Conduct Market Research To Avoid “Ugly Baby Syndrome”

by Tim Knox

Starting a new business without conducting market research is like traveling a winding road at high speeds with a blindfold on: it’s exciting for a mile or two, but you will quickly slam into an assortment of unforeseen obstacles without ever reaching your final destination. 

It’s odd how many businesspeople seem to be averse to testing the water before they jump into the pool. Odder still is the fact that conducting market research in the digital age couldn’t be easier.  The problem in my opinion is that many entrepreneurs are afraid their market research will tell them what they don’t want to know, i.e. their big idea – their baby – ain’t so cute after all.

They become victims of what I call: “Ugly Baby Syndrome’”

It’s a tough pill to swallow when market research tells you that your baby is about as appealing as the south-end of a north-bound mule.

That’s why many entrepreneurs choose to forego market research or ignore the results and plow ahead as planned; fooling themselves, their families, and their investors, believing that they know the market better than the market knows itself.

Vegas has a word for these characters.  They’re called “plungers” and both the craps tables as well as the world of business failures is full of them.

So why is conducting market research such an important step in the startup process? Because well-conducted market research can verify whether or not there really is a market for your product or service, globally and locally.

If research proves that there is a verified market, great, forge ahead. And if the research shows a problematic market that you’d be best to avoid, consider yourself lucky that you found that out before mortgaging the house to start the business.

Market research will also help you come to know your market well. Ideally a market should be passionate, large, easy to reach, and have plenty of disposable income to spend, preferably with you.

A market should be hungry for the product you’re selling; otherwise you will find yourself trying to sell a product to an apathetic market that has no use for it.

I equate it with trying to sell houseplants to homeless people; there’s just not much of a market there.

I can’t tell you how many times I’ve consulted with startup entrepreneurs who think they have a “can’t miss” business idea, but their opinions are based on their own emotions, not on real world data.

They’re in love with their ugly baby and won’t take “no market” for an answer.

Just because you love your product does not mean the masses will. So conduct market research early and thoroughly, honor the results, and adjust your plans accordingly.

So how do you conduct market research? Thanks to the Internet it’s often as easy as going to Google and typing in the name of the product and industry you’re interested in.

You should find a number of industry organizations and associations, many of which publish statistics about their industry and make them available free or for a fee.

In the case of my retail business I found an industry association that supplied me with excellent market and industry data for a few hundred dollars; which saved me tons of time, so it was money well invested and the data was much more in-depth and well-researched than anything I could have come up with on my own.

The government also publishes market and industry data and it’s usually available for free (hey, you paid for it on the front end with your tax money). You can also find information on industry-related forums, message boards, search engines, forums, and newsgroups.

And don’t forget to research your competition because there is much you can learn from them.

I did on the ground research by going into the stores of my future competitors and noting things like selection, pricing, cleanliness, and customer service.

Doing that helped me validate my theory that the market I was contemplating would support a bright, clean store with fair prices and excellent customer service.

Localized market research can also tell you whether the area where you’re planning on opening your business is sufficient enough to support your efforts.

You may have a great product with a viable market, but not on the street where your store will be located. Localized market research will help you locate your business in the optimum spot.

Moral to the story: Play the odds and do your market research. Your wallet will thank you.

If You Enjoyed This Article You Should Read Tim’s New Book, “Everything I Know About Business I Learned From My Mama.” Visit http://www.timknox.com for more information.