Conducting Market Research From the Back of a Boat

I have often talked about the skewed parenting skills of my father, who, without ever realizing it, was quite the entrepreneurial genius. Though he never dabbled in business and it certainly didn’t occur to me at the time, many of the lessons I learned from him about life can be put to practical use in your business today.For example he would take me fishing and hang the dead worms on my hook and the lively wigglers on his. In business we call that, “Getting the competitive edge.”He would direct me to cast my line in waters that he knew were barren while he cast his line in waters teeming with fish. In business we call that, “Knowing your market.”He would turn to me every so often and say, “Look, son, I’ve hooked another one! That makes eight for me in the last ten minutes. How many have you caught? None? Gee, that’s too bad.”In business we call that, “Creating a monopoly.”There were times I recall sitting in that tiny boat with he and his big string of fish on one end and me and my empty string on the other, that I imagined myself picking up an oar and giving it a swing to see how far I could knock him out of the boat.In business we call that, “Customer satisfaction.”So let’s look at a few of the lessons I learned from those fishing trips that pertain to how you should be doing business. First off, you may recall in the last column that I mentioned that the old man had surveyed every square inch of that lake and knew exactly where the fish were hiding.In business we call that, “Conducting market research,” and if your business is new or contemplating a move into new markets, failing to conduct market research could leave you sitting in the boat with no customers nibbling at your hook.Why do market research? The most obvious answer is to verify that there really is a market for your product or service and to determine if the market will support your efforts. A market should be large, easy to reach, and have lots of disposable cash. A market should be hungry for and passionate about the product you are trying to sell. Otherwise you will find yourself trying to build a business that caters to a market of disinterested, broke people; like selling house plants to homeless people, not a good idea.Many entrepreneurs make the mistake of giving consideration to their product first, without worrying about who will buy the product when it’s done. They come up with a great idea that they are sure the world will love without bothering to ask the world its opinion. They pour thousands of hours and tens of thousands of dollars into their great idea only to end up asking, “Now who will buy my wonderful new widget? Hello? Anybody out there?”The old man taught me that you should find a pond full of hungry fish first, then come up with the bait to catch them. Remember, you succeed by giving customers what THEY want or need, not by trying to sell them what YOU think they want or need.Identify a market first, develop the product second. Never put a dime into product creation until you are sure there is a market that will give you a dollar or more for every dime you spend. Never go on instinct and never trust your gut. More often than not you’ll find that the great idea you have churning in the pit of your stomach is just gas, and not the kind that will make you money.Fortunately it has never been easier to conduct market research. Thanks to the Internet you can thoroughly research a market with a few keystrokes. Most industries have associations that publish statistics about their market. The government publishes enough industry data to choke a horse. You can use online directories and business research tools to gather data. You can also use search engines like Google and Overture (Yahoo) to search the web for market data and gather competitive intelligence. Visit forums and newsgroups to see what people in the industry are talking about. What problems are they complaining about? What needs do they have that are not being met? What itch do they have that you can scratch?You should also research the competition in the market you are considering.
You can learn a great deal from your competitors, such as: what are the top product lines in the market, what is the demand for goods, what are the price points, what is the range in quality, what are they doing that you can do better, etc.And if you find there are no competitors in the market take that as a red flag. A lack of competition usually means a lack of market. Rarely does a product come along that is so revolutionary that it creates an entirely new marketplace, so keep that in mind as you do your research.At the end of the day business, like fishing, is all about finding a pond full of hungry fish and coming up with the best bait that you can use to catch them. He who reels the most customers into the boat wins the game.