Before you incorporate, hire, buy a domain or launch your business: how much do you know about the market?
Judicious, Inc. has scoped out markets and competitors for big companies and small, and for local, national, and global brands. Chances are, we’ve done it for a business just like yours. Read on to find out why we do it — and how.
First, I want to talk about why market and competitor research matter. I’d say if you do these things right, your business has a better chance than most before you do anything else. If you don’t, your odds of making it to five years in business are a coin toss.
Around 22% of new businesses fail within the first year, 32% within two years, and by ten years, more than two thirds of new businesses have ceased trading. Just 49% make it to the 5-year mark. 90% of startups and 99% of ‘unicorns’ (super fast-growing startups) are gone by then too, so being innovative isn’t the solution.
What stops new businesses succeeding?
In 2018, the top cause was ‘ran out of cash.’ A close second, accounting for 35% of businesses that failed, was ‘no market need’ (no market research). 20% were ‘outcompeted’ (no competitor research).
That’s 55% of all business failures1.
These businesses:
- Didn’t know enough about the market
- Didn’t know enough about their competitors
- Made avoidable mistakes as a result
If you want to give your new business a fighting chance, start here.
You need to know:
Is there enough market to support your business?
Let’s understand this with an example. Suppose Mitch buys a waste haulage business in Sacramento. The numbers look good on paper, but can he get enough customers to show a profit? We can check.
Running tests for searches in the Sacramento area lets us see how many Sacramento residents and businesses are searching for a solution like Mitch’s. If it’s all businesses and he’s set up for consumer operations, he might need to pivot. If there are hardly any searches, there are hardly any customers. It has to be local, because he can’t haul waste from Minnesota — not without special equipment and licensing.
So does that mean that if there are a lot of local, relevant searches, there’s a huge market out there for Mitch’s new business and he’s sitting pretty? Not quite…
Are competitors already servicing it? If so, how?
You also need to know if your competitors are already servicing the whole of your potential customer base. If they are, it’s not the end of the world, but you will need to figure out how you can pick up customers somewhere else or poach your competitors’ existing customers. You can also see how your competitors market their business, so you can see if there’s anything you can use yourself.
How can you find all this out?
Market research makes people think of marketing new products, but you should start by researching to find out if there’s enough market for the business itself.
When we work with businesses to do this, we’ll do keyword research to see if there’s enough search traffic to sustain and grow your new business. Is anyone looking for search terms that relate to your business? We can get local numbers if you’re a local business, national or global if that’s where you’ll be selling.
We use a mix of industry-leading keyword and business research tools to get a complete picture of your market, including:
- Total addressable market: all the customers available to you
- Competitor landscape: how many competitors? How many customers do they have? How do they market themselves?
- Most effective marketing: how can your business get the customers you need to be successful?
So why don’t more businesses know this — before they launch?
Because the idea is simple enough, but putting it into practice takes time, tools, and skills. Most people who are seriously planning to start a business are already plenty busy. They don’t have the spare hours to put into market research, even if they realize its importance. And without experience, it’s a steep learning curve to usable results.
Which is where we come in. If you’re planning to launch a business, we can literally double your chances of success by researching the market and scoping out what your competitors are up to. Let’s have a conversation about it.