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Starting a business

How to do research for your new business

Starting your own business provides the unique opportunity to make a living and be your own boss while pursuing your passions—but it isn’t easy. Many business owners agree that the first year is the toughest. However, if you’re diligent from the start, you’ll put yourself in a much better position for success.

To help, QuickBooks asked 965 seasoned small business owners if they had any advice for people who are about to start their first business. The top two recommendations were to:

  1. Write a business plan
  2. Research the competition

In this article we will cover how to conduct research for your new business—with the help of a simple planning template—to give your new business the greatest chance of success. 

Write a business ‘canvas’ (then, a plan)

A comprehensive business plan can serve as a business owner's guiding compass. Keep in mind, your first business plan isn’t finite. Parts of it will most likely change and expand as you learn more about your market and grow.

To save time, some experts suggest you should instead start with a business canvas: a one-page document that covers the critical information you need to get started. This option will save you time, get you up and running faster and provides structure to your new business research.

Once you’ve been in business for a while, or you’re ready to seek funding, then you can build out a more detailed plan. It should cover each section in the canvas in more depth—everything from:

  • Resources to operate
  • Your overall marketing plan
  • What your cost and sales structure will look like
  • How you’ll manage your finances, expansion, and more

The QuickBooks business canvas can help you shortcut your way to a robust business plan. Download the canvas as part of the free new business toolkit, here. With the canvas in hand, it’s time to consider the three most important questions for every new business owner.

Think about the who, the what and why

There’s a lot to consider when starting a new business—everything from developing your product or service to accounting, legal, marketing, and more.

It’s easy to focus too much on the small details before you see the big picture.

That’s why you should first validate that you have a strong business opportunity. Here’s how to get started:

Define your unique selling proposition

Every successful business has one thing in common: It delivers a particular benefit or solves a problem better than the competition. You want to establish what your product or service is, as well as what makes it unique. This is known as your unique selling proposition. It answers two important questions for your potential customers:

  1. “What do you offer?” (e.g. your products or services)
  2. “Why should I buy from you, instead of a competitor?”

To define your unique selling proposition, answer the two questions above in a single phrase or sentence. 

Write out different ideas that come to mind when you think of your offering, as quickly as possible and without editing your thoughts. Then, pick through that list for the strongest words and ideas and distil them into one statement.

Refine your target audience

Trying to be everything to everyone is a classic mistake among new entrepreneurs. No business can cater to the needs of the whole world, but it’s absolutely possible to meet the requirements of a select group.

That select group is your target audience and you need to figure out who they are. One way to do this is to create a buyer persona. To complete this character sketch of a fictional target customer, consider descriptors like:

  • Age range
  • Gender
  • Family status
  • Income level
  • Education level
  • Location
  • Values and personality traits

Your goal is to create a cohesive buyer persona: a portrait of your ideal customer. For instance, perhaps your customer is Alice, a fun-loving, young, working-class mother who is concerned about her family’s security. Or maybe your customer is Karl, a free-spirited man in his 50s who needs to plan for retirement but doesn’t enjoy thinking about money.

You may find your unique selling proposition changes as you think more about the needs of your audience. Be sure to update any section of your canvas as you learn more information.

Research the market

Now that you know you have a place in the market, your next step is to determine the financial viability of your idea. That means conducting two types of market research.

  • Primary research: Talk directly to prospective customers via interviews, surveys, etc.
  • Secondary research: Review statistics, news and reports that describe the current trends in your target market.

Your primary research will give you invaluable insights about your target market, the pain points they are looking to solve, the ways they are looking to solve them, and the motivation that drives them to find that solution.

Your secondary research will provide you with three essential criteria:

  1. The trends in your industry
  2. The potential revenues for your product or service category
  3. Whether the market is growing (more room for new players) or stagnating (squeezing out who’s already there)

Identify key competitors

Competitor analysis is one of the key ingredients to a successful business. It not only lets you see what’s out there to compare, but you can also see where your competition is lacking. This means defining the key players, finding their strengths and weaknesses, and determining how your business can capitalise.

The next step for your new business

By answering the who, the what and the why you’ve taken the first steps to starting a successful new business. Congratulations! You’ve equipped yourself with key information that will serve as the foundation of your journey:

  • You have a clear definition of your product or service 
  • You know your target market, what their pains are and how you solve them 
  • You’ve identified the key competitors you will face and how you stack up 
  • You understand your market and the trends that will impact your growth

Ready to take the next step towards launching your business? 

Download our free New Business Toolkit to see the seven steps to start a new business (tip: you’ve already completed the first step). You’ll learn everything you need to know to complete your canvas and gain access to tools and templates to help start, run and grow your business.

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Free New Business Toolkit

With the new business toolkit, you’ve got the right tools, right from the start. Learn how to set up your business for success and access tools and templates to get you started.

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