What You Need to Know
So, what exactly do you need to know about your market? The short answer is as much as possible, because the better you understand the marketplace — your customers and competitors — the better business decisions you're likely to make. If you know, for example, that most residents in your neighborhood have jobs that take them downtown during the day, and that home burglary is a problem during those hours, you're probably safe in assuming that there's a market for a home-based business that specializes in security consulting — helping people to make their homes less vulnerable.
When you speak to information sources such as librarians, suppliers, local business officials, or business owners, remember that any of these people could be potential customers or sources of referrals. Some might even be in a position to offer valuable advice or mentoring. Always present yourself as professionally as possible.
It's essential to continue to monitor the marketplace, however — it's not enough to do your research once. Hopefully, you've chosen a business in a subject area that you're already passionate about or at least interested in. That means that you're likely researching all the time — reading trade association magazines, for example, or keeping an eye on statistics. All this will help you to target the right customers at the right time with the right product or service.
The Market
You need to know which people could potentially do business with you. What are they looking for from your product or service, how do they shop for it, when do they shop for it, and what prices are they willing to pay for it? Just as important are the businesses where your customers are currently shopping. Who would be your competitors, what range of products and services do they offer, and how are they pricing everything?
The Business Environment
Looking at your specific market would be considered a “micro” approach. It's also important to take a look at the bigger picture — the “macro” approach. How is your local economy performing? Are there major new corporations arriving to increase local employment and thus buoy up people's willingness to spend or is a factory on the verge of closing, thus putting people into “save” mode?
You also want to look at local governments and business organizations. How business-friendly is the area in which you live? Are there miles of municipal red tape or is everything fairly streamlined? Are there small business development resources in place that you can take advantage of? Do you have a variety of lending institutions from which to choose?
