Breaking Into the Market

Having a business idea and deciding to launch a small business can be challenging if you don’t know who will buy your product or service. Consider conducting market research to determine customer demographics. Oftentimes, we rely on family and friends to determine that business viability but testing the marketplace might be the right way to go if you are just getting started. Here’s some steps to get started.

Conducting Market Research

A group of people are working on a computer.

Increase Industry Knowledge

Before you start your business, you should become a student of the industry. Be sure to conduct all the necessary research on your product and consumers so that you can remain on par with your competitors.

Understand Your Market

There are a few things you should know about who you’re selling to before you start a business. According to the Small Business Administration, consider these:

  • Demand : Is there a desire for your product or service?
  • Market size: How many people would be interested in your offering?
  • Economic indicators: What is the income range and employment rate of prospective customers?
  • Location: Where do your customers live and where can your business reach?
  • Market saturation: How many competitors are currently in the market?
  • Pricing: How much will potential customers pay for these alternatives?

Know Your Competitors

Chances are you’ll have at least a few businesses in your area that you’ll be competing with. Conduct research on your competitors to see:

  • How much room is there for your business in the market?
  • What will your business provide that the competition doesn’t?
  • What do your prices look like compared to your competitors?

Developing a Prototype

Once you’ve conducted your market research, your next step is to develop a prototype to test in your market. Here are a few considerations to make when developing your prototype:

  • Number of Prototype Rounds

    Before you develop your first prototype, consider the number of product iterations you want to test. Depending on your needs, you might have to test several.

  • Create a Budget

    Prototypes can be expensive. Before you begin manufacturing, evaluate your development cost for the prototypes you want to create, or the number of iterations required. Be mindful of the possibility that you may have to go back to the drawing board if there are issues with your first prototype.

  • Set Goals for Each Prototype

    Every prototype you make should have clear goals that you’re looking to accomplish and show your product progressing to its final state. Whether it’s the first and you’re testing customer satisfaction, or the tenth and you’re trying to fix defaults in previous versions, each prototype should get you one step closer to hitting the market.

Test the Market

Once you've done your market research and built your prototype(s), there still may be some things you need to test before launching the product.

Once you have a final product, start off by selling on a small scale. This allows you to get an accurate account of what your revenue stream and costs will look like before you start producing on a larger scale.

Marketing is one of the most important aspects of launching and growing a business. Before you fully launch, consider perhaps a soft launch to see what sort of traction you get and determine how much demand for your product. Don’t be discouraged by the lack of response at first; sometimes we don’t know what we need until we have it. Look to show the value your product provides and create demand in your community.

Pricing is one of the main factors in determining your retail value. It can be difficult to find the perfect sweet spot between cost of goods and total units you’re able to sell to maximize profit margins. Be patient as you test new suppliers and processes when finding your retail price points, careful not to undervalue your product or enter into a price war with competitors.

Moving from Idea to Action