If you’ve sat down recently to try and complete a business plan, you’re probably thinking of that familiar line from high school math class:
Teacherrrrrrrr!!!! Wheeen are we EVER gonna use this?????
And just like 14-year-old you who didn’t want to learn Pythagoras theorem, you’re sitting in a huff wishing someone would just do this for you so you could get on with the important stuff.
(Side note: I’ll do it for you. Just book a meeting and we’ll talk)
I get it. It’s hard to comprehend how knowing that there are 32,455 people in your target market segment today will help you build a business that can only ever serve 1,500 of them anyway. Since your share of the market will probably be really tiny, what’s the point?
Why Market Research is Important
There are a bunch of reasons why you need to include comprehensive market research in your business plan. Here are a few:
- Whatever your slice of the market is, your competitors have the rest and they want to eat yours. If you have 30,000 potential customers and your business can serve 1,500 of them before it hits capacity, you still have to compete with someone else for that business. Knowing how many competitors are vying for how many potential customers is important so you can promote your unique offering and create raving, loyal fans out of 5% of the market, who would never even think of switching.
- If you ever want to grow your business, you have to know how big you can get. There’s a cap on how large your company can be. If you know how big your market is because you’ve done the research, you can create a plan to scale up – one that, you know, actually might work.
- The market could change. If you know as much as you can about how your target market behaves, then you have a way better chance of predicting shifts in their buying behavior, and you can adjust your business to suit them.
- You need to know how to talk to your customers. The more you know about them, the better you can design promotions that appeal to them. The last thing you want to do is lose thousands of dollars on a radio campaign only to find out that the people you want to reach don’t listen to the radio. Figuring that out ahead of time will save a lot more headaches later on than you’re experiencing right now. For more on knowing your customer, check out this post.
- Other stakeholders need to know. The bank, your partners, maybe even your staff – need to understand the foundation of your business and your decision-making. If they know whom your company solves problems for, they can do a much better job of helping you achieve your vision.
Still think market research is a waste of time?
You’re not alone. But what it does is give you some context from which to assess and evaluate how differently your customers behave from the way you predicted they would. The insight you can get from those comparisons is invaluable.
So. Ready to learn everything you can about your customers? Good – your business will be more successful if you do.