This is where market research is important. You will want to gather as much information as you can about the market, potential customers, and your competition. Good market research will help you determine if your business idea can be profitable.
There are a variety of ways to gather information relating to your business concept. While you don’t have to do all of the following, you will certainly want to gather both primary and secondary research.
? Primary research is information you gather yourself. It may include conducting surveys, talking to potential customers and suppliers, observing other businesses, and test-marketing sample products or services.
? Secondary research is information that is compiled by someone else and is available through a variety of resources. Secondary research can easily be found at your chamber of commerce office, in trade magazines and journals, annual reports of your competition and related business practices, through information contacts and networks in related industries, and through the Internet. In identifying your target market, you can research demographics, scientific data, public polls, patent and trademark data, and legal information.
Use both types of information as you develop your business plan. It will help you make a realistic assessment of your business’s potential.