I spoke with a young gentleman today about his dream to start a business. That's not a rare occurrence as I deal in such discussions quite a few times every week.
As we began talking, it was obvious to me that he was passionate about his idea and his plan to take that idea to market.
His reason for contacting me was to find out where he might begin looking for funding to finance his project. It was the next item on his "to do" list.
He showed me a timeline he had drawn up that suggested a list of steps every entrepreneur needed to address, in chronological order. He had copied his list, he told me, from a book he had read on "How to Start a Business."
As we talked a little further, I asked him if he had taken any steps to test the validity of his idea. He had, he said, spoken to several people who were employees in the same field and they gave him encouragement to "go for it" . . . I guess meaning that they were wishing him luck in his new venture.
There was a single line item on his checklist, about a third of the way down, that was simply stated: "Have you done market research on your product?"
Since there was no further explanation of "market research" he assumed, I suppose, that it meant testing the market by getting opinions about the usefulness of his idea.
I explained to my young friend, that my idea of market research was something quite different than what he had done. I also told him that this step would be at the very top of my list of things to do in starting a business, regardless of what kind of business it was.
I believe market research begins with the customer.
The purpose in doing research is to determine as much as you can about who that customer is, what his/her preferences are, where he can be located (physically and online), and what he might be willing to pay for a product like yours.
Your research could also include some peripheral characteristics about your customer like what products he has purchased in the past, which of your competitors he has dealt with, what are those competitors currently offering and how are their businesses and products being sold and accepted in the marketplace?
Your research will likely also touch on the process you plan to use to put your product in the hands of that customer. What is it going to cost you to develop and "build" the product, how will you distribute it, how will your customer find your product, and what will it take to get him to buy it once it's laid in front of him?
How many customers like the one you've been profiling, are there in the pool of those you'll be able to contact? Where does this group "hang out" and is there one or more places where they congregate online? Are there lists of this same customer type available, and what will they cost me to get access to them?
I strongly believe that business begins with the customer, "the perfect customer" as he is often called. The perfect customer is the embodiment of everything you would want in the exact customer that is correctly targeted for the product or service you plan to sell.
What good does it do to begin your business with you as the perfect customer?
If you create a business without doing research into customer wants and characteristics (like we've mentioned) you are simply saying that your desires and habits are the same as those of all your potential customers.
Could it be that your own desires are influenced by your imagination that millions of people are already craving your product? That's a very risky assumption to base your whole business on.
