It can be daunting to begin business research for your start up idea. There is so much information out there, how do you know where to start and what to look for? Learning how to conduct business research is a valuable skill to have. It will not only help you create an effective business plan; it will enable you to make betterbusiness decisions. We recommend that you start by researching your specific industry (industry analysis), then your competitors (competitive analysis) and finally, your target customers (customer analysis). Once you have researched these three areas, you are ready to begin formulating your business plan.
An industry analysis is the section of your business plan that provides statistics about the market potential of your business products and services. This section of your plan needs to have specific information about the current state of the industry, and its target markets. Some of the goals when doing an industry analysis are to identify your industry, applicable government regulations and potential limitations and risks. It’s also a good idea to create a forecast and define your company’s position in the industry and why it is unique.
- Industry codes like the North American Industry Classification System (NAICS) will help you find industry specific stats and create lists of competitors in directories.
- Databases can provide information, articles and market research reports not accessible through search engines like Google. Many databases are accessible through your local library.
- Associations, magazines and trade journals are a good way to gather current industry information as are blogs and online forums. ASAE Gateway to Associations Directory can be used to search for relevant associations.
- Government websites like BC Stats, WorkBC and Industry Canada can also contain useful data on the industry, pertinent guidelines and regulations.
A competitive analysis compares your company to others in your industry. It is useful for determining your competitive advantage and assessing your limitations. When doing a competitive analysis you should list your competitors and what they do as well as describe and define your specific niche in the market. This is also a good opportunity to explore your strengths and weaknesses and how you will overcome them. Finally, it is important in a competitive analysis to describe your business in detail (including, history, structure, location, ownership, etc…)
- Directories are a good way to learn about your competition. Directories like B.C. Business Network provide BC specific businesses and Canadian Companies Capabilities lists over 60,000 Canadian businesses. Trade and industry directories will also help you narrow your results.
- Mapping tools like Google Maps can also be useful as they will help you identify where your competition is located.
- News articles and press releases are also a good source of information for your competition’s future plans as well as industry trends. YAHOO! Canada Business News and CanadaNewsWire are good places to start.
- Other resources like Financial Post Infomart, SME Benchmarking Tool and SEDAR may also provide financial information about your competitor.
In many ways the customer analysis is the most important piece of your business plan. In order for your business to be successful, you must be able to demonstrate who will buy your products or services. Be sure to identify your customer segments, how your business will meet their specific needs, their value and what the best approach is for each. Some of the steps you will need to complete for this section of your research are defining your prospects on a measurable level and describing the demographics of your consumer base. You will also want to look at projected changes in the future. It is important to be aware of the research you have already done regarding your industry and competitors while doing your customer analysis.
- Government online resources which can help you gather demographic information including Community Profiles and the Community Information Database (CID).
- Reports like Spending Patterns in Canada will also provide customer information.
Want more information? Go to our Business Research Basics Guide!