It’s one thing to spot an idea, it’s another to have it succeed at the marketplace. To tell you the truth, most of the business ideas you will come across out there are only good on paper – only when you implement them will you realize that they actually require a great deal of luck to translate into profit. So, before you take a plunge and before you even pump your life savings into any business it’s important to do a quick market analysis. Sounds like rocket science? Worry not for we have broken down all the steps you need to take to determine your venture’s chances of success.

Simplified Market Research For a Small Business

Step 1: Paint a Picture of Your Ideal Customer

Knowing who your customers will be, how they behave and what they expect of you is the single biggest favour you can do to your business. By painting a picture of the “ideal customer”, you are better able to identify whatever problems they face and thus the solutions they need. If you can’t easily identify who your potential customers are likely to be then chances are that your idea is faulty and you need to go back to the drawing board.

Step 2: Snoop On To Their Spending Habits

Now that you are familiar with the traits and behaviors of your customers you should try to figure out their spending patterns. Do they tend to spend more at the beginning of the month? Are they more likely to spend during Christmas? How much are they likely to spend per single visit to the shop? Asking yourself such questions before you set up shop may sound like a stupid idea but it actually helps you set realistic expectations. It also helps you adopt a more suitable business model so you can streamline your operations.

Step 3: Get Them On Your Speed Dial

It’s one thing to figure out who your customer is and how he/she spends their money…it’s another to actually reach them and get them to know that you exist. What I would like to insist at this point is that, because your business is still small, you will want to use the most affordable yet highly effective marketing option. Do you go marketing your stuff door to door or do you simply do a Facebook ad? Do you book a newspaper ad or do you simply get some billboards in town? Figuring out which method of marketing to as early as possible is the best way to kick-start a business.

Step 4: Keep Your Enemies Closer

Knowing who your competitors are, and what they offer, can help you make your products and marketing strategies stand out. That can also enable you to set your prices competitively and help you respond to rival strategies with your own initiatives. This knowledge can also help you to be realistic about how successful you can be. For instance, if you notice that a certain market is full of suppliers yet the buying power of consumers doesn’t seem to be growing, it would be safer for you to keep off. Likewise, if you notice that despite there being too many competitors most are using inefficient methods to operate, then you can jump in and beat them all by using more efficient methods.

Step 5: Sharpen Your Claws

Your competitive edge (or claws in this case) could be the fact that you are able to wake up earlier and deliver your milk to the market before everybody else. Or it could be the fact that you can use a motorbike to beat traffic and deliver orders to your clients on time. In some cases your competitive advantage could be the fact that you have got good communication skills that make customers want to come and get their manicure and pedicure done at your salon as you share some stories with them. So identify your competitive edge (read: claws) and be ready to do whatever it takes to stand out from the pack. It’s unwise to go for a fight with your claws clipped.

Final Word

So ladies and gentlemen, the next time your friends tell you to invest in quails tell them…”Not so fast, I have to do a market analysis first”…then come back to this article and follow these 5 steps. If the idea is faulty it won’t make it past step 1 because obviously it will not be even be possible to paint the image of the “ideal customer”. In other words, reading through this article is a small price to pay for a life-time of success in the murky waters of entrepreneurship. All the best folks.