Whether you are just starting out, or already an established business, market research is a vital activity that will help you gain competitive advantage, drive profit growth and position your products.
In this article, SWIG Business Manager for Cornwall and the Isles of Scilly, Mike Chapman, takes a look at the importance of conducting market research whilst your business is in its early stages, and continuing to regularly review your data as your business grows.
Be it at the very start of your journey, making incremental changes to your established product, or any changes in the wider market environment, market research will ensure your offering is always relevant and could also alert you to new opportunities for your business.
For many large companies that have suffered collapse, it is almost inevitably due to a lack of planning and market research. For example, Blockbuster famously collapsed after failing to spot the move to online streaming services, and mobile giant, Nokia, collapsed after failing to recognise the changing market trends.
To help you better understand the impact of market research, here are four effective ways that market research can be implemented to improve your business.
Lower your business risk
Use market research to ensure customers actually want, and will pay for, the product or service that you are offering.
Use questionnaires and minimum viable products (MVPs) to quickly and cheaply test the market before ploughing time and money into a product that you may not be able to sell.
Be careful to get the viewpoints of a wide range of people. Friends and family tend to be biased and might skew your results with an unrealistically positive view of the market!
Accurate financial forecasting
Being able to accurately and realistically forecast business growth based on reliable market research is essential.
Firstly, in applying for finance – any finance provider is going to want to see a believable forecast that underpins your ability to take on finance.
Secondly, in managing working capital. Poor forecasting because of inadequate market research will negatively impact your business. For example, incurring unnecessary costs, or purchasing too much stock which you cannot sell.
Effective market research is going to help you gain a much deeper understanding of your customer, and competitors.
Details about who is buying your product, what motivates them, and how they find your service is going to be essential in making efficient and effective marketing spend.
A common problem is spending a large percentage of marketing budget advertising to the wrong audience.
What is your end goal for this business? Is it to simply run it in perpetuity and take an income, or perhaps you plan to sell it on at some point?
Understanding who the potential buyers could be, and what they would look for in your business will be helpful in achieving your goals.
For more information on how to conduct market research and defining your goals, The Start Up Loans Company have produced a free Marketing Toolkit. You can access these guides here.
About SWIG Finance
SWIG Finance is the South West’s leading Community Development Financial Institution. We are passionate about bringing social and economic benefits to people and places in the South West.
We do this by providing support and finance to Startups and growing SMEs that can create and secure employment opportunities.
As the South West’s leading delivery partner for Start Up Loans UK, we can provide startup loans from £500 – £25,000. For more information visit https://www.swigfinance.co.uk/start-up-loans/
We also have loans from £25,000 to £250,000 available to South West SMEs who cannot access sufficient funding from their bank https://www.swigfinance.co.uk/funds-available/
For an informal discussion about your funding requirements, get in touch with our friendly and professional team to find out how we can help: firstname.lastname@example.org / 01872 227 932.