Research. When the word is mentioned to inventors or entrepreneurs they roll their eyes, cringe or get a blank look on their face. I get it. Some see it as a daunting task. They really don't know where to start and rarely does it have any immediate pay off so there is no motivation to do it! However, shying away from doing that research is at the heart of why many entrepreneurs fail early on. Whether it's lack of understanding of the market, poor product development, poor location, poor planning or even cash flow problems, many of these can be solved or even prevented with good research.
If research is a big part of an entrepreneur's failure, then doing the research should prevent them from failing, right? Unfortunately it's more a matter of knowing how to do the research correctly than actually doing the research. Many inventors and entrepreneurs simply don't know how to do research or know what to look for in that research.
I sat down with Lisa Heisey, a market research specialist, and asked her to explain what are the key elements of research and some ideas on how to do it effectively.
WHY RESEARCH IS CRITICAL
Inventors and start-up entrepreneurs often become too focused on the details of developing their new product or service. Market research is the important piece that helps them step back and see the big picture of how their product might fit into the marketplace. Through market research, entrepreneurs gain valuable information about industry trends, who their competitors really are, and which consumers they should target and how. Start-up entrepreneurs benefit from market research in developing, fine-tuning and enhancing their particular product or service, which ultimately leads to greater revenue through new customers.
DOING EFFECTIVE MARKET RESEARCH
In order to do good research, an entrepreneur needs to start by getting up to date on their industry and learning the best, most reliable sites and contacts within that industry. Business statistics, industry expert blogs, trade magazines, and consumer sites are all important in the search for quality background information and leads. Entrepreneurs need to be organized and methodical when conducting the market research, which should include up-to-date information including quantitative (numbers, statistics) and qualitative (feedback, anecdotes, personal stories). It is important that they document their findings and be able to cite where they found them.
They can gather some of this information by using a combination of secondary and primary types of research. Examples of secondary research are internet searches and reviews of online sites such as Amazon and other online sellers for similar or competing products, while primary research might consist of consumer surveys or first-hand interviews with experts in the field.
SOLID RESEARCH LEADS TO SUCCESS
Market research should help entrepreneurs identify specific market trends that may affect their new business or product. It should also identify existing and potential competitors, potential customers, how their idea can be differentiated from existing products, pricing trends and other useful information that will allow them to improve on their product or service while it's still in the pre-launch or development phase. All of which leads to a more successful endeavor, even if it means scrapping the idea.
This is the first in a monthly series about topics of interest to entrepreneurs. Lara Merriam-Smith is the program manager for NW Innovation Resource Center, a Bellingham-based organization that supports economic opportunities through entrepreneurial innovation in NW Washington. They help inventors looking to take products to market and connect new start-up businesses with resources to help them grow. For more information go to nwirc.com.