Market Research for the
Skeptical Home Business Owner:
Why you need to determine the who, what, where, why, when and how of your home business market BEFORE you invest your time and money.
by Anne Ramstetter Wenzel
planning isn’t easy, isn’t fun for most and can take precious time
away from jumping in to serve your customers.
But you’ve got to figure out just what your customers need,
want and will pay for before you jump in.
"According to AllBusiness.com, one of the 'Top
10 Reasons Small Businesses Fail' is 'Inadequate planning.'". Conducting
market research is essential if you are going to write a good business
Your marketing plan and sales goals will be based on your market
analysis. Realistic sales
goals result when you know your market size, growth and the prices
customers will pay. Advertising
and marketing dollars will be well spent if you know whom you’re
trying to reach, why they want to buy from you and where you can find
you can conduct market research and write your market analysis, you must
first document exactly what your company is offering, your pricing
strategy and your competitive advantage (why will people shop with you
instead of another supplier?). Your
market research results may lead you to go back and adjust your product
or service offerings, and the prices you charge, in order to align your
business more with market needs. But
you must clarify your business ideas in order to begin the research and
get to know your customers and industry.
Getting your ideas down on paper is the first benefit to planning:
inconsistencies between your ideas and your ability to actually
deliver the product or service, or over ambitious plans, become obvious.
Sometimes there aren’t enough hours in the day or we don’t
have enough energy or staff to deliver all that we’d like.
According to AllBusiness.com, a business plan “makes
you a better manager and makes your company, no matter how large or
small it is, more competitive and more likely to succeed over the long
Once you clearly define your business, you’re ready to take time
to really understand your potential customers. What are their needs, wants and desires, and does your
product offering meet those needs?
Andy Gibbs, inventor and founder of Patent Café, says, "A
new product [or service] will only succeed if it satisfies a
customer’s needs, wants or desires, can be economically produced and
sold at the right price, is delivered to market through appropriate
distribution channels within the window of market opportunity, satisfies
applicable safety or performance criteria, and delivers lasting
You need to familiarize yourself with the industry as well
as your customers. Understand
buying and distribution patterns. Andy
Gibbs explains, “You simply must know how a product [or service]
enters the sales channel - and how yours can enter a similar channel.
This might be through distributors, retailers, direct sales, or others.
Don’t simply ASSUME that your idea will sell unless you understand the
And you need to keep track of your competitors.
“Underestimating your competition” is another of
AllBusiness.com’s business planning Never-Evers: “If you want to stay ahead of the pack, you have to know
what the rest of the pack is up to.”
must be able to produce your goods or services at the lowest cost
possible, and deliver them quickly and conveniently to customers, so
that you can compete with businesses all over the country, indeed
sometimes all over the world. Today’s
Internet economy is truly competitive.
For example, United States artists are now competing with artists
from Latin America, Morocco, West Africa, Thailand and Zimbabwe via
Novica.com. Novica.com is
not only satisfying American’s growing desire for affordable ethnic
art, but does so with a money back guarantee.
An American artist or art dealer who hasn’t done market
research might become frustrated with his or her sales efforts,
wondering why they’re not grabbing a piece of the rapidly growing art
and home decoration market.
In short, your market research should prove that your product or service will be a big seller before you spend a lot of time and money on office furniture, equipment, supplies, bookkeeping and marketing. It’s true that passion for your work is critically important for the long-term survival of your business. But most of us can tweak our passions just a bit and still meet the needs of the marketplace. It’s much more rewarding, and profitable, when you’ve got plenty of customers happy to do business with you.
Anne Ramstetter Wenzel, owner of Econosystems, helps small business owners identify who is most likely to buy their products or services, then creates business planning documents that help her clients focus on growing sales more easily. Ms. Wenzel is also editor of "Small and Home Business Market eNewsletter," packed with market information and a "Marketing from the Trenches" column. To view a sample newsletter and subscribe, visit http://www.econosystems.com/newslettersample.htm.
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For more insights on the economy, markets and life as an entrepreneur, visit Anne Wenzel’s “Reflections of an Economist” blog.
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