What to research when brainstorming a business idea
If you have a business idea and you want to maximize your chances of turning that idea into a successful reality, it’s important to do your research proactively. Before you start shopping around for funding, and before you even write your business plan, you need to research the business environment and test whether your idea is viable.
The question is, what should you be “researching,” exactly? And what’s the best way to approach this research?
Target Demographics and Product Market Fit
One of the first things you’ll need to research is the market fit of your product and your target demographics. In other words, do consumers have a use for the product you’re envisioning, and if so, are there specific demographics who have a stronger need than others? The Census Bureau is a great place to start researching your target market; there, you can uncover demographic information and start making assessments for who might be interested in your product.
Product market fit is a related concept, forcing you to consider whether your product satisfies the needs of a specific market. The best way to evaluate product market fit is to design and distribute a survey for the people you believe would buy your product. If you’re still in the earliest stages of planning and you don’t have the time or budget for this, see what information you can find online on this topic.
Next, you’ll need to research your existing competition. Your competitors will be one of your biggest obstacles; if they can offer a better product for a lower price in all areas, you don’t have a chance of winning significant market share. You also need a way to differentiate your product and your brand from your competitors.
A simple Google search can introduce you to some of the top businesses in your field. Take a look at their history, their offers, and what makes them unique. From there, you can start working out your competitive differentiators – and possibly come up with a plan for how to evade or beat the competition overall.
Legal and Regulatory Issues
Some business ideas will require you to research legal and regulatory issues that stand in your way. For example, do you need a business license or some form of certification to run this business? Will you be restricted by zoning laws? Do you need to pass certain inspections to serve customers in your chosen area? You’ll consult with a lawyer eventually, but some preliminary research can help you estimate the challenges you’re going to face in the future.
Organization and Management
How are you going to structure your business? Depending on the nature of your business and your long-term goals, you may want to create a corporation, an LLC, or a simple partnership or sole proprietorship. Do you want to have a board of directors? Are there key positions you’ll need to fill to execute your business idea properly? Who will you need to hire and when will you need to hire them?
The Financial Workings
Your business won’t be stable unless you have a clear way to make money, so it pays to research the financial side of things as well.
- Startup costs. How much money will it cost to start this business? Some businesses can be started with only a few thousand dollars, while others require much more of an investment.
- Operational costs and overhead. How much will it cost you to keep the business running? Consider the costs of raw materials, overhead, labor, and production.
- Profitability. How much money will you be able to charge for your product? Will you generate enough revenue to cover all your expenses and still turn a profit?
- Revenue growth. How are you going to grow your business over time? Is your idea scalable? Will you have the potential to accelerate your earnings?
Marketing and Advertising Strategy
Finally, how are you going to market and advertise your business? There’s significant room for creativity here, especially since there are so many marketing strategies available in the modern era. What strategies are your competitors using? How do those seem to be working? Is there a cost-effective way you can build some early interest and momentum for your business.
After just a few hours of researching the above topics, you should be able to determine whether your business idea is practical. If it shows promise, you can start fine-tuning the details and collecting more information to use in your business plan; if not, don’t sweat it. It’s hard to come up with a business idea that works in every category.
Keep an open mind, continue brainstorming, and repeat this process when you get your next idea.