When you come up with a great idea, it’s tempting to keep it secret until you launch your product or service. But one of the best things you can do to save yourself from doing unnecessary work is to test your idea with others and see if there’s demand for it.
However, as an individual entrepreneur or owner of a small business, you don’t have unlimited amounts of time or money — so how do you conduct your preliminary market research in the most time- and cost-effective way? What steps are essential, and which ones are optional? Are there any tools you can use to eliminate the amount of manual labor required of you?
This article will cover the tools you can use to validate demand for your idea so you can be more confident that the time you spend on your project won’t be in vain and more likely to succeed.
Find What You’re Looking For
Articulate What You’re Trying to Do
Before you begin your market research efforts, you’ll need to have an idea fleshed out enough that you can write and speak articulately about it. It doesn’t have to be as short as an elevator speech, but it shouldn’t be pages and pages of description either. Here are some resources you might use to help you develop your idea:
- Inc. Magazine’s 4 Simple Questions to Ask Before Getting Excited About Your New Business Idea
- Bright Ideas for Business’ Got a Good Business Idea? 6 Questions to Ask Yourself
- Entrepreneur’s 20 Questions You Can Ask to Validate Your Startup Idea.
Once this is done, you can begin your research endeavors.
Check the Existing Marketplace
If you’re completely new to market research, consider viewing this market research course for beginners.
At a high level, you can use your favorite search engine (chances are, it’s Google or Bing) to see what currently exists and is similar to your idea. Two things to keep in mind:
- Be sure to go past the first page of search results; while consumers may be reluctant to view links buried in search engine results, you should dig deep to identify your peers and competitors
- Finding other options that are similar to your idea doesn’t mean that you shouldn’t pursue your idea; if anything, it means that there is demand for the product or service you’re proposing. However, you should note what the current products/services are offering and think about how they differ from your project.
Your search should also include social media platforms and other resources, such as job boards. While looking on job boards and the like seems a bit strange, you’re likely to find information about scrappy startups in this realm.
Finally, you can use Google Trends to see how popular certain key terms are. By looking at words that are likely to be affiliated with your brand, you can see if people are searching for it. For example, if you’re contemplating a rent-to-buy service for handbags, consider trends research for “handbags,” “women’s fashion handbags,” or “purses.” Try to use both generic and specific search terms.
There are very few truly new ideas, but don’t let this get you down. You can use the tools above to see what’s been tried before, what worked, and what didn’t. And by standing on the shoulders of giants, you can increase the probability of success.
Identify and Understand Your Audience
Who is your audience? Who is likely to pay you for your goods or services?
The more specific you can be about your target audience, the more likely it is you can gather data that informs your action. You probably have in your mind an idea of what you target’s demographics are like, but if not, here are some resources you might find helpful:
- The US Census Bureau (more specifically, the American FactFinder) is an excellent source of social, economic, household, and other demographic data points
- If you don’t know which agency collects the data you want, consider FedStats
- The US Small Business Administration links to data on business conditions and economic indicators collected by the federal government.
You can use the information you collect to help inform your data gathering process.
Talk to People Who are in Your Target Audience
At the most basic level, you can simply talk to those in your target audience — preferably those outside your network. Avoid your friends and family if at all possible to reduce the possibility of them skewing your data points by attempting to spare your feelings.
Sit down with (or send an email to) that person, and ask them questions. Explain your idea, ask them if it sounds like something they’d be interested in, and talk to them about whether your product would be able to solve any of their pain points. Prepare your questions (preferably open-ended ones) in advance so that you can elicit helpful information from your contact, not just answers to your questions.
If money permits, you can always consult with a marketing agency to help you through the process. GreenBook maintains a listing of those offering such services.
You can also survey your audience to see what they think. Survey Monkey is a great option for creating surveys, but if you want something even simpler, Google Forms will do. If you don’t have an audience already, consider using Ask Your Target Market (AYTM), which is a service that allows you to survey a panel drawn from a pool of over 25 million people around the world. AYTM surveys are free, but you don’t have to pay for each response you get.
Craiglist, as well as other local or community forums, are also a good option for meeting other people.
If you’re planning an idea that’s related to online shopping, Google’s Consumer Barometer will help you determine what drives people to buy certain products.
Finally, be direct. Ask your users if they would pay money for your product or service. While you might think that a “yes” answer is what you’re going for, hesitation — or a “no” — might be more useful. If the person hesitates or demurs, ask follow-up questions. Why wouldn’t they pay for the idea you’re proposing? What would make it better?
Ask for Help
You can consider this step to be the inverse of talking to people who are in your target audience. Talk to someone who is in your industry (or in an industry that’s similar to the one you want to be a part of).
This is where using your network comes into play. Hopefully, there’s someone you know who has the experience you’re interested in learning about. If not, social media would be great at asking for introductions and connections — because this is a professional endeavor, we recommend sticking to LinkedIn. Cold emails or more casual social media networks may not be as helpful, but if your trail towards a mentor turns cold, you might consider these options anyway.
Don’t forget that the US Small Business Administration has lots of local offices that would be happy to connect you with someone who’s been in the field and would be willing to mentor you. However, don’t discount those who aren’t in your area. For example, if you are interested in starting a business where geography matters, someone who doesn’t serve your market might be more candid since you won’t be direct competition.
Write it Out
At this point, you’ve got a reasonably articulate explanation of what you’re trying to do, and you’ve talked to multiple people about your idea. You’ve probably refined your idea somewhat over this period of time, and if your project still looks like there’s a chance of success, it’s time to sit down and create a business plan. By writing a business plan, you’re forced to consider all aspects of your business — you can’t just brush past any issues that might sink your business before you even get started.
However, writing a business plan isn’t necessarily easy. As such, there are many resources you can use to create yours. We’ve created a step-by-step guide to creating a business plan, but if you’re comfortable with DIY, you can find templates at the following sites:
- Palo Alto Software’s Business Plan Template
- Chris Guillebeau’s The $100 Startup One-Page Business Plan
- Score’s Business Planning & Financial Statements Gallery.
For the DIY options that offer the most assistance, consider using some type of software. For a free digital option, the US Small Business Administration offers a free Build Your Business Plan app that acts as a step-by-step guide as well as a template.
The current best-selling business planning software solution is Palo Alto Software’s Business Plan Pro. However, Palo Alto Software does have competitors that offer some very good alternatives, such as:
There are also services that can help you write your business plan, such as RocketLawyer and BPlan4U.
Build a Prototype
Building a prototype is a great way of getting a physical product into the hands of your potential customers. Some mentors actually recommend creating multiple prototypes throughout the design and creation stage.
This can result in feedback that is more tangible and actionable (after all, the user can actually use your prototype instead of just envisioning and imagining your idea). Remember: it doesn’t have to be perfect, and it doesn’t have to have a full feature set. It just has to be enough.
In the past, the only way you could get a prototype of your physical product was via an existing manufacturer (and depending on what you’re trying to create, this might still be the case). However, with the rise in availability of 3-D printers, you might be able to rapidly prototype items on your own.
If you’re interested in starting a physical location in addition to an online business, you might be able to do business on a small scale. The classic example is starting a food truck if you’re interested in opening a restaurant, but this idea can apply to any number of businesses, and it can be a useful way to measure demand.
Prototypes aren’t limited to physical objects or small-scale businesses, however. You can easily prototype apps and websites, or create wireframes that demonstrate what you’re trying to achieve. Here are some options for digital prototyping:
Any of these options will allow you to build a page, layout your features, and demonstrate to your users what the flow of your product will be like, allowing them to provide you with very helpful, very important feedback.
When you’ve come up with a great idea for a product or service, it can be tempting to keep your idea up wraps, lest it gets stolen by someone else before you can implement it. However, doing so may backfire. We recommend doing extensive research to test the possibility of success and validate the demand for your project.
As individual entrepreneurs or small business owners, you might be limited in the amount of time or money (possibly both) that you can spend on the marketing research phase. The resources we’ve picked out will be helpful to you as you test your ideas and hopefully find the information you need to make sure that your launch is a success.