Entrepreneurs have many great ideas, some go on to become hugely successful businesses, whilst other fail. Sometimes the idea fails because it is simply not a good idea and not a viable business opportunity, others may lack the resources needed in order to turn them into a business. However, some fail simply because they are not researched well. This article will explain how researching your business before you start, is crucial to its success.

Evaluating the size and nature of the market your business idea will enter, plays a significant role in its future success. If the market is saturated with other similar businesses, then competition will be fierce. This may mean that the idea needs to be altered so that it offers something slightly different to other similar companies. It could also mean that pricing needs to be changed in order to compete in such a competitive arena. However, in a large market there will be more potential customers, this is always good for new start up companies.

Alternatively the business idea may be entering a smaller more niche market. In this case, you must conduct extensive customer research in order to assess if the market will grow. You must also evaluate if there is indeed a demand for the service your business offers. Additionally, a small market means that your potential customer base will decrease. This must be taken into consideration.

Researching the nature of the market is vitally important. The history of the market should be taken into consideration. What are common trends? By knowing the history and trends, plans can be put in place to respond to changes in the marketplace.

These factors need to be thoroughly reviewed when setting up your business. If you do not analyse the nature and size of the market, then bad decisions are likely to be made as they will be made on limited information. By having extensive knowledge of the market, you are able to make rational decisions based on substantial information, for the benefit of your business.

Before turning an idea into a business reality, some research into competitors must be undertaken. Firstly, it is important that the main competitors are identified. Their prices need to be looked at and compared; this is essential, as pricing in a new business needs to be competitive. After reviewing this, three questions must be asked: What are competitors doing better? What are they doing worse? How can we improve the business by learning from competitors?

Asking these questions then allows your business model to change. For instance, it could came to fruition from your research that competitors have a lack of focus on customer service, your business could then focus upon promoting customer service in order to exploit this deficiency. Alternatively competitors may be offering a more comprehensive service. This would obviously mean that your business would need to respond to this and at least equal the service provided by competitors. By having this information, you are able to maximise every part of your business and compete with your rivals.

Perhaps the most crucial research you must do before you start your business is knowing who your target customer is, this will then lead to effective marketing. You must define what customers your business will be aimed at, this could be a large or small audience, depending upon the nature of your business. Factors could include geography, demographics, gender, age, size of company or income. Once these factors and others have been analysed and a target customer identified, you can tailor your marketing campaign towards this audience. This will mean that the people who will see your marketing campaign are those likely to use your business. Without this research many people who are highly unlikely to engage with your business may see your campaign, this makes it ineffective.

Research is a time consuming process and as the saying goes ‘time is money.’ However, as demonstrated in this article its benefits are tremendous. Your business has a far better chance of success if you have researched thoroughly. This means that when you do set up the business, decisions are made faster and more efficiently, as they are based on information and not guess work. Too many start up companies fail to see the value of research, thus many run into problems very quickly.