Researching your new idea and making sure it is viable is an essential part of your market research. You’re probably doing this already by talking to friends and family. It’s usually better if you collect research from the market, rather than conversations from people you know, who may tell you what you want to hear.

To help collect accurate information about your business idea, try the following research tactics.

Use the Internet to Research

There is a lot you can do from your laptop or phone with the internet being your best friend to discover what’s happening in your chosen market. Go undercover and search for:

• Your main competitors, what they say and offer
• Comparative prices and services
• Experts commenting on your industry trends
• Social media opinions and blogs
• Supplier and set up costs

Start to build a picture of your industry characteristics. Is demand increasing, is there room for another business, can you compete at the current price, do you have an edge or difference that allows you to grab market share from competitors?

From this initial research, if you can demonstrate a clear competitive advantage and the business opportunity has a stable long-term future, then your idea looks promising.

Ask Potential Customers

Nothing beats asking someone directly if they would buy what you’re offering, at the price you want to charge. To help you do this, profile your ideal customer by describing their demographics. This includes their gender, age range, location, income level, profession, etc. If you’re targeting businesses, list their characteristics such as, business size, location and what they sell.

Then identify the people or businesses that match your customer segment and make contact, or find their details in business directories and ask them:

• What they like about your business idea
• What they don’t like about your idea
• If they’d buy and how often
• If and why they would switch from their existing supplier
• What they are prepared to pay

The key is to obtain feedback that gives you a direct answer, even if it’s negative, to really know what people think.

Talk to Industry Insiders

Suppliers, industry associations, chambers of commerce or local business support agencies should all have an opinion on the chances of success for your idea. They’ll hopefully have a good working knowledge of your industry, market trends, any latest innovations as well as insight into the volume of purchases of similar businesses to guide you.

Also ask them:

• If the market is likely to continue to grow
• If your pricing is realistic to make a profit
• The best way to distribute or sell to your customers.

Though often the main reason to talk to suppliers is to research costs and the terms they’ll give you, take the opportunity to find out about the industry and your market potential at the same time.

Test the Market with Actual Customers

There is nothing better than selling to real customers to test the market. If people are buying and especially, re-ordering, it’ the ultimate proof that your idea is viable.

How you do this will depend on the type of industry you are in. You could:

• Develop a working prototype
• Create a minimum viable product (MVP)
• Produce limited runs of your product
• Deliver a service part time while you’re still working.

Balance this market validation with the cost, so you’re confident to keep going if the feedback is positive. Anything to track what customers actually do is like gold and should give you a better estimate of demand.
Use this collection of insights, research, data, feedback and conversations to guide your decision and if your information points to a viable business.

Diamond Credit Union’s Business Service’s Team is here to help you with your business.