How To Do Research For A Startup Idea

Did you know that more than 700,000 small businesses “fail” every year?  That might scare you, but it shouldn’t.  There are really two reasons why so many startup businesses fail:

  1. They haven’t focused on a specific customer
  2. They haven’t defined an offer that their ideal customer wants to buy.

In this article, I’m going to show you how to avoid these two craters of failure and get your startup on the road to success.image

When you look closely at the two reasons startups fail, you’ll notice that these are really rooted in some basic market and customer research.  The good news is that you don’t need to spend thousands of dollars to figure these two out, but you will need to spend some quality time thinking through the process I’m going to share with you.  Yes, it’s going to seem a little tedious, but trust me, the time and effort will be well worth it.

  1. Write down your idea or concept for your startup — follow this easy outline.
    • Who is your ideal customer? One of my favorite hacks for answering this question is to think about who needs your product or service THE MOST? What group of customers is SO BAD at what you offer that they would jump at the chance to work with you?  Let’s say your startup idea was a financial services company.  Now, who might have lots of money to manage, but be terrible at it? What about musicians and artists?
    • What is the problem they are trying to solve?  This is where you dig into your target customers’ pain points; they love what they do but don’t enjoy or care about managing money – and they want to make sure that their money is well-invested for when their “performing” days are over.
    • How do they perceive their problem is solved?  Here is where you list all of the ways your target customer might solve this problem; talk to a family member, work with a local financial planner, etc.
    • How does the industry believe their problem is solved?  This is your opportunity to really connect with the customer by listing everything they may have seen or heard about what to do.  What is the prevailing wisdom about financial planning?  What does the competition say?
    • How do YOU believe this problem is solved?  This is your opportunity to set yourself apart and make yourself the obvious choice for this customer.  Make a list of all the specific ways you service this specific audience.  Trust me – no one does this.
  2. How do you plan to make money from this?  This is where you outline the specific offers that you have for your target customer.  One easy way to develop an offer is to :
    • Make an a la carte list of specific products or services that you’re going to offer.
    • Then attach a “List Price” to this offer.  Your list price is going to be the highest price you ever hope to charge for this thing.  You can always give discounts, but this is the highest price they will pay.
    • Create packages and bundles at different levels.  Now you can start mixing and matching different elements of your offer into easy to choose packages.
  3. Google your customer’s problem.  Take the problem you identified that your ideal customer suffers from and start doing some online research; Who are the people that are complaining the most? Why are they complaining?  This bit of secondary research will help you hone in on exactly the customer you should go after.
  4. Find and participate in  LinkedIn and Facebook groups where your ideal customers congregate.  Engage with them and identify exactly what their issues are.
  5. Do some competitive research.  Your goal should be to see A LOT of competition, a lot of options.  This tells you that there is interest in your idea or topic area.
    • Google your idea and see what competitors pop up.
    • Search Amazon.com for books on your topic or idea.  Browse for the best selling books on your topic.  You want to focus on topics with a “best sellers rank” lower than #20,000
  6. Create polls and short surveys to share on social media.  QuestionPro makes it super easy to share your surveys on social media.  Take the time to create a series of questions based on your research and collect feedback from the groups and forums that you participate in.
  7. Run informal focus groups using Google Hangouts On Air.  Google Hangouts On Air are a wonderful way to engage with potential customers and dig deeper into their needs, wants, frustrations and challenges.  All you need is a Google account to set one up.  Then invite your community and discuss your idea.

At this point, you will not only have enough information and data to prove out your idea, you may also have recruited some ideal customers in the process.