in your brand’s long-term financial success.
How to Do Market Research for a Small Business
It’s vital to determine the exact kinds of data and information your team wants to gather from market research. While there are countless potential data points to choose from, it’s important to focus on the ones with the highest impact to your success. Exactly what those are for your business’s unique needs largely depends on the industry, competitive landscape, current market trends, and knowledge gaps. That said, the most common research areas typically include consumer demographics, market size, price points, competitive analysis, buying behavior, current and foreseeable trends, regional needs and preferences, etc.
Once you’ve defined which information you’d like to research, compile, and analyze, it’s time to get started. To conduct market research for a small business, you should:
Define Research Objectives: Precisely define the objectives, goals, and outcomes you want to collect from this research. Are you seeking general industry trends to ensure your long-standing brand is keeping up with consumer needs? Do you want to determine the right price point for your new services based on local competitors? Whatever you’re striving to discover, make sure it’s clear and known.
Create a Research Plan: Before jumping into the research, develop a plan outlining the steps, key players, primary and secondary data sources, and other details. From research methods to sample sizes to deadlines to focus group participants, defining these areas will help ensure nothing gets overlooked.
Collect Data: Start sending out surveys, talking to customers, digging into industry papers, and researching competitors. Once completed, compile and organize your collected data into a program or interface like a spreadsheet or similar document for analysis.
Analyze Data: After inputting all relevant information, begin to carefully analyze the data using statistical, observational, and other techniques for proper data analysis. Look for data-related patterns, trends, correlations, and other insights that could be key in identifying area of focus.
Interpret Findings: Once data trends, patterns, outliers, etc. are identified, put context around what this could mean for the success and growth of your business. Determine how these findings could or should guide upcoming leadership decisions for your brand.
Report Conclusions: Even if your company is tiny, it’s important to create a comprehensive summary of your methodologies, research groups, findings, data analysis, and conclusions into a final report. These can be given to key stakeholders, used for future research, relied on for reference, or distributed to your strategic team to make the best decisions for your brand.
Apply Market Research to the Business Strategy
With a completed market research report for your small business in hand, use these informed findings to open strategic opportunities that can drive your business forward. Ultimately, the invaluable information gleaned can lead to massive rewards including greater customer acquisition, larger profits, and faster expansion. Market research also adds data-driven insights so teams can minimize risks and avoid costly mistakes before they ever happen.
Ready to take your small business to the next level of success? Aside from initiating a great market research strategy, you might also need a great loan for your small business. At SmallBusinessLoans.com, we specialize in matching the perfect and personalized loan for your small enterprise. From bridge loans to short-term loans, our expert team is dedicated to your brand’s lasting financial success.
About the Author
Joe Valeo has over 37 years of experience in finance and sales. His leadership and expertise have served financial services and alternative working capital organizations such as LendingPoint and Capital Access Network, where he oversaw the growth of more than $5 billion in capital for small businesses. He also led sales strategy and management at First Data Corporation and Visa. Joe oversees SmallBusinessLoans, where he strives to make lending more accessible for small business owners.