Identify where the gaps are in the market
When people come to me for advice on starting a business and they want to know which business they should choose, one of the biggest things that I stress as important is market research. I tell them that the reason that more than half of the businesses in the UK fail due to the prospective business owners not doing the necessary research, and planning their success.
From my own experience, I have discovered that there are two main reasons why it’s so important to do market research before starting a business.
Think about some household names that have successfully filled gaps that were in the market or even creating a public awareness of GAPS that they did not know was there:
Google – global information
Ebay – selling on line (auctions)
Easy Jet – cheap flight
Facebook – global community
YouTube – promoting yourself on line
1) Avoid Redundancy
One of the main reasons I tell clients to perform market research is to avoid redundancy. For example, say someone wants to open a pizza shop in a town where there are two other pizza shops. Not only does the new owner have divide his or her business with two other pizza shops, but he also has to convince those patrons who know and love the other pizza shops that their pizza is so much better. If a client comes to me and wants to open a restaurant, my advice to them is to check and see what other restaurants are in the area and open something different. There is going to be very little competition and the people who live in the area are going to be excited to have another choice.
When a person is going to open a new business, whether it’s online or offline, they need to make sure that they are offering something that is new and will be exciting to the potential customers. In the example above, chances are that people are tired of pizza. They are looking for something new to choose. Without extensive market research, they aren’t going to know what is already available and what people need.
2) Improve on Competition
Another reason that I stress the importance of market research is to improve on the competition. A prospective business owner needs to know the shortcomings of their competition and find out what the customers don’t like about it, and then they can remedy that and obtain those customers.
These things can be:
- Better service
- Better prices
- Better quality
- Better food
- Better variety
- Better hours
One thing that I stress to my clients is this: It doesn’t matter what kind of business it is; there are always going to be deficits in the competition. In order to be a success, the new business needs to determine what is offered by the other businesses, what the customers like and don’t like about the business, and what they can do to give them something new and different to be excited about. This is where the market research comes in, and that is why it’s so important. If you don’t do some market research, how are you going to know what it is that your customers want and need?
In order to be a success, a potential business owner needs to know the following:
- What customers want from their business.
- What customers don’t like about their competition.
- What customers like about their competition.
- What is lacking in their town.
- What is lacking in the businesses on the Internet.
- Where the gaps are and what specifically needs filling
A new business needs to offer things to customers that they can’t get anywhere else. But if a business owner doesn’t do market research to find out what their customers want, they can’t fulfill the needs. If they fulfill the needs of the customers, then it will be harder to convince new customers to try their products and services, and it will be harder to be a success.
