How to Do Market Research for a Business Plan

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Starting a new business or developing an invention requires drawing up detailed business plans in order to predict your success or to show venture capitalists, investors and banks for start-up capital and loans. Writing your business plan, however, requires researching the background of the industry with which your business is involved and essential marketplace characteristics. Many resources exist where you can find information, such as government agencies and market research companies.

Read trade journals and publications specific to your industry. They include information about the current state of industries, technologies and trend data. Find industry-specific journals and articles by looking through the LexisNexis database, FindArticles.com and Scoop. Look for data on the size and growth of the market, sales details and trends, and characteristics of existing products. Use this information to create charts and graphs for your business plan that show if there is a market opportunity for your product or service.

Gather data about your target market. Go to Census.gov, the Nielson Wire and the Pew Research Center. Type in keywords in the archive and publication sections of these websites to find free reports, data and statistics specific to your industry. For example, typing in "cell phone" allows you to find data on which demographic uses cell phones most often. The U.S. Census Bureau's website contains data tools that give specific state demographic information, such as earnings by gender and educational levels. Business plans define your target market demographics, such as age, race and consumer trends, which is why gathering this data is crucial.

Research your target market's interest and activities. Construct a consumer survey that asks for opinions, personal experiences and preferences. Ask the consumer to list products and brands that are used on a regular basis. Include demographic questions about the survey takers. Mail this survey to people in the market that you're targeting. Analyze the data that you obtain by sorting the information into graphs and charts by age group and gender.

Find the brands and companies with which your business will be in competition. Go online to websites such as Bloomberg Businessweek and Hoover's. Use the filtering tools on these sites--such as Bloomberg's Company Insight Center and Hoover's Company Directory--to narrow companies down by industry, region and state. Compile information that you find on historical stock data, market share percentages and company financial profiles. Organize this data by the top-performing companies in your industry so that you'll have a clearly-defined list for the "competition" section of your business plan.

Contact suppliers and vendors for which you'll need to develop your product or carry out your service. Go online to business-to-business supplier resource websites like ThomasNet and Kellysearch. Type in the specific product or supply you need in the search box or narrow down suppliers by industry categories. Call vendors and ask about prices for raw materials or supplies. Information on prices is placed into business plan sections that discuss the costs and expenses associated with your business model.

Determine the distribution marketing channels for your business product or service. Think of your distribution channels in terms of where consumers would encounter your product--such as specialty and department stores or through a direct sales force. Look where your competitors' products are sold to develop a list of possible placements for your own. Search for appropriate manufacturers with which you may be interested in licensing your product. Manufacturers may be found in the same manner in which you found suppliers and vendors to help develop your product.

Tips

  • Include a self-addressed stamped envelope when mailing consumer surveys to increase your response rate.

References

Resources

About the Author

Matthew Schieltz has been a freelance web writer since August 2006, and has experience writing a variety of informational articles, how-to guides, website and e-book content for organizations such as Demand Studios. Schieltz holds a Bachelor of Arts in psychology from Wright State University in Dayton, Ohio. He plans to pursue graduate school in clinical psychology.

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