So you wake up with this great business idea – a service that would change the lives of people in your town. I know because I have them all the time. Perhaps your idea would reduce the amount of time residents spend queuing for something, or could save them money. Maybe it is an idea you are passionate about and, perhaps, with that passion of yours it will succeed.
Being passionate is great, but before you sign that office lease agreement and start hiring staff, you need to determine if there is actually a market for your business. Basically you must carry out thorough market research to analyse your potential consumers, industry trends and competitors.
My friend is against market research. As an Abu Dhabi native she believes she knows the market well enough and understands her townspeople’s needs. Also as a start-up entrepreneur, she is keen to keep expenses at bay. She is not on her own. Many new entrepreneurs overlook this step – perhaps because they do not want to hear negative remarks or fear they would be discouraged. Some also do not want to pay out any extra on their investments. In my friend’s case, everyone around her agreed her idea was great, and that was enough validation for her.
But good market research is as important as the product/service itself, because it could indicate the success or failure of a business.
In a nutshell, it is information collected that offers insight into the industry your business is in; the competitors and the potential customers. A good market research study would help to identify areas of opportunity, address weaknesses and provide insight into who the business should target. The right research could also help a business owner choose the ideal location for their business, and direct them to the right media channels to communicate with their customers.
Once you realise the importance of a feasibility study, what should you do next? You could seek business consultancies that would undertake such a project from A-Z based on your needs then share the results with you. The UAE has a number of these with many options available online. However, a company based in the country to carry out the study on your behalf is best placed to assess the market.
For those who value a feasibility study but cannot afford a consultant, you can still conduct your own assessment by analysing your business’s industry and reading the latest market and industry reports. Is your area of business expanding? Is the industry affected by the latest technological developments or current events? You do not want to start a business in a field that business owners are exiting. For instance, do not open a physical store if all your competitors are online.
Analysing your competitors is also key. And do not let the number of competitors discourage you. You can still do well as long as you have a differentiating factor. Look at how many competitors there are, how they are operating, what they are doing differently or where their areas of weakness lie.
Use the library, online search engines and the latest press releases to find out more information about others in your field. Websites such as business.com and corporateinformation.com provide company and market information for thousands of companies across different industries.
Last but not least, assess your potential customers. Conduct focus groups to ask customers questions about your product: what do they think of it? Would they buy it? Which outlets do they go to most? How much are they willing to spend?
Study reports on the demographics and spending habits of residents in the city you want to base yourself in. See whether the purchasing power has increased/decreased, what their spending characteristics are.
While detailed marketing research can be costly – both from a time and money perspective – it is an important investment towards your business to save losses in the long run. It could also open your eyes to opportunities you are not yet aware of.
Manar Al Hinai is an award-winning Emirati writer and communications consultant based in Abu Dhabi. Twitter: @manar_alhinai