How to Research Your Business Idea Your brilliant idea may indeed be brilliant -- or it may need some work. Here's how to find out if you're ready for startup.

Somewhere between scribbling your idea on a cocktail napkin andactually starting a business, there's a process you need tocarry out that essentially determines either your success orfailure in business. Oftentimes, would-be entrepreneurs get soexcited about their "epiphanies"--the moments when theyimagine the possibilities of a given idea--that they forget to findout whether that idea is viable.

Of course, sometimes the idea works anyway, in spite of a lackof market research. Unfortunately, other times, the idea crashesand burns, halting a business in its tracks. We'd like to helpyou avoid the latter. This how to on researching your business ideais just what you need to keep your business goals on track.

The Idea Stage

For some entrepreneurs, getting the idea--and imagining thepossibilities--is the easy part. It's the market research thatdoesn't come so naturally. "It's a big red flag whensomeone outlines the size of the market--multibillion dollars--butdoesn't clearly articulate a plan for how the idea will meet anunmet need in the marketplace," says Aaron Keller, an adjunctprofessor of marketing at the University of St. Thomas inneighboring St. Paul and a managing principal of Capsule, aMinneapolis-based brand development firm.

That kind of full-throttle approach can cost you."Entrepreneurs are often so passionate about their ideas, theycan lose objectivity," adds Nancy A. Shenker, president of theONswitchLLC, a full-service marketing firm in Westchester, New York."Rather than taking the time to thoroughly plan and research,they sometimes plow ahead with execution, only to spend valuabledollars on unfocused or untargeted activities."

Market research, then, can prove invaluable in determining youridea's potential. You can gather information from industryassociations, Web searches, periodicals, federal and stateagencies, and so forth. A trip to the library or a few hours onlinecan set you on your way to really understanding your market. Youraim is to gain a general sense of the type of customer your productor service will serve--or at least to being willing to find outthrough the research process. "For example," saysShenker, "if you don't know if your product will appeal tothe youth market, make sure you include a sample of that populationin your research efforts."

Your research plan should spell out the objectives of theresearch and give you the information you need to either go aheadwith your idea, fine-tune it or take it back to the drawing board.Create a list of questions you need to answer in your research, andcreate a plan for answering them. "Utilize experts in planningand conducting research sessions," Shenker advises. "Theycan recommend what type of research is most appropriate, help youdevelop statistically valid samples and write questionnaires, andprovide you with an objective and neutral source ofinformation."

The type of information you'll be gathering depends on thetype of product or service you want to sell as well as your overallresearch goals. You can use your research to determine a potentialmarket, to size up the competition, or to test the usefulness andpositioning of your product or service. "If, for example, theproduct is a tangible item, letting the target audience see andtouch a prototype could be extremely valuable," notes Shenker."For intangible products, exposing prospective customers todescriptive copy or a draft Web site could aid in developing clearcommunications."

Analysis

When working with firms on brand development, Keller first looksat a business idea from four perspectives: company, customer,competitor and collaborator. This approach allows Keller toscrutinize a business idea before even approaching the topic ofbrand development. Here's what he looks at for each of the fourissues:

1. Company. Think of your idea in terms of itsproduct/service features, the benefits to customers, thepersonality of your company, what key messages you'll berelaying and the core promises you'll be making tocustomers.

2. Customer. There are three different customersyou'll need to think about in relation to your idea: purchasers(those who make the decision or write the check), influencers (theindividual, organization or group of people who influence thepurchasing decision), and the end users (the person or group ofpeople who will directly interact with your product orservice).

3. Competitor. Again, there are three different groupsyou'll need to keep in mind: primary, secondary and tertiary.Their placement within each level is based on how often yourbusiness would compete with them and how you would tailor yourmessages when competing with each of these groups.

4. Collaborators. Think of organizations and people whomay have an interest in your success but aren't directly paidor rewarded for any success your business might realize, such asassociations, the media and other organizations that sell to yourcustomers.

Another approach is to research is SWOT analysis, meaninganalysis of the strengths of your industry, your product orservice; the weaknesses of your product (such as design flaws) orservice (such as high prices); and potential threats (such as theeconomy). "[SWOT] enables you to understand the strengths andflaws, [everything] from internal information such as bureaucracy,product development and cost to external factors such as foreignexchange rates, politics, culture, etc.," says Drew Stevens, aSt. Louis professional speaker and consultant who works withentrepreneurs in researching and marketing their ideas. "SWOTenables an entrepreneur to quickly understand whether their productor service will make it in the current environment."

Whatever your approach to evaluating your idea, just be sureyou're meeting the research objectives you've outlined foryour product or service. With those goals always top-of-mind, youranalysis will help you discover whether your idea has any holesthat need patching.

Checking Out the Competition

Assuming your research process has helped you uncover yourcompetition, you now need to find out what they're up to.Shenker advises becoming a customer of the competition, whether byshopping them yourself or by enlisting the help of a friend."Visit their Web site and put yourself on their list,"she says. "Talk to your competitor's customers, too--askthem what they like or don't like about your competitor'sproduct or service. If you conduct formal research, include aquestion like 'Where do you currently go for that product orservice? Why?'"

Your aim is to understand what your competition is doing so youcan do it better. Maybe their service is poor. Maybe their producthas some flaws--something you'll only know if you try it outyourself. Or maybe you've figured out a way to do thingsbetter, smarter, more cost-effectively. Find your selling point.It's going to be the core of your marketing program, if andwhen you're ready for that step. It's also going to be whatsets you apart and lures customers your way.