How to do Market Research on a Budget

Have you ever dreamed of opening a bed & breakfast in a particular neighborhood? Imagined running an unusual business, like a greenhouse-meets-coffee shop or a pet playground? Or even pictured becoming part of a neighborhood with a company that’s more mundane, like a mover or an accounting firm for bed & breakfasts? Our imaginations can bring us amazing entrepreneurial ideas. But before anyone spends money and time on a dreamed-up business venture, it’s important to ask one essential question.

Is there an audience for that dream?

If so, who are those people who will flock to your business? What are their ages? What do they like to do on the weekends? Do they have families?

Doing market research is essential for opening a new business, but you may not have the budget to commission a professional market research firm. Here are some tips and tricks for doing market research on a budget, so that you can investigate your audience and make the best possible decisions with relatively easy-to-get information.

Start with people you know. If you’re considering a certain location, you probably know a few people in the area—ask them for feedback on your choice of location. In addition to inquiring about what businesses have been really successful, ask about any recently closed businesses to get a sense of whether or not the economy in general is thriving in that area, and what kind of companies people favor.

Expand beyond who you know by using social media. Create a survey on a website like SurveyMonkey, then advertise it on Facebook to people who live in the town you’re interested in. (You can buy a Facebook ad that’s targeted to an audience of your choosing.) In the survey, ask simple questions, such as whether the participant would find your new business useful, or what he or she looks for in a company. Offer a small gift card as a giveaway to a random survey-taker in order to entice people.

Look into your competition. Are they doing well, or just staggering along? What could you possibly do better? What will make your business unique, but still build on the industry the competitors have thrived in?

Use your free resources. Check out the local Department of Commerce or Small Business Development Center. People there will have a very solid understanding of the demographics of the town, and could also provide you with affordable, helpful literature with market forecasts for the area. Don’t forget to go to the library. Sometimes copies of marketing reports are available on the shelves; if not, ask a librarian, especially one in a business department, if there are any online or published reports you can access.

Decide. You’ll know you’ve gathered enough information if you can summarize in a sentence or two who your customers are and why they need your business. Try filling in the blanks in a sentence like “I’m helping X audience solve Y problem.” That’s a good way to see if your dream will have legs in the real world. Once you have a sense that you’re onto something, stop researching and start doing. There is such a thing as too much market research. Here’s what the Marines would say: if you’ve got 70 percent of the information and resources you’ll need, and you’re 70 percent sure you’ll be successful, then go for it.

Start small. Once you think you know your customers, try out your idea on them. Take a few sample products at the local farmer’s market. Before you have a huge kick-off at your bed and breakfast, invite a few test customers to spend the night, and cook them breakfast. If the interest in your business is truly there, a few little projects can help you gauge what you’re doing right and what needs improvement.

Doing market research is an important step of starting your business, but it doesn’t have to cost a fortune. With these simple hacks, you can help cement the success of your future company without spending too much time and money.