Market research is vital to understand the business environment in which I will operate. I am in the process of starting my own business. Part of this process is writing a business plan to present to potential investors, which should include reliable market research. My business is a new Female Clothing Boutique selling bespoke garments, handbags and shoes. I am not sure how to do market research on my startup. I have a limited amount of my own funds available but after a brief discussion with potential investors, they made it clear that they want to see justifiable proof of why I feel my business will succeed. Can you advise me on how I can conduct market research for my company?
This is one of the most critical challenges that most entrepreneurs are faced with. On the one hand, you want to start a business but have limited financial resources available to allocate to market research. On the other hand, all investors will require some sort of factual statistics and market research included in your business plan that will prove there is a gap in the market for your products/services. When faced with a limited budget, consider the following:
- Do the Groundwork Yourself. As an entrepreneur, you can’t expect a financier to take 100% risk by investing in your business with you not taking any risk yourself. The adage of “putting your money where your mouth is” needs to be kept in mind when preparing your business case. Any investor wants to see that you have enough passion and drive to make your business a success. This includes running around and doing all the legwork required. A great place to start is using Online Survey Tools which allows you to design a focus group questionnaire that you can send to potential customers. As an example, SurveyMonkey (www.surveymonkey.com) offers various packages, including their basic package, which is free. This will allow you to design a survey questionnaire with up to 100 questions and track the results of the feedback you receive. Another cost-effective option is Google’s Consumer Surveys (www.google.com/insights/consumersurveys/home), which starts from as little as R1.00 per question. Not only will the results of the surveys be invaluable to you fine-tuning your business strategy, but it will be factual and seen as primary market research by potential investors, which will go a long way in securing start-up finance.
- Secondary Sources are Much Cheaper. Even though Google Search has provided us with a wonderful opportunity to search for anything imaginable, searching for reliable research is an art. Unfortunately, it is difficult in South Africa to find both reliable and up to date information on all industries and markets. Websites such as StatsSA (www.statssa.gov.za) provides a detailed library of the latest research and statistics available. Most of these reports are focused on macro-economic factors. Another alternative is searching for Dissertations and Research Studies conducted by students and other Academia. Several universities have online libraries that you can access, in some cases for free. Using Google Search to source reliable statistics conducted by primary research firms is possible, but it will mean that you may have to browse through Pages 1 to 10 of the search results to find what you are looking for. Although this can be daunting, the information you will find is in most instances free. Use search terms on Google such as “Fashion Trends”, “South African Fashion Industry”, etc.
- Follow Expert Blogs and Research Articles. Consider signing up for the newsletters of Industry Organisations in which your business will operate. A prime example is Bizcommunity (www.bizcommunity.com), which publishes regular articles, blogs and expert opinions on many local and international industries. For your specific industry, you can follow the Retail section on their website, which includes a subsection Fashion, Clothing and Textiles.
- Ensure that Market Research is Included in Your Business Plan. If you have already decided to invest your money with a Business Plan Writer or Business Consultant, make sure that part of their service includes some sort of market research that they will conduct as part of writing your business plan. Although market research is an essential element for ensuring the success of a business, many small businesses do not have the resources to engage a professional Business Plan Company. However, all is not lost, most reputable companies won’t mind answering a few questions (for free), guide you in your market research efforts or at least point you in the right direction. All you need to do is ask.
- You Need to Understand Your Competitors. A business needs to know who it is up against; you need to establish who your competitors are and their strengths and weakness when compared with your own business. The least expensive method of acquiring information about competitors is to visit your competitors yourself, see how their Shop Assistant treats you, buy one of their products, and engage them via their website and their social media pages. This way, you will be able to gauge and understand how these competitors operate, their success levels and how much of a threat they pose to you. You will at the same time be able to investigate how they treat and interact with “potential customers”, which will provide you with the opportunity to build your own value proposition around what they don’t do that well.