Your Business Plan Part 5: Market Research
Your Business Plan Part 5: Market Research
If you’re considering purchasing a business, taking the time to create a thorough business plan is a wise first investment. For some business owners, they may consider working on this document only after the fact, but planning your purchase with your business plan beside you means that you’ll be able to hit the ground running, as well be able to articulate your business functions inside and out. The 5th section of your business plan covers your market research, which is essential to understanding where your business sits in the market, and with this positioning, how your business can be a market leader.
Market research requires proactive outreach and independent research to collect data that reflects the choices of your customer base, and also allows you to stay in touch with trends within the market that may impact your business in the future. Importantly, market research allows you to further learn about your competition, and use this information to leverage your operations and planning.
Primary Market Research
First, the focus will be on your primary market research, connecting with the people you have identified as your target market, as well as your current customer base. You want to tap into their purchasing patterns, their geographical spread, and understand what is important to them when they engage with you, which will allow you to shape your product or service offering to continue to appeal to them.
You’re asking the question, “Why does our customer purchase the product or service?”
For some businesses, this may be a price-point focus, or the level of convenience, for others, a defining factor might be personalised customer service, or simply that you have the monopoly on a specific product, and customers come to you first to make the sale.
Primary market research is first-hand information, and you want to ensure this section is as current as possible – it’s the perfect place to find new opportunities to tailor your offering to what your customers are looking for.
To gather this information, you may be able to draw on existing data that has been collected in the past 6-12 months – this may take the form of a customer survey or a targeted focus group where you’ve tested the service or product and requested specific feedback from your primary market customer base.
Recent information and insights will always fare better within your business plan as market research, like many aspects of this document, is subject to change as the market shifts. Aim to conduct new market research in the process of creating your business plan, and this could be as simple as sending out a survey to your customer database requesting their thoughts.
Once you’ve collected some meaningful primary market research, detail the findings in this section of your business plan, articulating any overarching themes amongst the results, flagging areas that could be actioned both short-term and long-term.
Your primary market research will ideally reflect and align with the previous sections of your business plan that have been completed. For example, you should see parallels between your business strategy and what your customers see as important to them when choosing to purchase from you.
Secondary Market Research
Here, you’re bringing together existing data and statistics about your market – these may include reports that are already published and are available publicly. For local businesses, a useful resource, to begin with, is the Australian Bureau of Statistics website, as will trend reports and other industry content available online.
In a clear format, detail this research in your business plan along with your sources, and look for the common themes and insights that you can apply directly to your business in order to improve your offering and operations.
Secondary market research may take more time to compile, and is an opportunity to “deep dive” and learn more about market trends or opportunities that you’ve identified in advance as being relevant to the success of your business.
Some business owners may like to utilise paid resources like detailed reports that have been compiled and are accessible for a fee, and others may prefer to go the extra mile and enlist paid market research teams to bring this data together. If you choose to move ahead with this option, make sure that you’ve compared the cost of a professional market research team vs doing your own research, and be certain of exactly what information you’re looking to acquire before you begin.
You’ve now completed your market research portion of your business plan, and this document is really taking shape – next time we will be discussing your competitor analysis, where you will take a detailed look at your key competitors within the market.