by Sherry Shafer, Drake University SBDC, Des Moines, IA One of the most common mistakes that entrepreneurs make when starting a business is converting a hobby or interest into a small business without first doing the research to find out if there is a need for their specific product or service. So how do you know if your idea will result in a profitable business? The answer to that question is relatively simple: research, research, research. While most beginning entrepreneurs don't have the money or the time to conduct extensive market research, there are some simple things you can do to see whether your business idea is worth pursuing. Here are a few ideas:
- Read
The mainstream press and the business press, magazines, association reports and industry reports and books are excellent places to look for current business and cultural trends. Internet searches yield an abundance of free information and data on businesses. These trends are often what drive the market. For example, the number of single-parent homes or homes in which both parents are working is rising steadily. These families often don't have time for many tasks, such as getting groceries, house-cleaning or cooking. The population is aging with "baby boomers" soon to be seniors. What products/services will they need? By capitalizing on business and cultural trends such as these, your business will have an advantage.
- Talk
Talk to people and have them identify needs that they believe are not being met or what they want they can't find. If your business fills a market niche or an area that has previously been ignored, you have a better chance of success.
- Check with owners of similar businesses
Small business owners are usually very willing to share their experiences and insights with you—as long as you're not probing them for trade secrets. Other entrepreneurs will be able to tell you more about the type of success you can expect based on their own personal experiences. Don't reinvent the wheel; get the real information from someone who has or is doing what you want to do. Learn from their mistakes and soak up their wisdom.
- Get a job
Working for someone else is an excellent way to learn more about the business you're exploring. Think of it as an internship—you can observe and learn from their successes and failures. Think of it as entrepreneurial school where you get paid to learn. Once you've got a basic idea of whether or not your business idea will float, you can proceed with more in-depth market research and the development of a business plan. For assistance, contact your area Small Business Development Center. > See also: Starting a Business |
