Market Research: The Most Critical First Step to Launching a Business

Recently I was asked to start contributing posts to Christi and Joe Wharton's great blog on E-commerce about small business issues, and after listening to her recent radio interview with Margaret Banks about turning Passion into Profits; I thought the first group of posts should cover resources for entrepreneurs to get a better understanding of their business to determine whether their idea was feasible.

At the Arkansas State University Small Business and Technology Development Center, my consultants help a new client by conducting market research. Our consultants concentrate on 4 primary areas initially: Industry Information, the Market Place – consumer trends, competitive analysis and financial benchmarking. In this post I want to share some of the best sources we use to get a better “feel” of the industry.

A good working knowledge of the industry your venture will operate in is a critical first step. The key is to find good reports that cover current economic conditions, trends within the industry, issues important to business owners in that industry, and the overall distribution channel.

My consultants start our industry research out with 4 sources:
First Research http://firstresearch.com,
Hill On-Line Library www.hillsearch.org,
National SBDC library www.sbdc.net.org
Data Monitor reports at www.marketresearch.com, and

The best source for a concise overview that we have found is First Research. A 12-15 page overview for the industry including:
• competitive landscape,
• sales & marketing issues,
• current finance & regulations impacting the industry, and
• human resource issues.

It also has a section on recent developments (updated quarterly to ensure current information) and current business challenges that the industry is facing, as well as benchmarking financial information, forecasting, and links to other sources.

Our consultants pull First Research reports on the client’s specific business as well as businesses in the distribution chain to include wholesalers, manufacturers and complimentary types of business. First Research reports run from $130 to $250 per report.

Professional trade journals are another good source of current industry information. The ASU SBTDC uses the Hill On-Line Reference Library’s Special Issues section to find current information from trade journals these journals often have quarterly or annual “State of the Industry” reports accessible through the Hill Library. For research in multiple professional journals, Hill can be a more cost effective option to purchasing from individual journals. Hill Library annual subscription is $225 and allows the subscriber to access a wider variety of reports most included at no additional cost as part of the annual subscription.

SBDCNet is an on-line library for Small Business Development Centers to research client information on a variety of industries. Although primarily for SBDC offices, the general public can access SBDCNet and has limited ability to pull reports.

Finally, Market Research.Com’s DataMonitor reports are an excellent (although very expensive) source for detailed industry data as well as recent studies on different consumer issues. Data Monitor reports can be ordered from their website and run anywhere from $500 to over $5,000 depending on the type of report.

Obviously there are many resources available to a small business to conduct research but these four are great places to start. While the cost can be quite high for a small business owner the “intelligence” provided is invaluable.

In Arkansas any small business can receive information from any of these sources through their local Small Business and Technology Development Center, and by signing up as a client this information is free of charge as part of our market research projects with our clients. For more information about how you can access any of these sources through the Arkansas SBTDC feel free to shoot me an e-mail; hlawrenc@astate.edu, call our office (870) 972-3517, join us on Facebook www.facebook.com/asu.sbtdc or make a request using the comment section on the blog. We would love to hear from you and see how we may be able to help your business. If you are outside of Arkansas we can direct you to the nearest SBDC in your part of the country.

Next time I will show you some great sites and resources to start conducting research on your potential customers.