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Wednesday, July 5, 2017

Starting a New Business Part 2: Market Research

In Part 2 of our series, we're exploring the SBDC Business Start-Up Guide.  Did you know that only 20% of new businesses survive past their first year? And only 50% of those will make it to 5 years!?  (Source USA Today).  If you want to be one of the success stories, then you need to be prepared.  Let's look at the SBDC new business checklist:
If you're starting a new business, you probably have enthusiasm and what you think is a good idea to make you some money, but part of making a successful business is evaluating both your idea and yourself before going off with nothing but blind ambition.

The SBDC guide recommends conducting market research as part of your business development process so that you understand your proposed market and the potential demand for your product or service.  This might mean using your own experience and the connections within your industry or conducting interviews or surveys of potential customers.  Regardless of how you go about it, here are the questions SBDC recommends you ask:
  1. What will you offer? Describe in detail the products/services you will sell.
  2. Why will customers want to buy your products/services and what is your competitive edge?
  3. Who are your customers? Describe the characteristics of your potential customers.
  4. How did you determine these customer characteristics and what sources did you use?
  5. How will you reach customers and motivate them to buy your products/services?
  6. Who is your competition and how do you compare? List and describe your direct competition.
For most small business owners, starting a business means being actively involved in it.  This means that in addition to evaluating your idea, you also need to evaluate yourself.  So here's a few of the questions the SBDC suggests asking yourself before you embark on your business venture:
  1. Do I like being in charge and do I accept responsibility for my actions?
  2. Am I confident in my ability to overcome obstacles and can I function in an environment of uncertainty?
  3. Am I able to motivate and inspire people?
  4. Am I willing to devote my time, energy and money to making this a success?
  5. Is the risk of my financial assets worth the expected rewards?
  6. Do I understand my own limitations and know when I need to ask for help?
  7. Do I have a history of success at things to which I am committed?
  8. Do I have a strong support-group of friends, family and/or community?
With the evaluation step complete, next we can look at the business plan.