Market Research: What to Know Before Starting a Business

Sure, your product’s great, but will anyone buy it?

The most important step before you open a business is to do your research on the market. First ask yourself if anyone other than you wants your specialty item, where those people live and how much they want to pay. Let’s do the example of a bakery. I’ve seen all sorts on the Suncoast including cupcakes, macaroons and cake pops.

In this scenario pretend you want to open a sugar free pie shop on Main Street in Sarasota. What do you need to look at before you start?

First, research how health conscious the population around your proposed location is. Creating sugar free pie will require you use a lot of expensive specialty ingredients to make sure the pies still taste sweet. This will mean a higher price for your pastries. If people don’t care about the sugar content of their pies, then they won’t choose your bakery over another. The price will still be a factor even if you discover a large population interested in your product. They might prefer sugar free pie and be willing to pay more for it, but only up to a point. Then customers will either choose a less expense product or decide to forgo dessert altogether.

You also need to research your competition. Mystery shop at the other bakeries and see what they offer. Remember, even if they don’t serve pie they can still be competition because they provide another choice. This means that Popsicle stands and ice cream trucks are also your competition. Ask yourself what sets you apart. In the summer people might want a nice cold Popsicle instead of hot apple pie. Popsicles are often made of fruit, which would be a draw for the health conscious customers you are targeting. What will you offer instead?

Finally consider your location very carefully. Main Street might seem like a busy place every Saturday during the local Farmer’s Market but can get quite slow during the week. Do people looking for sugar free dessert live in Sarasota or are they concentrated on Ana Maria Island? Do you want to be next to a restaurant or in a long line of retail stores?

If you can find an answer to all of these questions you just might be ready to start your own business. We can help. Give us a call at 941-744-2666 ext 2 to set up an appointment today!

Click here for some great free online market research tools from Entrepreneur.

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