Q: I
really like working with numbers and enjoy payroll processing,
along with figuring quarterly tax forms and reports. I enjoy it so
much, I want to start a business out of my home doing payroll and
possibly expand to other business services, such as collections. My
problem is, in order to research whether there's a market in my
area for payroll processing, I have to contact local small
businesses and ask if they would be interested in outsourcing their
payroll. How do I just call them up and ask without them feeling
like I'm wasting their time? After all, they're busy enough
without having to answer my questions.
A:
You're smart to want to research your potential market to
determine whether there's a need for your services. However,
you'll want to do more than just call local businesses. And
I'd bet that if you did call them without doing any other
research, many of them would give you a resounding "No,
thanks" if you asked them whether they'd use your
services. Even though you aren't selling something to them yet,
that's the impression they might get if you're calling them
with no prior understanding of your target market.
That's not to say you should never call them, but I would
recommend doing other research first. That way, when you do call,
you'll be armed with information about why they might need your
services--and why they might choose you over the competition. Here
are some market research tactics that can help you approach
potential customers knowledgeably:
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1. Find out what your
competitors are doing. Take a look at all the services
they offer. You could even approach them as though you are a
customer and ask questions about their offerings. What do they do
that you could do better? Is there anything they're not doing
that you could do? What are their prices like?
2. Set the right price. That
means being priced competitively while also allowing you to cover
costs and earn you a profit. Don't price yourself so low that
clients view you as a lesser value, nor so high that they choose
one of your competitors over you.
3. Test-market your
service. Before you start offering your service en
masse, try it out on a few local businesses. You'll get
valuable feedback that could help you make the necessary
adjustments to your offering.
4. Visit the
library. You'd be surprised at the wealth of
information you can find there just by digging around a bit. Not
only can you get specific information about your target group, but
you can also discover industry associations and professional
organizations (many of which publish their own reports and
publications) related to your business.
Once you've gone through these steps, you might also want to
develop a questionnaire. Based on your other research, think of
several standardized questions that you could easily ask
prospective customers over the phone or even in person. Having this
list of questions in front of you will help you feel less like
you're wasting anyone's time, and the answers will help you
fine-tune your offering even further.
You always have the option of conducting focus groups or hiring
a market research firm, but the costs can be prohibitive, so
consider doing it on your own first. In the end, when you're
ready to actually start selling your service, you'll be able to
pick up the phone and call prospects with confidence, knowing
they'll have trouble turning you down.
Karen E. Spaeder is editor of Entrepreneur.com and managing
editor ofEntrepreneur magazine.
The opinions expressed in this column are those
of the author, not of Entrepreneur.com. All answers are intended to
be general in nature, without regard to specific geographical areas
or circumstances, and should only be relied upon after consulting
an appropriate expert, such as an attorney or
accountant.