Have a Business Idea? 6 Ways to Research Your Industry.
When deciding to launch a business, it's important not only to talk to potential customers, but to gather all of the industry data you can. Here's how to do it.
In their book, Start Your Own Business, the staff of Entrepreneur Media, Inc. guides you through the critical steps to starting a business, then supports you in surviving the first three years as a business owner. In this edited excerpt, the authors explain what secondary market research is and the different sources you can use to gather it.
When conducting market research for your new business, you'll gather two types of data: primary and secondary. Primary research is information that comes directly from the source—that is, potential customers. Secondary research involves gathering statistics, reports, studies, and other data from organizations such as government agencies, trade associations, and your local chamber of commerce.
The vast majority of research you can find will be secondary research, plenty of which is available for free to entrepreneurs on a tight budget. The best places to start? Your local library and the Internet.
Reference librarians at public and university libraries can point you in the right direction. Become familiar with the business reference section, also. Two good sources to look for: ThomasNet, an online resource that connects industrial buyers and sellers, and the Hoovers Industry Reports. Both sources can help you target businesses in a particular industry, read up on competitors or find manufacturers for your product.
To get insights into consumer markets, check out the Statistical Abstract of the United States. It contains a wealth of social, political, and economic data. Ask reference librarians for other resources targeted at your specific business.
In addition to libraries, here are 6 other sources of secondary research:
Your industry trade association can offer such information as market statistics, lists of members, and books and reference materials. Talking to others in your association can be one of the most valuable ways of gaining informal data about a region or customer base.
Look in the Encyclopedia of Associations, found in most libraries, to find associations relevant to your industry. You may also want to investigate your customers' trade associations for information that can help you market to them. Most trade associations provide information free of charge. Also read your trade associations' publications, as well as those aimed at your target customers, to get an idea of current and future trends and buying patterns.
Government agencies are an invaluable source of market research, most of it free. Almost every county government publishes population density and distribution figures in widely available census tracts. These publications will show the number of people living in specific areas, such as precincts or neighborhoods. Some counties publish reports on population trends that show the population 10 years ago, five years ago and today. Check local employment figures for the area, too. A stagnant job market—or worse, a consistently declining one—could mean fewer people will be able to spend money, even on necessities.
The U.S. Census Bureau turns out reams of inexpensive or free business information, most of which is available on the Internet:
- The Census Bureau's State and Metropolitan Area Data Book offers statistics for metropolitan areas, central cities and counties.
- The Census Product Update is a monthly listing of recently released and upcoming products from the U.S. Census Bureau. Sign up for a free email subscription.
- County Business Patterns reports the number of a given type of business in a county by ZIP code and metropolitan and micropolitan statistical areas.
- For breakdowns by geographical area, look to the Economic Census, which is published every five years.
Most of these products are available online or at your local library. If not, contact the Census Bureau at (800) 923-8282.
The U.S. Government has an official web portal that's another good source of information. For instance, at the USA.gov website, you'll find a section for businesses that's a one-stop link to all the information and services the federal government provides for the business community.
Or you might try the Commerce Department's Economic Indicators web page. Literally every day, it's releasing key economic indicators from the Bureau of Economic Analysis and the Census Bureau.
Maps of trading areas in counties and states are available from chambers of commerce, trade development commissions, industrial development boards and local newspaper offices. These maps show major areas of commerce and can also help you judge the accessibility of various sites. Access is an important consideration in determining the limits of your market area.
Your local chamber of commerce or business development agency can supply useful information usually free of charge, including assistance with site selection, demographic reports and directories of local businesses. They may also offer seminars on marketing and related topics that can help you do better research.
Financial and business services firm D&B offers a range of reference sources that can help startups. Its "Regional Business Directories," for instance, provide detailed information to help identify new business prospects and assess market potential. D&B's Million Dollar Database can help you develop a marketing campaign for B2B sales. The database lists more than 34 million companies and includes information regarding the number of employees, annual sales and ownership type. The database also includes biographical information on owners and officers, giving insight into their backgrounds and business experiences. For more information, go to www.mergentmddi.com. Visit the main website, or call (866) 503-0287 for more information.
Start by searching for business databases. You can find everything from headline and business news to industry trends and company-specific business information, such as a firm's address, phone number, field of business and the name of the CEO. This information is critical for identifying prospects, developing mailing lists and planning sales calls. Here are two to get you started:
KnowThis.com's virtual marketing library includes a tab called "Marketing Links" that contains links to a wide variety of market research web resources. You can simply type in what you want to do, and voila, results for resources.
MarketResearch.com has research reports from more than 700 sources consolidated into one accessible collection that's updated daily. You pay only for the parts of the report you need with its "slice and dice" feature called Profound. After paying, the information is delivered online to your personal library on the site. Its "In a Nutshell" series offers three- to four-minute videos on the highlights of various topics.