First, conducting market research doesn’t always have to involve hiring a research firm or commissioning focus groups; much of the information you need may be at your fingertips.
This research can impact and inform all areas of your business, from where you locate your business to the color of your logo. Even a small amount of analysis can help you gauge the receptivity of your target market to your idea. Check out this blog for a quick overview of the type of data you can draw from these sources: Conducting Market Research? Here are 5 Official Sources of Free Data That Can Help.
But how will you use this data effectively? Here are some tips for finding data you need and translating it into information you can use in a business plan or simply to inform your strategy:
Sources of Market Data
So, where do you look?
- Free Government Market Data – One of the best sources of data is the U.S. Census Bureau. The information there is vast, and among the easiest to navigate. Thanks to a variety of Data Access Tools such as the 2010 Census Interactive Population Map, you can pinpoint census data to the block level and compare one community to another. Census data can help you answer many questions that come up during the business planning process, such as:
o How can we determine the economic activity of communities large and small?
o Where should I place a new business?
o What products in my industry are growing?
o What materials are purchased by my industry?
o What industries purchase my products?
- Competitive Data - Want to know how your business stacks up against the competition? Where your potential competitors located? The best places to advertise? These are all critical inputs for your business plan and can also support your financing applications. SBA’s new SizeUp tool lets you crunch millions of data points to get customizable reports and statistics about your business and its competition. Enter your industry, city, state and other details. The tool then runs various reports and provides maps and data related to your competition, suppliers and customers. It also highlights potential advertising opportunities.
- Use Your Own Data – Don’t just rely on external data sources. As your business grows, use your own data to analyze consumer profiles, buying behaviors and so on.
How to Use the Data
Here are some ways you can use the data you uncover in your market research to build your business plan or inform your strategy:
- Get to know your target market – If you are seeking investors, they will want to know that your market is sizable and that you have researched and understand its opportunities and its limitations. Is your market definable? Is it sufficiently large that you can reach it efficiently (for example, are population or demographic shifts likely to play to your advantage)? Where do your competitors fit in? Can you segment that market further? Above all, is there a niche you can carve for yourself?
- What is going on in your industry? – Few businesses are immune to industry trends. If consumer spending is down or unemployment is on the rise, this may affect your plans and your budget. Use economic indicator data to assess trends and market forces that can help you succeed. If your industry is in flux, could you use this fact to your advantage and position your business for future growth? Investors will want to see that you understand the factors that affect your business’ success. Be sure to include in your plan: 1) a description of your industry, 2) industry trends and 3) strategic opportunities in your industry.
- Analyzing the competition – SBA’s SizeUp Tool can help you zoom in on exactly who your competitors are – use this information wisely. Include a description of your competition in your business plan. What market share do they command? Who are their customers? What barriers to entry do they represent for your business? What opportunities are there? The SizeUp tool is very visual; consider using screen caps or charts to back up your data. Knowing your competition will help you better position yourself against them and reach your target market more effectively.