Is market research important for a side business?
This is probably the question going through your mind as you plan to start a side business.
The simple answer is “it depends”.
Here’s why I said so; If you want to build a side business that you expect to eventually produce a full-time income, then conducting market research is important.
But if you just want a few bucks to go by, without any long-term plan, market research might not be necessary.
What sustains a business is customers, market research lets you know if there are enough people out there who’d sustain your business for as long as it lasts and how to get to them.
You wouldn’t want your business to be among the failed 71.5%, would you?
So whether you just want to create a course, write a book, start an online consulting business, have a unique product idea, start a home production business, or whatever it is- as long as you’ve some long-term plan for your business, you need to do market research.
And with the help of the internet, market research doesn’t have to cost a thing and doesn’t require a special skill either.
In this post, I’m going to walk you through how to conduct market research before you start your SIDE business.
Ready? Let’s go.
Is Market Research Important – What is Market Research?
Market research is a broad term. And is generally defined as an organized effort to gather information about target markets and customers – Wikipedia.
In a simple term, it is an act of finding out whether people need your product/service, and getting to know who these people are (Consumer preference) and how to get to them (Marketing strategy
Is Market Research Important? – Types Of Market Research And Their Importance In Your Side Business.
There are many types and stages of market research, but we will cover the ones I consider most important for starting and growing your side business.
We’ll also be looking at why they are important for your business – This will answer your question “Is market research important?”.
The types of market research we would be looking at are
- Market demand Analysis
- Target market analysis
- Competitor analysis
Market Demand Analysis
Market demand analysis helps you ascertain if there are enough people interested in your business what you’ve got to offer.
If your idea is to solve a problem, market research gives you an insight into how many people have that problem. If it’s for entertainment purposes or pleasure, it lets you know how many people are interested in it.
Importance of Demand Analysis:
- To determine the demand volume: Market demand analysis is used to determine if there are people interested in what you want to offer and how large that demand is.
- Used to identify a product niche: Conducting a demand analysis also helps you know the products that are already available and identify a possible gap.
- To understand the business cycle: Conducting a Market demand analysis also helps you know if the demand for a particular product/service is declining or increasing.
- Can be used to understand consumer’s preference and sentiment. Doing a demand analysis will help you understand what consumers are looking for, how they currently feel with the products available, and what they expect to change. etc.
How to Conduct Demand Analysis:
As I said, you don’t necessarily need to go too advanced on this. Gaining some basic knowledge is enough for a start.
So, how do you conduct a market demand analysis?
Let’s say we want to start a Virtual Assistant Business (An agency where you can hire professional virtual assistants)
We can conduct a market demand analysis in 2 ways: 1) Use Google and SEO tools, 2) Use a survey tool.
Our goal for the research will be 1) To ascertain the market demand, 2) determine the business circle, and 3) find a product niche.
- Using Google and SEO tool Semrush: I searched “Where to hire a Virtual Assistant” (Notice that I didn’t just search for “Virtual Assistant Services”, For best result, it’s best to use a long-tail keyword)The aim is to know if people are searching for virtual assistant services. I got this result as the global monthly search volume 👇
This tells us that 800 people are searching to hire a VA monthly.
This is an average volume. (If you prefer to offer your services to a specific location, the tool can narrow your search to that location.
To further confirm that people are searching for this phrase, Let’s throw the question to Google and see what shows up
You can also perform this exercise using a survey form.
If you have a good number of social media followers, email lists, or you are a member of professional, entrepreneurial communities (Still using VA business as an example), consider creating a questionnaire using survey tools like forms.app or Google form.
Example of questions to ask in your questionnaire:
- What industry are you in?
- If you had a chance, what services would you rather outsource to a VA?
- Do you currently use the services of a VA?
- How will you rate his/her performance?
- What’s the reason for your rating?
- What is the reason you don’t use a VA? etc.
Now we are sure that there’s a market demand for our “Virtual Assistant Business”. The next thing is to know the business cycle.
Is the demand in this industry decreasing or increasing?
If it’s decreasing, then there’s no point venturing into this business if you have a long-term plan.
The reason is that the business might become obsolete (No longer in demand, out of date, old-fashioned) in the next 5 years.
The easiest way to do this is to check for recent statistics of that industry. For the VA Agency, there’s much report that proves that the industry is increasing.
After this step is completed, you now need to research a niche.
What VA services are high in demand? You can get answers to this question by checking different job boards to see the job descriptions of the virtual assistant job listings.
Target Market Analysis
In business, everybody is not your customer.
While market research gives you a broader overview of people interested in what you have, a target market analysis helps you filter the list to only people who are more likely to give you their money.
Target market analysis lets you know those to whom your offer will be valuable.
Importance of Target Market Analysis:
- Helps you develop an accurate buyer persona
- Helps you develop a strategic and targeted marketing strategy.
How to conduct a market demand analysis:
The two objectives for a target market analysis are to know WHO needs your product, WHERE the person is, WHY they need the product, What alternative they currently have, and WHEN they’re likely to make purchases.
Knowing these will help you develop a strong marketing message and a strategic marketing strategy.
So let’s take them one by one, still using the “Virtual Assistant Business” as a case study.
Who: List people you feel need a VA service. E.g. Bloggers, medical professionals, real estate companies, startups, consultants. If you are not sure, do some Google with the question, “Who needs x service/product”.
Google search result for “Who needs virtual assistant services”.
Where: Where can you find these people? You can find them on their websites, social media, online communities, conferences. etc.
Why: Why do they need your services or product? What challenges are they facing? For example: For a solopreneur, it could be to reduce the workload. For a small business owner, it could be to reduce operational costs.
List as many WHYs as possible. If you are not sure, you can still google “What’s the importance of a VA”
What: What option is already out there? Chances are, there are other VA companies out there serving these people, what will make them ditch them for you? What makes you unique?
This is where to start crafting your marketing message.
After you are done with this step, the next thing is to come up with a marketing strategy.
How will you be able to reach these people? Content marketing, outreach, paid advertisement?
But before doing this, you must look at your competitors and know the strategies that are working for them.
That brings us to the last but not least type of market research “Competitor Analysis“.
Competitor analysis helps you identify key competitors, their products, and marketing strategies.
Importance of Competitor analysis.
- It helps you identify strengths, weaknesses, threats, and opportunities.
- It also allows you to have a peek at their marketing strategies
How to conduct a competitors analysis
Most organizations usually hire the services of a mystery shopper or market research specialist to perform this task, but that will require you to spend some money
And I’m guessing you don’t have that much to spend, after all that’s why you want to build a side business.
For this purpose, you can use a tool called Competitors App.
Competitors.app is a great tool for monitoring everything about the daily activities of your competitors including their emails, newsletters, blog posts, social media posts, website changes, SEO strategies, keywords, and ads.
It sends you the report via email. It has a free version and the paid version is just $9/m
You get every activity of your competitor delivered to your email. Amazing, yeah?
To do this, you’ll first need to have an idea of who your competitors are. It’s worthy to note that competitors are in levels.
For someone just starting, your competitor should also be somewhat new, maybe 1-3 years ahead of you.
It’ll be hopeless to take someone who’s been in the industry for 5-10 years as a competition. I’m not saying it’s not possible to compete with them but your chances are very slim.
Using Instagram or Twitter hashtags, you can easily know who your competitors are:
I did a quick search for the keyword virtual assistant service. You can see there are 316k results.
Scrolling through the search results, I found two VA services, among others
vacentral.co.uk and runnovate.com.
From my research, Runnovate started posting on IG in April 2020, so we’ll assume that’s when they started. (This is an ideal competitor) -Remember to put the location into consideration if your business is location-based.
After you’ve got 2-3 competitors, the next thing is to clock those names into the competitor.app dashboard
To understand how it works, watch their demo video.
Competitor monitoring feature.
The information from monitoring your competitors will let you know which market strategy is working for them.
And their pricing so you know what to price your own
Is Market Research Important – How Long does it take to conduct a market research
Conducting basic market research like what we talked about in this post, takes less than a day to complete. However, you’ll have to spend 3-7 days gathering your feedback if you distribute questionnaires.
The competitor analysis on the other hand isn’t a one-off thing. You’ll want to keep monitoring your competitor’s activities as long as both of you are in business.
Is Market Research Important -How to write a market research report
This is where many people become glueless. This doesn’t have to be complicated either, except you want to follow all the laid down rules (by I don’t know who)
To write a concise market report, follow these simple pattern
- In separate sheets, write down the different types of research you want to conduct.
- Write down the objective for each type of research
- Go ahead to conduct your research – conduct each research separately for clarity. And write down your reports in the sheets
- Analyze your report. Did you get the information you are looking for?
- If your answer to #4 is yes, Write a conclusion. A conclusion contains a summary of your findings and the actions required on each.
Is Market Research Important – Other types of research you should conduct subsequently.
Marketing strategy analysis. After you’ve started your business, you should subsequently analyze your marketing strategy to know how effective each one is.
This lets you know where to focus your resources.
Customer Satisfaction analysis: This is a type of analysis that lets you know how satisfied your customers are with your services/products.
This analysis also allows you to ask for customers’ suggestions.
You can use survey forms or ask them directly.
You should start customer analysis right from your first customer. This lets you know you are on the right track and likely to have repeat customers.
Are the data gotten from market research 100% accurate?
No! The data are not 100% accurate but they serve as a roadmap to starting and running a successful business. It helps stop wondering if there are people interested in your offer and focus on reaching those people – because you are sure they are out there.
What if I have a business idea that doesn’t exist out there, how will I conduct the market research?
Your business idea may be new, after all, they say “necessity is the mother of invention”. In this case, you first need to understand the problem your idea wants to solve.
Knowing the problem means you already have an idea of those who are facing the problem. Your research should be focused on finding out the volume of people who have that problem.
Once you see that the volume is good enough to sustain a business, you then focus on where to find them, and how to reach them.
Is this the only way to conduct market research? No! There are different ways (more advanced) to conduct market research. You can also hire a specialist to research for you.
This is getting longer than expected so I’ll drop my e-pen here 😌
Over to you… Do you have a question?
Have you started your side business and did you conduct market research?