Is My Business Idea Viable? Time To Do the Research

You’ve got your business idea, the drums of excitement are banging, the visions of freedom and riches are soon to be on the horizon! 

But what happens now?

If you’re still after the idea, check out our blog on, “How to come up with a business idea.”. Good luck, and be sure to come back here after.

Whether you have one or many ideas on your list, how do i know if my business idea is viable? 

Should you close your eyes and jump straight in?

Would you turn up to an exam without doing any classes or revision?

There are few of us in society who can get away with this and still manage to get that A* but most people, especially myself, would feel a lot more comfortable and confident doing the homework first.

The only difference in business is that there’s other things at risk too, such as:

  • The most precious asset, your time
  • Customers and colleagues time
  • Money
  • Missed opportunities
  • Your reputation
  • Depending on what your niche is there can be some really serious risks, such as people’s health and wellbeing, the feasibility of other businesses, and legal issues.

Even if you think that you know and understand your niche, it’s best to do some research before you invest your time and money into the endeavor.

The process is called market research.

What is Market Research?

So, how would it be possible to earn enough money, and free up valuable time, to do the things that you want so bad? You can buy a lottery ticket, for sure you’d be rich if you won but I wouldn’t put all your eggs in one very very unlikely basket. 

Market Research Map

“Market research is the process of determining the viability of a new service or product through research conducted directly with potential customers..” – Investopedia

Market Research is used to understand whether your business idea would practically work (beyond the theory) and make a profit, also known as business feasibility. 

In order to understand the feasibility of your business idea, there’s a variety of information that you’ll need to gather to make an informed decision, this includes:

  • Who your customers are and what their requirements are – known as your ‘Target Market’
  • Who else is working in your niche and how do they do it – ‘Competition’
  • What are the trends in the niche – ‘Industry Trends’
  • Will there be enough money to make it work – ‘Financial Feasibility Analysis’
  • Piloting your idea

There are two types of market research out there, primary research and secondary research.

  • Primary research is done by you, or you could pay somebody else, where you’re generating new information that isn’t already available. The advantage of this method is that the information you get will be specific to your questions but this can often be time consuming and expensive.
  • Secondary research is information that already exists, for example; looking at public records. What’s great about this type of research is that in most cases the information is free and readily available, however, you’re subject to the quality of the work and it might not be specific to your aims.

Top tip – Apply these two methods of market research to all of our suggested methods in the “How to research your idea?” section. 

You can read more about the differences of both types of research at mymarketresearchmethods.com

Why carry out market research

We’ve already mentioned that market research is probably something that’s not worth missing but what REALLY is the point to it all?

One thing we all can agree on is that people all want their decisions to be easier. Market Research will do exactly that.

Have you ever been to an electronics store and been overwhelmed by the amount of choice there is, and worried you’re getting a good deal for your money?

Market research is like detective work, where you gather information that helps you to make a more informed decision.

So, you can walk into the store and overlook the techno-babble and tell the salesman you want the mid-range spec, pink laptop with the fluffy case because, compared to the others it’s the best bang for your buck.

Still on the fence?

Here are some of the positives of market research that might persuade you to invest the time it needs:

It helps you to identify the risks and gives you an opportunity to address them earlier: If done effectively, market research will give you a better idea of the niche that you want to start up in. When you’re investing valuable assets (time, money etc.) into a business, you want to make sure that they aren’t wasted on a venture that was destined to fail from the start or would have minimal return on the investment (ROI). It also prevents you from having to react quickly to situations as you’ll have already identified a variety of threats and opportunities and planned accordingly.

You’re able to identify potential opportunities: The research that you do will give you a competitive advantage over your peers, this is because you’ll have a data set that will allow you to identify common trends or patterns. You can use this information to spot any opportunities either now or coming up in the future.

You discover your competitor’s strengths and weaknesses: It is important that you explore what your competitors are doing well and determine how you can offer better value. You’re also able to capitalize on any of their weaknesses, making your service or product a more attractive alternative. If other businesses have already done something similar to what you’re planning on doing then you can learn from their mistakes before you make them.

It helps you set out goals and expectations for the future: From an early age we’re all encouraged to plan ahead, this is often led by objectives or goals that we set. The research that you’ll do will give you a head start at predicting how well you might be able to progress over a specific period and this can be used to set realistic and achievable goals. All of a sudden, from a very simple process, you’re able to set realistic expectations about how you’ll perform, which is essential for your investors and your business’s reputation.

You can estimate your earnings: Closely linked to goal setting, this is especially relevant if you plan on securing loans or grants for your business. Once you’ve crunched some numbers and done some whizzy math, potential investors will want to know how much money your business is likely to earn over a given period. The financial estimates are vital aspects of determining if your business is viable or not. See more on the section about financial feasibility.

It can make your marketing more effective: The information you collect will give you a solid understanding of your customer profiles, therefore, you’ll know where to reach them e.g. via social media, a notice board at the local community centre, or an advert straight after a dance video on youtube.

You’ll also have a better understanding about the content that you will want to include for your advertisements, for example: if you’re selling fishing rods for beginners you’ll know to include more of the basic information as opposed to some of the technical lingo that a master angler might be familiar with.

So, you can walk into the store and overlook the techno-babble and tell the salesman you want the mid-range spec, pink laptop with the fluffy case because, compared to the others it’s the best bang for your buck.

Still on the fence?

Here are some of the positives of market research that might persuade you to invest the time it needs:

It helps you to identify the risks and gives you an opportunity to address them earlier: If done effectively, market research will give you a better idea of the niche that you want to start up in. When you’re investing valuable assets (time, money etc.) into a business, you want to make sure that they aren’t wasted on a venture that was destined to fail from the start or would have minimal return on the investment (ROI). It also prevents you from having to react quickly to situations as you’ll have already identified a variety of threats and opportunities and planned accordingly.

You’re able to identify potential opportunities: The research that you do will give you a competitive advantage over your peers, this is because you’ll have a data set that will allow you to identify common trends or patterns. You can use this information to spot any opportunities either now or coming up in the future.

You discover your competitor’s strengths and weaknesses: It is important that you explore what your competitors are doing well and determine how you can offer better value. You’re also able to capitalize on any of their weaknesses, making your service or product a more attractive alternative. If other businesses have already done something similar to what you’re planning on doing then you can learn from their mistakes before you make them.

It helps you set out goals and expectations for the future: From an early age we’re all encouraged to plan ahead, this is often led by objectives or goals that we set. The research that you’ll do will give you a head start at predicting how well you might be able to progress over a specific period and this can be used to set realistic and achievable goals. All of a sudden, from a very simple process, you’re able to set realistic expectations about how you’ll perform, which is essential for your investors and your business’s reputation.

You can estimate your earnings: Closely linked to goal setting, this is especially relevant if you plan on securing loans or grants for your business. Once you’ve crunched some numbers and done some whizzy math, potential investors will want to know how much money your business is likely to earn over a given period. The financial estimates are vital aspects of determining if your business is viable or not. See more on the section about financial feasibility.

It can make your marketing more effective: The information you collect will give you a solid understanding of your customer profiles, therefore, you’ll know where to reach them e.g. via social media, a notice board at the local community centre, or an advert straight after a dance video on youtube.

You’ll also have a better understanding about the content that you will want to include for your advertisements, for example: if you’re selling fishing rods for beginners you’ll know to include more of the basic information as opposed to some of the technical lingo that a master angler might be familiar with.

How to research your idea?

Now we now know what market research is and why we should be doing it. Where do we go from here?

It’s time to set sail on our market research adventure, all aboard!

Market Research ship helm

The next sections are going to explain some of the key areas that you need to cover in order to understand if your business is worthwhile starting. Let’s kick off with Identifying your target market.

Identify your target market

What does 'target market' mean?

“A target market refers to a group of potential customers to whom a company wants to sell its products and services. This group also includes specific customers to whom a company directs its marketing efforts. A target market is one part of the total market for a good or service.

Consumers who make up a target market share similar characteristics including buying geography, buying power, demographics, and incomes.” – Investopedia.”

The idea here is that the ‘target  market’ are the potential customers who are most likely to buy your product.

With the above explanation in mind, it’s important to say that you’re not excluding people outside of your target market in your business, but instead you’re looking to get more ‘bang for your buck’ when it comes to budgets for advertising or focusing your general resources.

Why is it important to identify your target market?

Understanding who your customers are is an essential step for a number of reasons:

  • You can adapt your marketing strategies to suit the customer profiles
  • If you’ve not yet developed your product or service then you can gather customer requirements and tailor your product to their needs
  • The two points above will enable your business to save money and be more efficient with its efforts, for example: you’re probably not spending your marketing budget well if your retirement home adverts have been put on Tik Tok, which is well known for its younger audience in 2020

Why is it important to identify your target market?

Understanding who your customers are is an essential step for a number of reasons:

  • You can adapt your marketing strategies to suit the customer profiles
  • If you’ve not yet developed your product or service then you can gather customer requirements and tailor your product to their needs
  • The two points above will enable your business to save money and be more efficient with its efforts, for example: you’re probably not spending your marketing budget well if your retirement home adverts have been put on Tik Tok, which is well known for its younger audience in 2020

How do you identify your target market?

There are three main steps to this:

  1. Get to grips with what your business offers and the problems it can address, once you have this you can then start to think about the types of people who would usually encounter these issues.
  2. Create buying personas of the people who would benefit from your offering. These are essentially profiles of the types of people who would be your main type of customer, e.g. where do they live, what is their age, what are their buying habits, what’s their average budget, how would you get your brand in front of the customer, etc.
  3. Further research: Now you know the types of people that you’re looking for using your buying personas, you’ll have a much better idea of what to explore alongside the rest of your research. The more research you do, the more your target market will grow and evolve.

Research your competition

This part of market research is aimed at learning and understanding as much as you can from other businesses within your niche.

Search engines

If you’re just starting out a good place to “kick off” would be a simple google search, punch in the phrases you’d expect customers to use to find your business. For example, if I had a window cleaning business that was based in Cardiff, I’d type in “Window cleaners in Cardiff”. The businesses that appear at the top of the page are likely to be leading the market for that search term and are likely to be your competitors.

Top tip: try using different variations of the search terms that could be used to find your business, there’s a chance that businesses will rank differently depending on the exact search term or phrase.

There’s a lot of information that you can get from a website, but also a lot of info you can get if there isn’t one or if it’s a very poorly made website (and you don’t have to throw a stone very far to hit one of those).

Here’s a checklist of key pieces of information that you’ll want to note for each of the different businesses you’ve found in your area:

  1. Is there a website & is it user friendly?
  2. Company name and location
  3. What services are on offer
  4. How easy is it to contact the company or to make a purchase / order?
  5. How are the services or products delivered to the customer
  6. Prices for each service
  7. Objectives and vision for the company
  8. Are they hiring? If so, what jobs are on offer?
  9. Read the reviews and note who’s giving the reviews (target market data)
  10. Take note of the special offers or advertisements
  11. Make a note of any partners they work with or suppliers if named

Social media

Whether you personally use social media or not, it really is a goldmine of information.

There are three strands to this section,

  • Content
  • Followers,
  • Interactions

Content

The types of content that a business puts out is important as this is a reflection of the personality of the business, and it’s usually updated on a regular basis, so you’ll know what a business is up to almost on a live basis.

There’s a plethora of social media platforms available and each of these can be used to reach slightly different audiences with different appetites for content. Understanding the platforms a business is using is a great start to researching your competitors. Here’s a blog which describes what each platform is usually used for to get you started here.

Here are some questions to consider:

  1. How often do they post?
  2. What days and times are they posting?
  3. Does the content look professional?
  4. Is there much engagement on each post? e.g. likes, shares, comments, retweets, etc.
  5. Is the content advertisement based? e.g. are they posting ads or funny memes or a mix?

Depending on the answer to the above questions, this will give you a great insight into who the business is targeting and what the objectives of the business are.

Followers

These are the people who “follow” social media accounts and are interested in the business, and if you work in a similar niche, they’re likely to be interested in yours too.

On most social media accounts, you’re able to view the profiles of the people who follow your competitors. Take a look and get a feel for the types of people who follow these accounts on social media, maybe even give a few of them a follow yourself.

One step better than looking at your competitors followers, is looking at the recent likes and comments on your competitors posts. Take a peek at the last 3 or 4 posts and click on the number or comments section, and it will usually show up the profiles of the people who have actively gone out of their way to show interest or “like” the post.

Finding and understanding these users is a great way to build up your target audience and to gain insight into the relationship between your competitors and their audience.

Who they follow and interact with

It’s also wise to understand who your competitors follow and interact with, you can view the accounts they follow by clicking on their profile and, usually, clicking on the number in that area. 

Questions to ask yourself:

Who do they follow, are they other businesses? 

Are the accounts they follow their competitors or businesses they work with / look up to?

You can also tell a lot about a business by the way they respond to their audience, keep an eye on their posts and check out any responses they put to their customers or any other businesses they might help to promote.

Become a customer

If you really want to “go to town” with your research and get some first hand experience then you can become a customer of your competitors yourself.

Think carefully about each stage of the process, how they perform, and what they offer.

Ask yourself the following:

  1. Is the product or service easy to buy?
  2. How was the customer service?
  3. Was the payment process fair and streamlined?
  4. Did they offer you anything additional, also known as “upselling” or “cross selling”?
  5. How was the delivery process? Who delivered the product?
  6. Was the product or service good quality and value for money?
  7. Is it easy to return or refund the product?
  8. Is support available if you have any questions or problems?
  9. Did they ask you to join an email subscription or newsletter?
  10. Were there any discounts or offers available?
  11. What can you offer that they don’t?

Using the information that you gather, think about how you can use it to improve your current offering and potential ways that you could differentiate to the competition.

Attend events and conferences

“Keep your friends close but your enemies closer”

A great way to keep your finger on the pulse of your industry is by attending events and conferences, where your competitors and potential customers might be.

You could take the incognito approach and remain silent about your business, plans, and plot for world domination but in a lot of circumstances businesses are really open and generous when it comes to giving advice. It often pays dividends to be open and transparent and this is a great step to creating meaningful relationships within your niche.

Try and meet as many people as possible and pick their brains about what they do and how they’ve done it, you’d be surprised how willing people are to help out, and how much you can learn from being the “fly on the wall” in conversations.

A great way to help filter the crowds down is by using your buying personas to help guide you to the people that you might want to talk to.

Study industry trends

Looking at industry trends is a mixture of looking at the past and present, in order to help predict the future.

Predicting the future? Sounds spooky to me…

While you’re free to go to a fortune-teller or you’re perhaps talented with mystical cards, studying industry trends usually focuses on evidence gathering and using this to make informed decisions about what you should do next.

It might have been cool to turn up to college parties late, but in business it’s the opposite (that’s right cool kids). The sooner you’re in the know about the ‘next big thing’ the better.

“Industry trends are patterns or trends that occur within a specific industry. These trends may relate to price, cost, consumer purchasing, marketing, manufacturing, sales methodology or any number of other areas.” – Wisegeek

The truth is that a number of these factors are beyond your control and could impact your business, so it’s best you’re aware of them well in advance.

A great example of this is when technology advances, there has been a significant rise in the number of people using streaming services such as Netflix and Amazon Prime, therefore, the consumer behaviour has changed from purchasing DVDs to streaming movies online.

The industry has moved away from physical copies of movies and Netflix and Amazon have taken advantage of this industry trend.

So where do we find this mystical information?

As mentioned in the What is market research? section, there are two ways of getting your market information: Primary and Secondary and you’ll need to do a combination of both.

If you’ve been in the industry a while then you’ll have an advantage as you will have seen how the market has evolved over time first hand, however, if you’re new then there’s a lot more work to be done.

Here are some things you can consider doing:

  • Subscribe to industry specific magazines, blog subscriptions, and newsletters.
  • Use a search engine for information – there might be a number of open access studies, research papers, or blogs on the topics for your area.
  • Reach out to colleagues or friends that work in similar areas.
  • Join social groups, e.g. facebook groups, in your niche and keep an eye on the discussions. If you have anything specific that you want to ask then be sure to get involved in the discussions or post your own thread.
  • Keep up to date with the news, especially for your niche.
  • Follow the industry influencers on social media
  • Keep up to date with trending hashtags and topics on social media
  • Talk to your customers and see what they think
  • There are a variety of analytics tools available online
  • If you have a budget for this then you could think about hiring a professional company to do some research and provide you with a report

Conduct a Financial Feasibility Analysis

Money talks.

It doesn’t matter how great your idea is, if it’s not going to generate a profit then it’s not going to be a sustainable business or an attractive investment.

The ultimate goal of a financial feasibility analysis is to determine if an investment in the business will produce a return on the investment, and if so, how much and by when?

If you’re planning on attracting funding from banks or investors, this will make up a big part of the evidence that you’ll present in your pitch.

There are a number of financial aspects that you’ll need to consider:

  • Forecasts for sales and expenditure
  • Budgets
  • What your breakeven point is
  • Capital costs for equipment or infrastructure
  • Upfront and / or monthly costs for products or services
  • If you’ll need any loans or overdrafts and what the repayments might be
  • Staff salaries and general expenses, e.g. travel and subsistence
  • Bills, e.g. keeping the office lights on
  • Contingency funding to cover unexpected problems

Using a combination of all of the above considerations and factoring in any external influences, e.g. Industry trends, you’ll use this to work out the financial feasibility of the idea.

Put yourself in the shoes of an investor. Why would you lend money when you have no proof that you will get a return on your investment? The financial feasibility analysis will give you the information needed to calm the nerves and hand over the cash. Cha-Ching!

It’s important to note that not every idea will be financially feasible, and it’s okay to kill off an idea because of this, you’ll have to accept this as part of the process. That said, just because something isn’t feasible now doesn’t mean that it won’t be in the future, so keep tabs on all of your old ideas and check in now and then for good measure.

Piloting your idea

You can run as many models, simulations, calculations, as you like but the undisputed champion of market research is testing your product or service with the customers. You might be worried that you’re not ready for the customers to see it, but when will it ever be ready?

Do what needs to be done to get the minimum viable product ready and ship it out, not to the world but to small focused groups who can give you feedback on the idea. When choosing people to test your product or services, don’t just approach friends and family , try and approach people who can give an impartial and balanced view. Use your buying personas to help identify potential testers as these groups are most likely to buy your product or service and will make up a large part of your income.

Put your pride aside here and ask the testers to ‘dig their claws in’ and give you as much honest feedback as they can, some questions for you to consider:

  • Find out how much they’d be willing to pay for the product or service
  • Did it meet the requirements of the job? If not, what was it missing? If yes, what worked well?
  • How did it compare to other products or services that they’ve used?
  • What are the ‘must haves’, ‘should haves’, and ‘could haves’

Once you get the feedback from the users you can tweak, rinse and repeat.

It will take a lot less energy and resources to make changes to a half finished product than it will if it’s already been stamped as ‘complete’. 

With all this said, just because somebody has suggested something that doesn’t mean that it’s written in a holy stone that you can’t ignore. Go with your gut feelings and find a balance between what you think is best and the feedback from the customers.

Document your findings

This isn’t a step on it’s own per say, however, you should be doing this throughout the whole process. Make sure that you keep notes and records of all of your findings to be sure that you don’t miss a trick and you’re able to check back for reference.

In a lot of cases most of the market research will help formulate your business plan or bids for financial investment.

So get organised and set aside some time during each activity to write up what you’ve done and what the results are. It would be a shame for any of the work to be lost or misinterpreted. Make sure that you’ve filed and organised your research in an accessible and easy to use format because future you will thank you for it. Trust me.

Useful links:

Hubspot Market Research Kit

Aaron Hughes
Aaron Hughes
Hey, I'm Aaron! I'm one of the two co-founders of Gotiggo. I used to work as a professional in the public sector in the UK. I enjoyed my job role, however, I knew that I wanted more! I decided that the normal 9 to 5 grind was not going to give me the financial freedom that I desired, so I made the decision to start this website in the hopes of helping other like-minded people.

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