You probably are familiar with Magic Johnson’s tenure as one of the greatest basketball players in the NBA. And, you most likely also know that he has become, since his retirement, one of the greatest entrepreneurs of our age. Opening movie theatres and Starbucks stores in inner-city neighborhoods, Magic found a unique niche and has made both a big difference— and fortune— in the process.
"We never made it past the first store. Looking back, I can give you a whole list of reasons why this startup flopped. The major factor was our crazy main buyer, who ordered clothing he liked rather than stocking up on what our customers might buy.”
So who was this main buyer? It was Magic himself. He goes on to say:
“I knew what I liked in sportswear, yet I didn’t have a clue what our customers would or could buy.” Like many business owners, Johnson learned the hard way that market research, or getting to know your customer base, is essential for business success.
Market research is essential, and it doesn’t have to be expensive! Here are some easy and affordable ways for you to get the feedback you need on your next big idea:
Trade Associations: Every industry has a trade association connected to it, and these groups offer a wealth of information. Find groups associated with your business or idea and contact them— explain what you are doing and ask about survey data and research reports that are available. Get copies of their publications. Many will even have a start-up resource kit available.
Trade Shows: Consider attending some of the above mentioned associations’ specific trade shows. These shows will put you in touch with hundreds of like-minded individuals— people who are already successfully doing what you want to do.
Trade Magazines: Each industry also usually has one or more trade magazines. Find the main magazine for your industry and get several back copies. You should be able to notice industry trends, mistakes to avoid, potential costs and much more.
Websites: In addition to what you might find with a simple Google search, check out these sites:
- www.census.gov: The U.S. Census Bureau offers a lot of free demographic data that you can use.
- www.hoovers.com: Hoover’s offers business and industry data, as well as sales, marketing, business development and other information on public and private companies.
- www.marketresearch.com: This site offers over 300,000 market research articles from more than 700 publishers, categorized by industry.
Social Media: Social media is a fantastic tool for conducting free market research. On LinkedIn or Facebook, you can join groups related to your prospective business, meet people who already own businesses like the one you want to open and learn from people already succeeding in that industry.
Interviews and Experiential Research: Reading is great, but nothing beats actually talking with people who are associated with your potential business. There are two groups of people you need to meet and interview when conducting your market research:
- Potential customers. You need to find and meet people who would be willing to pay for the products or services that you want to provide. Find out what they like and dislike about their present provider and what would cause them to switch— lower prices, a better location, more personal service, etc.
- The competition. No one knows your potential business better than people who are already running similar businesses. Become their customer, shop at their store, or use their service. Analyze their strengths, weaknesses, and profit potential.
Libraries: Of course, librarians are and always have been the keepers of the research key, and they can show you where to find plenty of free information. But here is something extra: The Internet-Plus Directory of Express Library Services: Research and Document Delivery for Hire, by editors Steve Coffman, Cindy Kehoe and Pat Wiedensohler, lists 500 libraries nationwide that provide low-cost research services that you can tap into.
Online Focus Groups: How do Fortune 500 companies and presidential candidates know which commercials to run, products to pitch, or ideas to share? They use focus groups. You can too. Find an online discussion group or forum for your industry and ask questions. And again, as I mentioned above, you can do the same thing using social media. All you have to do is ask your networks. Another option would be to post a poll to various online groups and tally the results.
After conducting all of this research, you must remember to take the time needed to sit down, sift through and analyze the data. You need to get a clear idea of the strengths and weaknesses of your plan. Either you will conclude that there indeed is a market for your proposed business, or you will find there is not. Either way, the information will be, well, magic.
Have you found other ways to conduct market research for your business on the cheap? Share them with us below.
About Steve Strauss
Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest,The Small Business Bible, now out in a completely updated third edition. You can listen to his weekly podcast, Small Business Success, visit his new website TheSelfEmployed, and follow him on Twitter. © Steven D. Strauss You can read more articles from Steve Strauss by clicking here.